Taking Tourism Seriously For Future Economic Development The Irish Economy Conference: Learning from Crisis 25 th February 2015 Institute of Banking Professor Jim Deegan University of Limerick
Presentation Outline 1. Brief introductory remarks 2. Some data on international tourism & comment on current & projected driving forces: technology is now a key driver 3. Performance of Irish Tourism 4. Tourism in Irish Policymaking 5. Conclusion
Some General Factors to Understand Tourism is significantly affected by innovations in other sectors Creative industries being linked with tourism is becoming ever more important across the world The impact of artificial intelligence will impact on the tourism labour market but just how?
PERFORMANCE OF IRISH TOURISM Tourism Proves Yet Again A Good Bellwether For The Overall Economy
THE QUARTERLY NATIONAL HOUSEHOLD SURVEY Person aged 15 years and over in Employment (Thousand) by Sex, NACE Rev 2 Economic Sector and Quarter 2008Q3 2011Q1 2012Q4 2014Q3 All NACE Economic Sectors 2,136.4 1,841.8 1,848.9 1,926.9 Agriculture, forestry and fishing (A) Accommodation & food service activities (I) 112.5 83.2 90.0 109.7 135.5 110.7 118.3 139.8
World Tourism Arrivals (Millions): 1950 to 1995 and Forecast to 2020 Forecast Made in 1995 1800 1600 1,600 1400 1200 1000 800 600 400 200 0 1,018 697 564 458 287 327 165 210 25 55 70 110 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2010 2020 *Actual Arrivals in 2010 Were 940 million
1980 Tourist Arrivals Market Share 2012 2030 Arrivals to Europe: 1980=180m 2012=520m 2030=720m(f)
2030 Predictions Number of International Tourists (mn) Actual 2014 arrivals 1.14billion Central prediction for 2030 1,800 ( 74%) Prediction for 2030 with slower economic growth Prediction for 2030 with higher costs of transport Prediction for 2030 with lower costs of transport 1,400 ( 35%) 1,660 ( 60%) 2,000 ( 93%) Emerging Markets Will Play a Key Role In Tourism Across The World adapted from UNWTO
Tourist numbers (000's) Total Overseas Visitors to Ireland 9,000 Total Overseas Visitors to Ireland (000's) 8,000 7,000 6,000 5,000 4,000 No. of Visitors 3,000 2,000 1,000 0 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014*
REVENUE (MILLIONS) Total Overseas Nominal/Real Revenue 1986-2013 (1986 = Base Year) 4,500.0 4,000.0 3,500.0 3,000.0 2,500.0 2,000.0 1,500.0 Nominal Real 1,000.0 500.0 0.0 YEAR
Annual Percentage (%) Change in Overseas Visitors 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 11.5 15.6 15.6 10.4-1.5 4.0 5.5 9.0 15.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 10.7 6.9 10.5 7.4 4.0-5.5 1.4 4.4 3.3 5.9 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total Change 9.7 4.3-3.9-11.5-9.6 5.0 0.8 6.3 9.5 289.3
Visitor Numbers (ooo's) Main Purpose of Visit: Britain 2,000 1,800 1,600 1,400 1,200 1,000 800 Holiday VFR Business Other 600 400 200 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Year
Comments on Economic Impact Poor representation of tourism in the national accounts left void to be filled by numerous Panglossian economic impact assessments - often by hired guns. From 1990s more conservative/realistic estimates produced by Tansey in particular. Nonetheless, the unusual nature of the statistical make up arrested serious engagement by officials in Department of Finance - political expediency rather than strong argument led to funding of the sector. Tourism Satellite Account - TSA(2004 - Deegan et al) pilot gave an employment estimate that was far less than that being quoted by DAST at the time-what was overlooked was the insights on what tourism accounted for in related industries. Failure to adopt standard UN recommended methodology of a Tourism Satellite Account in Ireland is a significant failing.
Delaney & McFeally 2015 Innovative Use of Business Registers Tourism industries accounted for 197,000 persons employed - 12% of all enterprises in Ireland and 11% of all employment Affected by the downturn since 2007 but more resilient than other sectors The regions of the North West, West and South West most dependent on tourism for economic activity A negative pay gap of 35% in tourism compared to other sectors but most likely overestimated because of nature and structure of tourism employment Tourism employs more females, young people and immigrants than other sectors of the economy
Innovation and Performance in Irish Tourism: An Agenda For Action Deegan (Forthcoming 2015) Between 2008-11/12 it was found that 53% of tourism firms introduced one of the 4 measured elements defined as innovation-product, Process, Marketing or Organisational Innovation(s) 47% of firms open declare no innovation over the period Study finds very different rates of innovation by sub sector of tourism for the main areas measured in tourism innovation studies The barriers to innovation similar to Irish industry in general and some particular problems The ecosystem to stimulate tourism innovation is weak
Type of Innovation Introduced By Tourism Enterprises 2008 to 2012 Category of Innovation (n=395) n % Product 183 46 Process 142 36 Organisational 162 28 Marketing 112 41 Any Innovation 211 53
Detailed Innovation Activity Rates By Enterprise Sector, 2008 2012 Sector Product Process Organisational Marketing All enterprises Hotel/Guesthouse 60 48 47 55 65 B&B 31 24 8 25 33 Self-Catered 32 21 9 14 36 Restaurant/Licensed Trade 59 47 34 44 69 Tourist Attraction 50 40 35 50 60 Transport Company* 83 67 67 100 100 Festival Management 42 42 42 42 50 ITO/DMC/PCO 44 29 24 44 53 Total 46 36 28 41 53
Detailed Type of Innovation Activity By Company Size, 2008 2012 Type of Activity Micro <9 (n=282) Small (10-49) (n=74) Medium (50-250) (n=39) All enterprises (n=395) Product 42 42 86 46 Process 30 38 73 36 Organisational 21 41 60 28 Marketing 35 43 81 41 Any Innovation 48 53 92 53
Type of Organisational Innovation Introduced By Number Of Persons Engaged 2008 to 2011 Organisational Innovations: Number of persons engaged <9 10-49 50-250 All enterprises New Business practices 16 39 60 25 New Knowledge systems integration New methods of organising external relations 15 35 54 23 15 24 38 19 Any Organisational Innovation 21 41 60 28
Type Of Cooperation Partner By Size Of Enterprise, 2008 2011 Other enterprises within tourism sector Number of Persons Engaged <9 10-49 50-250 Total 34 42 58 39 Suppliers of equipment 21 26 21 22 Consultants 7 12 19 10 Clients or Customers 32 39 32 34 Competitors 24 31 30 26 Universities/Colleges 13 29 24 18 Government 12 22 22 15 Failte Ireland 38 40 50 40 Tourism Ireland 15 12 17 15 Any Co-Operation 30 40 63 35
Tourism Does Not Feature In Any Serious Way In National Policymaking For Innovation In IRELAND Do You Need Proof?
Government Policy: Action Plan For Jobs 14 Areas Identified By Research Prioritisation Report of November 2011 The 14 priority areas are listed below and form the vital components on which Ireland s future prosperity is being staked. Research/Competence Centres are established and funded following this broad architecture. Priority Area A - Future Networks & Communications Priority Area B - Data Analytics, Management, Security & Privacy Priority Area C - Digital Platforms, Content & Applications Priority Area D - Connected Health and Independent Living Priority Area E - Medical Devices Priority Area F Diagnostics Priority Area G - Therapeutics: Synthesis, Formulation, Processing and Drug Delivery Priority Area H - Food for Health Priority Area I - Sustainable Food Production and Processing Priority Area J Marine Renewable Energy Priority Area K - Smart Grids & Smart Cities Priority Area L - Manufacturing Competitiveness Priority Area M - Processing Technologies and Novel Materials Priority Area N-Innovation in Services and Business Processes
OVERSEAS REVENUE AND VISITOR NUMBER TARGETS FROM TOURISM POLICY REVIEW GROUP 2003 COMPARED WITH ACTUAL OUTCOMES Rev m 2002 Prices 2002 Actual 2006 Target 2006 Actual 2012 Target 2012 Actual Overseas Visitor Spend 3088 3835 3.80 6000 2.95 No Visitors (m) Britain 3.5 4.1 3.82 5.5 2.72 M.Europe 1.4 1.7 2.25 2.3 2.24 N.America 0.8 1.0 1.03 1.8.94 Other Areas 0.2 0.3 0.31 0.5.43 Total 5.9 7.0 7.41 10.0 6.686
Draft National Tourism Policy Paper of July 2014 TARGET IS FOR 5bn in Real Terms From Overseas Tourism by 2025 Hard not to conclude the confidence policymakers have for tourism to contribute to national development has been arrested since 2003. This target seems to lack real ambition for the sector.
: A more in depth understanding of what the sector contributes (Building a Tourism Satellite Account) Building on Ireland s advantages to link tourism and Creative Industries (OECD,2014) Recognising that ICT and tourism are more entwined than ever and we need to study what opportunities and challenges this will engender-airbnb -UBer Recognising that tourism is more likely than other sectors to maintain and grow employment as artificial intelligence expands its reach Dedicate resources to research the future of tourism for Ireland----
MAYBE SOMETHING RADICAL LIKE THIS!
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