The reduction in the VAT rate to 9% on tourism related services is widely credited with getting the industry back on its feet in recent years. The industry is also benefiting right now from the weak euro relative to the dollar and pound sterling. Just yesterday figures from the DAA said passenger numbers at Dublin Airport increased by 15% in the first six months of the year.
Austin Hickey, a senior manager with BDO specialising in the hospitality and tourism sectors, said the industry had maintained the huge improvements in competitiveness that had been realised in the past ten years and it has been noted by visitors here. However, challenges remain, one of which is skills shortages. "It's the most serious issue facing the sector right now. It's important to emphasise that things are very positive in the industry right now and there's a lot of optimism for this year and next, but a recurring theme in our report was skills shortages," Mr Hickey said.
"Traditionally, the sector has relied on overseas workers. What it has suffered from is a lack of investment in training and a lack of capacity in terms of the numbers required. The Government has an ambitious target to create 50,000 jobs by 2023, 20,000 of which have been created since the reduction in the VAT rate, but there are concerns about the capacity to create the additional 30,000," Mr Hickey said.
On the 9% VAT rate, he said there was a strong desire that it be maintained. "It was a major boost in 2011 when it was introduced. It would pose a serious challenges if it was removed," he said. Mr Hickey explained that there was something of a three-tier recovery emerging in relation to the tourism industry nationally. "Dublin is flying. You'll see that any night in the capital. It's difficult to get a bed. As you move out to the larger towns and tourism centres, things are looking good, but in the rural economy, particularly the rural pub market, there are issues and challenges," he concluded.
MORNING BRIEFS - NAMA generated €3.5 billion in cash in the first half of 2015 according to its latest report. It brings to just over €27 billion the amount of cash it has generated since its inception. Operating profit in the first three months of the year came in at €103m. No impairment charge was recorded in the first quarter. The agency redeemed €2.75 billion in senior bonds in the first six months of the year.
*** Life sciences company Malin is to place almost four million shares for sale at €10.99 in order to raise €42m. It represents up to 10% of the company's issued share capital. Malin is also to invest $80m in biotech company Immunocore. It will fund that investment using cash reserves.
*** More evidence has emerged that casts doubts on the robustness of the Chinese economy and its ability to withstand adverse conditions. China's debt levels reached a record high in the month of June. Outstanding loans reached 207% of GDP, up from 125% in 2008. The figure, which covers business loans and household borrowing, rose 12% in the month of June compared with a year earlier - that is far faster than China's 7% rise in GDP.
*** Janet Yellen, the chair of the US Federal Reserve, is to continue her testimony before a committee of the US House of Representatives today. Yesterday, she said the Fed remains on track to raise interest rates this year. She said labour markets were expected to improve and turmoil abroad was unlikely to throw the economy off track. Rates in the US have been near zero for over six years now and policy makers are keen to get them back up again in order to normalise the financial environment.
*** Those companies reporting second quarter earnings this week will not have been happy to hear those words from Janet Yellen. Interest rate hikes tend to be accompanied by a strengthening currency and the strong dollar is already hurting earnings. Tonight Google is among the companies reporting - it makes half its revenue overseas and will be particularly badly affected by the dollar's standing.
*** Japanese and Australian stocks rose in response to the vote in favour of conditions attached to the next Greek bailout. The euro weakened relative to the dollar and sterling, although that might have something to do with noises from both the US and UK central banks about impending rate rises. This morning, the euro has fallen below $1.10 mark and just below the 70 pence mark.