Nine months ago, when the Minister for Arts, Sport and Tourism, Mr O'Donoghue, was under pressure from the hospitality sector to spend a further €3m on overseas advertising, he suggested the industry should review its own high charges as a way of increasing the number of tourists.
His comments were not particularly well received at the time. Now, however, there is hard statistical evidence to show that over-pricing within the sector is threatening its viability.
More than half of all visitors to Ireland last year were dissatisfied with charges for eating out, the prices they had to pay for goods and services and the cost of drink in pubs, hotels and restaurants. Four out of five German, Dutch and Italian tourists had complaints to make. And visitors from Britain's and the United States are becoming more price sensitive as, with a possible war in Iraq looming, the euro strengthens against the pound and the dollar. Anecdotal evidence would suggest that unhappiness is not confined to visitors. An increasing number of Irish people are finding the cost of foreign holidays compares favourably with staying at home.
It is not all doom and gloom. If the price issue was addressed, the tourism industry has a very attractive package to sell. The quality of accommodation provided in both hotels and guesthouses is high and, in spite of some slippage, we still enjoy an enviable reputation for friendliness and hospitality. The countryside is a major attraction and one-third of visitors reported that the quality of their holidays had exceeded expectations.
Speakers at the Irish Hotels Federation's annual conference in Galway during the week were critical of the Coalition Government for raising VAT charges in the Budget, which made the industry less competitive. And they sought concessions that would allow them to cope with increasingly tight profit margins. In the present economic climate, however, Mr O'Donoghue was not making any commitments. Accepting that the VAT change had caused difficulties, he drew attention to the benefits a reduction in corporation tax would confer.
Ireland now ranks as the second most expensive country in the euro zone, after Finland. There is no disguising the cost of food, drink and services where a common currency operates. The Government has promised greater competition in the insurance industry, to bring industry overheads down. And there is some evidence of excessive pricing in food and drink retailing. Action on these fronts, along with strict price control in the hospitality sector, will help to preserve and to develop one of our largest industries.