Potential to unlock €6bn for the domestic economy

Potential to unlock €6bn for the domestic economy

Spending incentives for domestic tourism could unlock up to €6bn for the economy. Picture: iStock

THE introduction of any state-backed plans for spending incentives for domestic tourism has the potential to unlock up to €6bn for the domestic economy and aid the recovery of service-based Small and Medium Enterprises (SMEs), including the heavily hit tourism sector, according to the latest SME Monitor published by Banking & Payments Federation Ireland.

Speaking on the report, Brian Hayes, Chief Executive, BPFI said: “In 2019 consumers spent €6 billion on foreign holidays and with limited non-essential overseas travel throughout last year as well as much of this year, this deferred spending on overseas trips is likely to be the major source of some consumers’ accumulated savings.” 

The severity of the challenges faced by the accommodation and food services sector is evident in recent figures which show that while the average fall in turnover across all SME sectors between March and October 2020 was 25%, SMEs in hotels and restaurants experienced an average decline of 65% in their turnover during the same period. 

This report also highlights that there are 767,000 workers still on some sort of state income support due to the pandemic with the accommodation and food services sector accounting for over one-fifth of total state income supports in terms of employment.

Mr Hayes continued: “One of the ways in which we could get thousands back to work is by encouraging domestic tourism. A recent Fáilte Ireland survey shows that 46% of consumers intend to take a short break in Ireland in the next six months, compared with 21% intending to take a long break. 

"The same survey also shows that 40% of consumers were most influenced by cost or value of money in their trip decisions. This clearly shows that while many consumers may have additional savings available that can be spent on domestic tourism, value for money will be an important factor that will influence their decisions in how they will spend. 

"A new scheme to encourage domestic tourism could be designed to address the value for money concern of the consumers while removing some of the challenges associated with the scheme that was launched last year.

“Ultimately by focusing efforts on unlocking savings accumulated by consumers which would otherwise have been spent overseas, this could help around 170,000 employees in the accommodation and food services sectors who are on some sort of state income support to be able to get back to work as domestic activity increases with the gradual reopening of the economy during the second half of 2021,” Mr. Hayes concluded.

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