Why Ireland is struggling to attract tourists

Ireland may be the land of a hundred thousand welcomes, but right now there aren’t as many people there to experience it.

According to the World Tourism Organisation (UNWTO), Ireland welcomed 10,951,000 overseas holidaymakers in 2019, but only 6,300,000 in 2023. That means visitor numbers are down by around 42 per cent, making its post-pandemic recovery rate the slowest in Europe. Furthermore, arrivals for the first six months of 2024 show only a small increase of 4 per cent on 2023.

But why has the Irish tourism industry been so slow to bounce back? When the perception of Ireland has traditionally been fairly positive, what is keeping people away? A spokesman from Tourism Ireland says that “challenges include the cost of living crisis, which affects many of our overseas markets, capacity issues, along with competition from other destinations”.

Significantly, Tourism Ireland also says that the figures above may not give an accurate representation of numbers. “There is a new CSO (Central Statistics Office) methodology used to measure visitor figures, so the data is no longer comparable with historical data. The CSO now releases Inbound Tourism statistics, replacing the former Overseas Travel series and the Tourism and Travel series of the pre-Covid era. The Inbound Tourism series is compiled using a different sampling methodology and a different mode of data collection.”

Whichever way you look at the statistics, however, it seems that visitor numbers are down across the board. In the Summer 2024 Tourism Barometer published by Fáilte Ireland, research shows that visitor volumes are down in all markets and regions of Ireland.

The biggest factor is likely the most obvious – cost. Ireland has long had a reputation as an expensive country, and when pennies are being pinched in holidaymakers’ pockets, cheaper destinations are likely to win out. And the cost of living crisis isn’t just affecting visitors, but the businesses who are struggling with rising running costs.

“Ireland is never going to be the cheapest destination,” says Eoghan O’Mara Walsh, CEO of the Irish Tourism Industry Confederation. “And the rising costs mean we’re now becoming an expensive destination in which to do business. The big problem you hear from every hotel, restaurant or tourist attraction is the cost,” he says. “The costs of running a tourism and hospitality business are really high. So the business has two choices. One, they pass on all those extra costs to the consumer, but obviously that risks damaging demand. Or two, they absorb it to the bottom line and that obviously risks the viability of the business.”

An additional pressure is the increase of the VAT rate that largely affects the tourism and hospitality sector. In 2023, the VAT rate for some goods and services increased from 9 per cent back to 13.5 per cent, reversing a decision made in 2020 in order to help businesses during the pandemic. The decision to proceed with the planned reversal of this rate has caused outrage in the industry, among the restaurants, bars and hotels that are already struggling to make ends meet. Which, in a country where prices are already high, doesn’t bode well for the future.

“I think Ireland has become a more expensive country to visit over the last few years, like a lot of others,” says Johnny Duggan, owner of Taylor’s Bar and Thai Garden Galway.

“We have seen large increases in hotel and accommodation rates in most parts of the country, with Airbnb and Booking.com often mirroring these rates for private rentals. Government policy in Ireland also isn’t helping, where VAT rates are at 23 per cent on beverage and 13.5 per cent on food and accommodation, some of the higher sales taxes in Europe. In addition, we have one of the highest excise rates in Europe on alcohol, meaning that the price of a pint or a glass of wine is often up to four times more expensive than in the likes of Spain.”

And while Ireland can never compete with a Mediterranean destination in terms of value or sunshine, this past summer was a particularly damp squib. In the Fáilte Ireland Tourism Barometer, bad weather was cited by 51 per cent of the participants as a factor into poor performance in 2024.

But really, no one was ever coming to Ireland for a sun holiday. Particularly not the British, who are all too familiar with a relentlessly drizzly summer. However, the number of British visitors going to Ireland has also declined – the ONS reports that 3,439,000 Britons visited Ireland in 2023, down 28.1 per cent on 2019.

Likely, this could be put down to the same reasons the Irish are holidaying outside of the country – when you live in a miserable climate, the idea of a week in the sun with cheap booze and food will be hard to resist.

The price of accommodation in Ireland is another huge hurdle in terms of attracting visitors, particularly around big-ticket gigs like Coldplay, Taylor Swift and the upcoming Oasis concerts. As was the case in other cities, hotel rates in Dublin skyrocketed and accusations of price gouging flew, which is damaging to a city already considered costly.

But alongside the increase in costs that are driving up hotel rates, there’s also the lack of availability. “Capacity in our accommodation sector is an issue at peak and shoulder seasons, due to some hotels having taken on year-round contracts to accommodate people fleeing war or seeking asylum,” says Johnny Duggan. “There has been a massive displacement of people into Europe from various other areas over the past few years, leading to a reduction in accommodation capacity in some areas and regions.”

In March 2023, 34 per cent of the registered tourism bed stock was being used as emergency accommodation for refugees and asylum seekers. While this figure has now decreased to 10 per cent, there are knock-on effects from that period, with associated businesses like tourism attractions and cafés closing down.

However, it’s not all doom and gloom. The Fáilte Ireland Tourism Barometer states that 43 per cent of inbound tour operators have seen more visitors, and the US market, key for Irish tourism, is reportedly looking strong.

“While 2024 was relatively flat compared to 2023, in fact this was significantly ahead of pre-covid bookings in terms of numbers,” says Robert Kidd, founder of McKinlay Kidd, who specialise in holidays to Ireland. Its bookings for Ireland holidays are about 75 per cent up for 2024 compared to 2019, with their customers largely coming from England and North America. 2025 is looking buoyant, too.

Tourism Ireland shared a similar outlook for the upcoming year, with a focus on revenue, rather than numbers. “When comparing Jan to Aug for 2024 versus 2023, we see spending up by 17 per cent, trips up by 11 per cent and nights slightly down by 2 per cent. This is a positive indication of how the year will turn out.”

Will things turn around in the coming months? Only time will tell.