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Editor’s Note: Drinking in all the Statistics is a Taxing Affair

Amongst the many flurries of activities that characterise the early autumn period, is the proliferation of statistics and annual reports released.  Adding in Brexit and the ever-stronger push for lowered excise and VAT rates has pushed reportage into overdrive. It very much feels like this is a sector marching on its figures right now.

Always welcome is the comprehensive overview provided by AIB in its Hospitality & Tourism Outlook, just released at the end of September.  Compiled by David McCarthy, Head of Hospitality & Tourism, AIB Business Banking, this year’s report is titled Challenging but Positive – accurate, given the propensity for doom and gloom we are so inclined to fall into in the face of resilient figures.

After seven years of remarkable growth and a broadening of the industry’s revenue base, it’s very clear for all that we have entered a challenging period of potentially flat growth.  Yet we have much to remain positive about – 2018 was another record year, standards have never been higher, and there has been huge investment in recent years.

Perhaps a lesser talked about statistic that is beginning to make itself known is that with the continued devaluation of Sterling, it hasn’t just made British holidaymakers more likely to stay at home but it has also made Britain a more attractive destination for international visitors.  Hospitality in Ireland, in comparison, is getting hit from the VAT increase, rising rates, increasing insurance costs, an ongoing staffing shortage, and a relatively highly valued euro.

Altogether, it’s making Britain an increasingly attractive destination for international visitors and the statistics qualify this; North America is showing a weak pattern for Ireland and is down 1.5% by volume of visitors for the month of August 2019 compared to 2018.  There has been an overall increase in overseas arrivals of 2.2% for the first eight months of the year compared to the same period in 2018, however there are many signs that this will peter out for the remainder of the year. A flat year overall wouldn’t necessarily imply a looming disaster, rather we perhaps have become used to the average 7.2% annual growth the industry has experienced over the last five years.

Tourism Ireland is predicting weakened air access capacity as the year rolls on – unexpected events such as the grounding of Boeing’s 737 MAX aircraft and the subsequent discontinuation of Norwegian flights from New York, Boston and Toronto; the suspension of the Hainan Airlines flight from Beijing until 2020, and the cancellation of its service from Shenzhen; have all created problems and contributed to an increase in airfare costs.

Meanwhile in the Drinks Industry Group of Ireland (DIGI)’s final 2019 report, we are reminded that Ireland has some of the EU’s highest excise tax rates on alcohol.  We pay the second-highest overall excise tax on alcohol, the highest excise tax on wine, the second highest on beer, and the third highest on spirits. It is ironic that many domestically produced beverages are cheaper to buy abroad, with a big reason for this being excise.  Tax on a bottle of whiskey in Ireland is €11.92, compared to €2.90 in Italy – it’s cheaper to buy Jameson outside of Ireland.

Speaking at a DIGI briefing, Ronan Lynch, owner of the Swan Bar in Dublin and current LVA chairman, summed up the problem well: “It’s so important we stay competitive as high excise tax is a massive barrier for Ireland”.

To contact me directly, email mark@fft.ie.

Encircle 360 Ltd T/A Food for Thought - FFT.ie, 59 Merrion Square, Dublin 2, Ireland.

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