ASAC 2001
London, Ontario
Karen E. Volkman
Ray M. Guydosh
School of Business and Economics
Plattsburgh State University of New York
TOURISM IN IRELAND: OBSERVATIONS ON THE IMPACT OF EUROPEAN UNION
FUNDING AND MARKETING STRATEGIES
The tourism industry in Ireland has undergone substantial changes between the
years 1980 to 1999. These changes are analyzed in the context of the EU
structural funds, employment factors, and types of tourism markets. The paper
concludes with an examination of the potential for increasing Canadian tourism
to Ireland.
The images of the Ireland of the late 1990s are a stark contrast to the Ireland of the late 1980s.
When one imagines Ireland today, one is likely to think of large computer companies, such as
Dell and Gateway, an educated workforce, and one of the lowest unemployment rates in Europe.
However, the “Celtic Tiger", as Ireland is now referred to, was nowhere to be found during the
1980s. The European Union grouped Ireland with other agricultural “Objective One” countries
such as Greece, Portugal, and Spain, who were in need of extensive financial assistance to bring
them into the single monetary currency of the European Union.
Economists are asking the question, how did Ireland successfully transform its economy to
become the Celtic Tiger. As mentioned above, there is a tendency to attribute its success to the
expansion of the high tech industries. While the expansion of foreign information technology
companies into the Irish economy should not be underestimated, the authors contend that the
primarily locally-owned tourism industry also had an important role in the turnaround of the Irish
economy. Perhaps this overlooking of tourism can be explained by the very recent (1980s)
acknowledgment of the significance of tourism as an industry in the entire European Union.
The paper will focus on the following areas in its analysis of tourism research in the Republic of
Ireland: objectives and funding from the European Regional Development Fund (ERDF), labor
market sector employment and areas for growth, emphasis on tourism sectors; specifically
heritage tourism, and an analysis of expansion of overseas markets with a focus on Canada.
Observations
The authors visited Ireland (primarily the Republic) during the summer of 2000, following a
traditional tourist route via Kilkenny, Waterford, Cork, Kinsale, Killarney, the Ring of Kerry, and
the Dingle Penninsula. They traveled North to the Cliffs of Mohr through Galway and Sligo to
Donegal and spent a short amount of time in Northern Ireland to Portrush and the Giant’s
Causeway before returning South to Dublin. They were struck by the preponderance of signs
alerting us that many a project, from road building to heritage centers, had been funded by the
European Union.
Shortly after hiring a car at the Dublin airport the authors observed their first EU structural
funding sign on the Dublin ringroad. Some other observations included the newly renovated
visitor’s center at the privately owned Waterford crystal factory sporting the familiar EU funding
logo. No trip to Ireland would be complete without learning about whiskey, which led them to
the Middleton distillery, part of the Irish Distillers consortium of five brands of Irish whiskey.
They observed the familiar EU logo on this heritage center, which is a combination of distilling
history and the working plant site for whiskey manufacture for the Middleton brand. Yet another
observation of EU funding was at one of the most popular attractions in Dublin, the “Guinness
Hopstore”, the visitor center for the Guinness brewery at St. James Gate. The “Hopstore” is a
multi-level visitor center with exhibits ranging from Guinness advertising through the years, a life
size replica of the brewing process, to the sampling bar.
The authors later investigated the subject of EU funding signage and found that for such projects,
EU structural funding must be acknowledged and that the EU logo must even comprise 25% of
the sign. These observations led to an interest in tracking the funding and marketing initiatives of
tourism in the Republic of Ireland.
Objectives and ERDF Funding
One finds comparatively few scholarly articles on the subject of the Irish tourism industry during
the past 20 years in English language journals. Indeed, a recent Queens University Belfast,
Centre for Cross Border Studies (CCBS) Mapping Study notes that the tourist industry:
“…is vastly under-resourced in terms of research. It is difficult to conceive of
any other industry with an annual turnover in excess of £ 2bn functioning with
so little research and development backup in the universities. We have tried to
draw published and unpublished research for this study but our impression is that
very little academic work is being done, especially on North-South matters.”
This phenomenon is reflected in the wider scale lack of recognition of tourism by the European
Union before the early 1980s. Pearce (1992) has traced the evolution of tourism in the EU and
points out that it was not until 1980 that the EU even designated a commissioner for tourism. The
influential policy document “The Role of the Union in the Field of Tourism”, a Commission
Green Paper was not released until 1995. The European Union has four main categories of
Structural Funds to address economic and social inequities within the Union: European Regional
Development Fund (ERDF), European Social Fund (ESF), European Agricultural Guidance and
Guarantee Fund (EAGGF), and the Financial Instrument for Fisheries Guidance (FIFG). Tourism
receives direct funding under the ERDF, thus this particular structural fund is the focus of this
paper.
The ERDF was created in 1975 and the scope of its funding programmes is arranged in the
following time periods: 1975-88, 1989-93, 1994-99, and 2000-06. Ireland is classified along with
Greece, Portugal, and Spain as an Objective One region, “Promoting the development and
structural adjustment of regions whose development is lagging behind.” These regions are
eligible if their GDP based on data for the three years prior to 1993 was less than 75% of the EU
average. EU contributions are matched by their respective country recipients; in the case of
Ireland, EU funded projects can be funded at the 75% EU to 25% Ireland levels. (IBB, Ch.1)
As one might infer from the relative downplaying of tourism in the EU mentioned previously,
tourism during the 1975-88 period received a small proportion of ERDF funding. The ERDF
funding for tourism during the 1975-88 period has been studied most extensively by Pearce
(1992). He found that tourism funding accounted for only 1.9% of all ERDF funding of 22,723
million euros (MECU). Out of this small amount, Ireland received only 2.4 % of the total tourism
funding grants. Indeed, Ireland didn’t receive any tourism grants until 1984, with 80% of the
2.4% being allocated during 1988. Interestingly, the UK (54.1%) and Italy (19%) took the
greatest advantage of the tourism funds. All of the Objective One regions took little advantage of
the ERDF structural funds.
The 1989-93 period begins to show the benefits of a greater emphasis on the tourist industry.
Pearce (1992) mentions that the change in official government policy accounts for increased
tourist targets and investment plans. There is also recognition of a specific Irish tourist product to
sell to the market
The Operational Programme for 1989-93 created very specific target goals acknowledging the
role of tourism in the Irish economy. In fact, tourism’s share of the GNP increased from 5.8% to
7% in 1993. This was aided by 220 MECU of funding from the ERDF programme. (IBB) This
is also significant in that that Irish tourism industry is primarily a local one with little foreign
ownership. (Hurley 1994) Thus, while GNP receipts are affected by foreign ownership of the
information-technology infrastructure, receipts for tourism stay mainly within the Irish economy.
This program included doubling the number of overseas visitors, a goal which the Irish tourism
industry was successful in accomplishing. (IBB)
The 1994-99 Operational Programme, which coincides with Ireland’s increasing economic
power, is its most comprehensive ERDF request.
ERDF 1994-99 Funding for Tourism in Ireland
Financial Information by sub-programme:
Sub-programmes/Measures
Natural and cultural heritage
Development of new products
Marketing
Training
Technical assistance
Total
Total cost
EC contribution
(in € millions)
(in € millions)
155.000
116.000
355.000
171.000
154.000
63.000
136.000
102.000
6.000
4.000
806.000
456.000
Source: Ireland Tourism Outline of Programme-Inforegio
As with the prior initiatives, the EU funding is matched: 57% from EU and the rest from the Irish
government and private sector. It should be noted that, while the bulk of the EU funding is from
the ERDF (77.63%), 22.37% is from the European Social Fund, another structural fund. This
initiative continues support for cultural heritage and visitor centers and adds marketing support,
particularly for off-season international travel. Interestingly, little research covers this funding
period. While not exactly following the ERDF funding period, Henry and Deane (1995) have
completed input-output modeling methods to compare the impact of tourism on the Irish
economy during 1990 and 1995. They observe that the impact of foreign tourism on the GNP in
1990 was IR £1337 million and increased to IR £2032 million, an increase of 52%. They
conclude “that tourism has played an important role in the rapid expansion of the Irish economy
during the period and has, in fact, performed above the average for the economy as a whole.”
The year 1995 was also a watershed year in terms of EU issuance of policy. The Commission of
the European Communities published the “Role of the Union in the Field of Tourism”, a
document which analyzes the growth of tourism in the EU and examines how tourism adds value
to the ideals of establishing a European “Community”, both in terms of economic and social
structure. It is important to remember that the ERDF funds are intended to promote “social
cohesion” for a unified Europe. Specifically this "Green Paper" outlines three areas for action:
- supporting improvement in the quality of tourism by taking greater account of
trends in tourism demand;
- encouraging diversification of tourist activities and products by improving the
competitiveness and profitability of the tourism industry;
- incorporating the concept of sustainable and balanced growth into tourism by
taking greater account of the cultural environmental dimensions of tourism.
Clearly, the 1994-99 plan accommodates these goals by seeking to expand the traditional tourist
season in Ireland. Ideas concerning sustainable growth are discussed in the context of
employment, later in the paper. The chart below demonstrates the Irish tourist market has been
growing at a steady rate since 1988, when the government changed its policies toward investment
in the tourism plant. The 1990s show a clear growth of doubling the overseas visitors to Ireland
at the same time period that Ireland is escaping economic obscurity to emerge as the Celtic Tiger.
Number of Overseas Visitors to Ireland Unit=thousands
1988
2,345
1989 1990 1991 1992 1993
2,732 3,069 2,997 3,128 3,333
Ireland Central Statistics Office (CSO)
1994
3,681
1995
4,256
1996
4,739
1997
5,164
1998
5,716
1999
6,068
Labor Market Sectors in Tourism
In analyzing the growth of the Irish economy, much reference is made to the staggering increase
in GDP. The Irish GDP has increased from 60.8 (PPS) in 1986 to 96.5 (PPS) in 1996. This
increase is significantly more than any of the other regions identified as economically
disadvantaged by the Objective One structural funds status. Indeed, the overall EU GDP has
remained constant from the 1986 figures of 107.7 (PPS) to the 1996 figures of 104.8 (PPS). Thus
Ireland’s change in GDP from 1986-1996 is 6.2% while the overall EU lags behind with a 2.0%
change. ( Statistical Annex, ERDF Sixth Periodic Report)
How can one explain these changes in relation to tourism? It is important to note that
unemployment has dropped significantly in Ireland from 1985 when unemployment rates were
18% to 1997 when unemployment rates decreased to 10.1%. (Statistical Annex, ERDF Sixth,
p215) One must factor into this effect the labor force needed to run an industry dominated by
small guest house/B&B type establishments. The Irish Hotels Federation (IHF) estimates that
78% of rooming premises have less than 40 rooms, thus the majority of the industry is dependent
on the more local and labor-intensive small hotels and guesthouses as shown in the chart below.
Categorization of Percentage of Hotels and Guesthouse Size by Number of Rooms
Hotels and Guesthouses by Number of Rooms
151-300
2%
41-50
5%
51-70
6%
71-100
6%
101-150
3%
+300
0%
0-10
24%
31-40
5%
21-30
12%
11-20
37%
Source: Irish Hotels Federations
The State Tourism Training Agency (CERT) predicts a future staffing shortage if the current
tourism growth rate continues. CERT estimates an additional 105,000 employees will be needed
over the next five years. The IHF in their submission “Investing in People, Not Rooms” also
points to the disparity between the employment rates of women in Ireland versus their
counterparts in other EU countries. The IHF data demonstrates that there is a significant
underutilization of the women’s labor force aged 25-54 with only 58.4% employment. This is
significantly lower than the 75% in the UK or 73.7% in Germany. Employment of these women
in the tourism industry would make great strides in alleviating the shortage. Thus the IHF is
lobbying for legislative reform including the “Homemakers Tax Free Allowance” of IR£ 2,000
for the first three years of people returning to the workforce. Creative government strategies
could bring more people into the tourism workforce to alleviate the shortage problem.
Irish Tourism Sectors
The World Tourism Organization calculates the aggregate European annual tourism growth rate
at 4.6% between the years 1988-97. (WTO, 11) As we have seen, the EU has made significant
policy changes since 1988 to recognize the fiscal contribution of tourism to EU countries’
economies and enhance social cohesion. In fact, tourism is now estimated to account for 14% of
the total EU GDP and 14.6% of the total EU workforce. (Barnard)
Within this expanding market, it is even more crucial that Ireland now finds and markets its
tourism niche to the traveling international public. Indeed, given the immanent single European
currency, Ireland must find marketing methods to distinguish itself amongst its European
neighbors and to compete against the traditional European “sun holiday” during the winter or
summer months with such destinations as Majorca, Tenerife, or Southern Spain. However, it
does have a number of very specific sells to European and North American markets that make it
very distinctive. Hurley, Archer, and Fletcher (1994) have identified the following:
1) cultural and ethnic links with over 70 million people of Irish extraction world-wide, 2)
one of the cleanest environments in Europe with extensive areas of outstanding natural
beauty, (3) richness in archaeological and cultural attractions, (4) its people’s reputation
for friendliness and hospitality, (5) the experience and professionalism of Bord Failte,
and (6) its large stock of tourist facilities and amenities.
There has been a revival in some history departments in recent years to include the history of
migration; it is not uncommon to find a migration specialist in the history departments of U.S.
and Canadian universities. In addition to the labeling of the African Diaspora, many of these
migration specialists now also refer to a global Irish Diaspora. While it is difficult to calculate
precise estimates, the figure of 70 million people of Irish extraction is commonly cited as in the
above reference. Although the majority of Irish went to North America and Britain, Irish
migrated worldwide in response to such events as the potato famine of the 1840s and the poor
economy, particularly the 1960s and 1970s. In one of the new studies, The Irish Diaspora, Einri
comments:
The 1980s and 1990s saw a new and remarkable emphasis on the ties between
the Irish at home and those around the world. In part this was cultural- the new
wave of Irish singers, musicians and cultural artists, from within the country but
also from within the Diaspora, who put Irish identity on the map and even made
it cool.
The Irish government changed its policy toward Irish progeny, particularly during the President
Mary Robinson administration of 1990-1997, and is now eager to recognize people of Irish
descent throughout the world. In fact, the Department of Justice, Equality and Law Reform has
published a pamphlet concerning Irish Citizenship. A quick review of the pamphlet shows the
influences of the Robinson policy reforms: clearly anyone whose grandmother or grandfather was
born in Ireland may now register for Irish citizenship. In some cases this would even apply to
great-grandchildren.
North America is Ireland’s third largest travel market, behind the UK and Europe. Clearly
migration/genealogy tourism has large prospective markets and both Canadians and “Yanks” are
made to feel very welcome. It is not uncommon for many establishments to fly the U.S. flag
alongside that of the Republic. Indeed, as official tourist agency, Bord Failte’s own data shows,
there has been a growth in North American tourism from 419,000 visitors in 1988 to 858,000
visitors in 1998. In addition, anyone who has been to such common destinations as Blarney
Castle or Temple Bar, Dublin, is clearly made aware of the North American presence. Indeed,
given the number of American tourists that the authors observed themselves, they were surprised
to find in the statistics that North America wasn’t indeed the primary tourist market for Ireland.
The Irish “image” is a second crucial sector of its tourist marketing. Bord Failte, the official
Republic of Ireland tourism agency, is responsible for creating Ireland's image in the international
markets. When one thinks of Ireland, one typically imagines traveling through green pastoral
scenes to relax at the pub in the evening with some good “craic” and a pint of Guinness. This
image is certainly crucial in Europe, Ireland’s number-two travel market, with 1,255,000 visitors
in 1998 according to Bord Failte. A quick look at European population figures tells a part of the
story. Aside from the Nordic countries, Ireland has the lowest population density in Europe.
With German population density at nearly four times that of Ireland, it is no wonder that the
Germans would want to vacation in the idyllic green pastures of Ireland. The efforts of Bord
Failte and the NITB (the Northern Ireland Tourist Board), through the Tourism Brand Ireland
initiative launched in 1996, help to tell another part of the story. The Tourism Brand Ireland
campaign was launched with various forms of advertising, including the web, to create the image
of Ireland as “a green and pleasant land.” (O’Maolain ) While the success of TBI is controversial
enough to be the subject of a paper in its own right, suffice it to say that TBI was the launch of
many web-based advertising initiatives aimed in particular at English speaking markets.
Heritage tourism has been an important component of the funding for Irish tourism physical plant
since at least 1975. The concept of heritage tourism is distinct from that of migration/genealogy
tourism. Heritage tourism has been characterized by Brown and Stevens:
-heritage attractions are indigenous and unique in their representation of an area’s
history
-heritage attractions enliven, enrich and animate those naturally occurring themes
and storylines upon which contemporary tourism marketing is based
-heritage attractions provide a relatively stable base of visitor activity
-heritage attractions have innate appeal for overseas markets
Pearce (1992) has done the most comprehensive analysis of distribution of ERDF funding by
types of tourism projects for the time period 1975-1988. He characterizes projects by such
factors as: infrastructure, accommodation, leisure complexes, marina facilities, sports facilities,
museums and historic centers, cultural and visitor centers, conference facilities, and other.
Pearce’s study shows several interesting comparative factors in regards to heritage tourism
funding by the ERDF in the countries of the European Union. Funding to Ireland for “museums,
historic centers, and restoration” was at the level of 24% for the time period 1975-1988. France
was the only other EU country that was near distribution in this range with a 23.9% allocation.
Other EU countries ranged from no funding in this area at all to a funding level of around 10% of
their ERDF tourism funds. Another interesting item in his study is the allocation to “cultural and
visitor centers”. Again, Ireland is the highest with an ERDF allocation of 34.8%. The next
highest allocation was that of the Netherlands with an allocation of 17.1%. Other EU countries
ranged from none to 6%. This level of funding for heritage and cultural centers continues to the
EU funding period of 1994-1999. As shown in the “Financial Information by sub-programme”
(above), the EU structural funding for “Natural and cultural heritage” is € 116 million out of the
total EU contribution of € 456 million. This represents approximately 25% of the total tourism
funding for this period again going toward the heritage tourism model. Unfortunately no
comparable studies exist for EU-wide heritage funding for this time period; the authors could
suggest this topic as an area for further investigation.
While it would be difficult to determine without EU-wide comparative data whether or not other
countries have adopted this heritage strategy, it is clear that Ireland was the only country with this
tourist strategy during the 1975-1988 period. As increases in the Irish tourism figures
demonstrate, clearly this strategy has assisted in tripling the number of tourists visiting Ireland
between 1988 and 1999.
Expansion of North American Markets
Bord Failte’s web site indicates that the UK is Ireland's largest tourism market with 3,199,000
visitors in 1998, followed by mainland Europe in second place with 1,255,000 visitors in 1998.
The authors have not identified any unequivocal reason why Britain is Ireland’s largest tourist
market, however it is most likely because of the proximity of Ireland to Britain and the large
numbers of people in the UK of Irish heritage. The Irish image campaign noted above would
explain the interest of mainland Europeans in visiting comparatively under-populated and green
Ireland.
Can Irish tourism expand in North America? We believe that the area of greatest possible
development for Irish tourism marketing may in fact be tourism market ranking third, North
America, with 858,000 visitors in 1998. Vast numbers of people of Irish descent live in North
America. For example, Canada’s 1991 census shows that 3,780,000 Canadians identified
themselves as being of Irish heritage. The Irish are the fourth largest ethnic group in Canada.
(Canada’s Peoples) Image tourism should be no less effective when aimed at North American
markets. Heritage tourism is not a strong influence towards tourism destinations in North
America, as it could be for destinations in Ireland. Have these influences been effective?
The authors conducted an analysis of Canadian visitors to Ireland between 1979 to 1999 using the
Statistics Canada serial publication International Travel: Travel between Canada and Other
Countries. (Guydosh and Volkman) They examined specifically “Visits, Expenditures and
Length of Stay of Canadian Residents in Selected Countries” and in particular Canadian visits to
Ireland for the years 1979-1999. They also noted visits to UK and Europe to use as bases for
comparison. As a similar English-speaking country, the UK is typically used for statistical
comparison to Ireland. The authors also wanted to compare with EU-wide trends.
Tables below report Canadian visits and expenditures to Ireland for the period 1979-1999. Data
was indexed using a percentage of respective 1979-1999 averages – 100 equals the country's
average for the period. The patterns for number of Canadian visitors and for expenditures by
Canadian visitors to Ireland do appear different from both patterns for number of visits and for
expenditures to either the UK or the entire European region. Although Canadian visits to Ireland
follow the approximately the same trends as visits to the UK and Europe in the period from 1979
to 1993, beginning around 1994 there is a definite increase in Canadian travel to Ireland in
comparison to that to the UK or Europe as a whole. This increase relative to other travel
continues through 1999. There is a similar change in the trend for Canadian expenditures on trips
to Ireland.
As visits (and expenditures) to the UK and to the European region continue a single trend
throughout the 1979-1999 period, while the trend line for visits (and expenditures) to Ireland
changes in mid-period, the authors conclude that the trend-line change represents an effect based
on tourism to Ireland rather than on Canadian tourism in general. Clearly Canadian travel is
increasing, but increasing greater in travel to Ireland.
Canadian Tourist Visits 1979-1999
200
180
160
140
IE-Vis/Ave
UK-Vis/Ave
EUR-Vis/Ave
120
100
80
60
40
20
19
99
19
97
19
95
19
93
19
91
19
89
19
87
19
85
19
83
19
81
19
79
0
Canadian Tourist Average Expenditure 1979-1999
300
250
200
IE-Spnd/Ave
UK-Spnd/Ave
EUR-Spnd/Ave
150
100
50
19
99
19
97
19
95
19
93
19
91
19
89
19
87
19
85
19
83
19
81
19
79
0
Source: Guydosh/Volkman -- Changing Trends
Why has Canadian travel to Ireland increased significantly in comparison to the base European
and UK travel? The authors cannot determine the answer to this question with certainty.
However, they can point to the pool of Canadians of Irish heritage that might have potential
interest in migration/genealogy visits to Ireland. They can also point to the improvements in
Ireland’s tourism structural plant brought about by the ERDF structural funding and Irish
government policy favoring tourism.
By 1990 tourism became recognized as an important contribution to the GDP and GNP of the
economy throughout the EU.
Ireland’s early recognition of the importance of
migration/genealogical tourism, image tourism, and heritage tourism led to increased funding of
the local tourism plant. One can note also that the 1994-1999 corresponds to the ERDF funding
period which saw € 116,000 million allocated from the ERDF to “Natural and cultural heritage”
with and additional € 39,000million matched from the Irish government. Overall the 1994-99
period saw € 806,000 million infused into the Irish tourism infrastructure.
One can surely conclude that the European Regional Development Funds have had an important
impact on the Irish tourism industry. A comparative increase in trends in Canadian tourism
points to the need for increased attention to the success of marketing of Irish tourism abroad.
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TOURISM IN IRELAND: OBSERVATIONS ON THE IMPACT OF EUROPEAN UNION
FUNDING AND MARKETING STRATEGIES
Track: Tourism and Hospitality Management
Karen E. Volkman
Ray M. Guydosh
School of Business and Economics
Plattsburgh State University
101 Broad Street
Plattsburgh, New York 12901
U.S.A.
ray.guydosh@plattsburgh.edu
karen.volkman@plattsburgh.edu
Phone: 518 564-4189
Fax: 518 564-3183