Ireland losing competitiveness - tourism body

Ireland's cost competitiveness as a holiday destination is being seriously eroded by high VAT rates and recent rises in local government charges, an Irish Tourist Industry Confederation (ITIC) report has warned.

The report - entitled Ireland's Competitive Position in Tourism- cites the high VAT rates in Ireland relative to our European competitors and the non-recoverability of VAT as a business expense as negatives to competitiveness.

It recommends that VAT on hotel and restaurant expenditure for conferences, incentive travel and corporate meetings be made allowable as a business input. It also calls for the current local authority rates system to be replaced with a local income tax based on profitability as opposed to property valuations.

But the report - commissioned with support from Fáilte Ireland and Tourism Ireland - claims that although price is an important component of competitiveness there need to be greater emphasis on product quality, staff training, product innovation and marketing.

"Since we are no longer a low cost destination, it is essential that we compete successfully in these areas," it said.

The report recommends at least €210 million should be allocated to tourism product development under the National Development Plan 2007-2013.

"The money would go towards public sector investment in key heritage attractions which would be prioritised in the tourism development plan and support for private sector heritage attractions in the form of support for employment through employment training schemes," it recommended.

The report also emphasises the need for continuing development of access for regional tourism, the roads network, the Western Rail Corridor and the Atlantic Road Corridor.

It said Ireland had a strong brand in tourism but that research revealed while people understand the appeal of Ireland, they were less clear on what there is to do in Ireland once they get here.

"There is high level of interest in Ireland but much lower active planning and purchase rates," it said.

ITIC chairwoman Catherine Reilly said: "As this report highlights, price is only one aspect of our competitiveness in the international marketplace and we must adopt a holistic approach to the challenges that face us."