Brand New Ireland? (New Directions in Tourism Analysis)

Brand New Ireland? Tourism, Development and National Identity in the Irish Republic

Michael Clancy

BRAND NEW IRELAND?

New Directions in Tourism Analysis Series Editor: Dimitri Ioannides, Missouri State University, USA Although tourism is becoming increasingly popular as both a taught subject and an area for empirical investigation, the theoretical underpinnings of many approaches have tended to be eclectic and somewhat underdeveloped. However, recent developments indicate that the field of tourism studies is beginning to develop in a more theoretically informed manner, but this has not yet been matched by current publications. The aim of this series is to fill this gap with high quality monographs or edited collections that seek to develop tourism analysis at both theoretical and substantive levels using approaches which are broadly derived from allied social science disciplines such as Sociology, Social Anthropology, Human and Social Geography, and Cultural Studies. As tourism studies covers a wide range of activities and sub fields, certain areas such as Hospitality Management and Business, which are already well provided for, would be excluded. The series will therefore fill a gap in the current overall pattern of publication. Suggested themes to be covered by the series, either singly or in combination, include—consumption; cultural change; development; gender; globalisation; political economy; social theory; sustainability. Also in the series Cultural Tourism and Sustainable Local Development Edited by Luigi Fusco Girard and Peter Nijkamp ISBN 978-0-7546-7391-0 Crisis Management in the Tourist Industry Beating the Odds? Edited by Christof Pforr and Peter Hosie ISBN 978-0-7546-7380-4 Landscape, Tourism, and Meaning Edited by Daniel C. Knudsen, Michelle M. Metro-Roland, Anne K. Soper and Charles E. Greer ISBN 978-0-7546-4943-4 Tourism and the Branded City Film and Identity on the Pacific Rim Stephanie Hemelryk Donald and John G. Gammack ISBN 978-0-7546-4829-1

Brand New Ireland? Tourism, Development and National Identity in the Irish Republic

MichAEL CLANcY University of Hartford, USA

© Michael Clancy 2009 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the publisher. Michael Clancy has asserted his right under the Copyright, Designs and Patents Act, 1988, to be identified as the author of this work. Published by Ashgate Publishing Limited Ashgate Publishing Company Wey Court East Suite 420 Union Road 101 Cherry Street Farnham Burlington Surrey, GU9 7PT VT 05401-4405 England USA www.ashgate.com British Library Cataloguing in Publication Data Clancy, Michael Brand new Ireland? : tourism, development and national identity in the Irish Republic. - (New directions in tourism analysis) 1. Tourism - Ireland 2. Tourism - Social aspects - Ireland 3. Tourism - Government policy - Ireland 4. National characteristics, Irish I. Title 338.4'791417 Library of Congress Cataloging-in-Publication Data Clancy, Michael. Brand new Ireland? : tourism, development and national identity in the Irish republic / by Michael Clancy. p. cm. Includes bibliographical references and index. ISBN 978-0-7546-7631-7 1. Tourism--Ireland. 2. Tourism--Social aspects--Ireland. 3. National characteristics, Irish. 4. Nationalism--Ireland. I. Title. G155.I7C52 2009 338.4'791417--dc22  ISBN 978 0 7546 7631 7 (hbk)

2009000936 ISBN 978-0-7546-9820-3 (ebk.V)

Contents

List of Figures List of Tables List of Abbreviations Acknowledgements

1

Introduction: Tourism, Development and National Identity

vii ix xi xiii

1

2 Development and National Identity under Globalization

15

3

The Celtic Tiger and Irish Tourism

31

4

State, Society and Tourism Development

61

5

Selling Ireland

81

6

Patterns of Development in Irish Tourism

99

7

Conclusion: Brand New Ireland?

Bibliography Index

127 141 157

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List of Figures

2.1 Analytical Model for Industrial Change 3.1 Overseas Arrivals and Receipts 3.2 World Tourism Growth, 1950-2020 3.3 Overseas Visitors (000s) by Reason for Visit, 1999-2006

24 43 44 46

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List of Tables

1.1 Irish Economic Performance, 1981-2005 6 1.2 Tourism Annual Average Growth Rates 1985-2005 10 3.1 Real Growth in GDP and GNP in Ireland, 1987-2007 (percent) 32 3.2 Irish and EU-15 Growth and Unemployment Rates, 1974-2005 33 3.3 Ireland’s Human Development Index, 1975-2005 34 3.4 Overseas Tourist Arrivals by Region of Origin, 1960-2005 (000s) 45 3.5 Summary of Government and Private Sector Reports on Irish Tourism, 1987 50 3.6 Tourism Budget Totals for 5-year Plan, 1989-1993 (millions of 1989 constant Irish pounds) 53 3.7 Budget for Operational Program for Tourism, 1994-1999 57 3.8 Irish International Tourism Arrivals and Receipts, GNP Growth, 2001-2007 59 6.1 Breakdown of Tourist Spending in Ireland, 2006 (excluding transportation) 100 6.2 World’s Largest Hotel Chains 2007 101 6.3 Approved Accommodation in Ireland, 1995-2006 106 6.4 Top Hotel Groups, Ireland, 2007 109 6.5 World’s Largest Airlines, 2007 (Passenger Kilometers Flown) 112 6.6 Ireland Air and Sea Passenger Statistics, 1985-2006 118

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List of Abbreviations

ASA Air Service Agreement BDC Buyer-driven Chain BES Business Expansion Scheme CAP Community Agriculture Policy CSO Central Statistics Office DBS Development Bureaucratic State DNS Developmental Network State EEC European Economic Community ERDF European Regional Development Fund ERM Exchange rate mechanism ESRI Economic and Social Research Institute EU European Union FAEI Federation of Aerospace Enterprises in Ireland FDI Foreign Direct Investment GCC Global commodity chain GDP Gross domestic product GDS Global Distribution System GNP Gross National Product GPA Guinness Peat Aviation GVC Global Value Chain IATA International Air Transport Association ICT Information and communications technology IDA Industrial Development Authority IFSC International Financial Services Centre IHF Irish Hotels Federation ITIC Irish Tourism Industry Confederation JIT Just in time LCC Low Cost Carrier LEADER Liaisons Entre Actions de Développement de l’ Economie Rurale MITI Ministry of International Trade and Industry MRO Maintenance, Repair and Overhaul NDP National Development Plan NESC National Economic and Social Council NIC Newly Industrialized Country NITB Northern Ireland Tourist Board NUTS Nomenclature of Territorial Units for Statistics OECD Organization for Economic Cooperation and Development

xii

Brand New Ireland?

OP Operational Programme OTMI Overseas Tourism Marketing Initiative PDC Producer-driven Chain RIB Rapid innovation-based RTA Regional Tourism Authorities TAPIG Tourism Action Plan Implementation Group TBI Tourism Brand Ireland TDC Technology-driven chain TNC Transnational Corporation TPRG Tourism Policy Review Group TSA Tourism Satellite Account UNDP United Nations Development Programme VAT Value Added Tax VFR Visiting Friends and Relatives

Acknowledgements

As with all books, this one would not be possible without the help and support of many, many people. I will undoubtedly omit some, but I trust you know who you are. I would first like to acknowledge the support of my institution, the University of Hartford, who supported this project through a year-long sabbatical leave in 2007-2008. I also benefited from a Vincent B. Coffin grant as well as research from the College of Arts and Science Buggy Funds. Support also came from my colleagues in the Department of Politics and Government, especially chair Jilda Aliotta, who has repeatedly let me slide as I have prioritized this project over many other department tasks. In Ireland I was fortunate to be granted affiliation at the Centre for International Studies at Dublin City University as well as the National Centre for Tourism Policy Studies at University College Limerick. Many thanks to Peadar Kirby and Jim Deegan respectively for their support. Barry Cannon at DCU spent a great deal of time making arrangements for me and helping me in many ways. I also benefited from library access at Trinity College Dublin and the National Library during my stay. Many people in the public and private sector in Ireland aided my research through candid, open-ended and often long interviews. While they are not quoted by name in the text, their names are listed at the end of the bibliography. All though some will not agree with my findings, they all helped me immensely in putting together the story of Irish tourism over the past two decades. In addition, I was aided by several people in both Fáilte Ireland and Tourism Ireland, who helped me in various informal ways. Particular thanks go to Emma Gorman at Tourism Ireland, Mary Fletcher and Mary Stack at Fáilte Ireland, as well as Suzie Rafter and Barbara McCormack at the Fáilte Ireland library and the staff at the Fáilte Ireland photographic library. Less formally, researching Ireland and Irish development was new to me. I benefited from informal conversations with Peadar Kirby, Jim Deegan, Barry Canon, Sean Ó Riain and Anne O’Brien, among others. All were extremely helpful and immensely patient regarding what had to be very naïve questions from me. At Ashgate, Val Rose and series editor Dimitri Ioannides supported this project from the start, offered me encouragement and helped forward along the publishing process. Others have also been especially helpful. Greg White read the book proposal and various portions of the book. His insights, as always, have been invaluable, as has his friendship. Eric Zuelow and Tim White have read sections on branding and national identity and have also provided me with useful feedback. Portions of the book have been presented as conference papers at the International

xiv

Brand New Ireland?

Studies Association convention and ISA-Northeast. I benefited from the comments of discussants and panel members there. My greatest debt has been to my family. Although my wife and I kept telling our 15- and 11-year-old sons Nico and Patrick that picking up and moving to Dublin for eight months would be a wonderful adventure, I know that this adventure was not of your choosing. While I still believe you both grew a great deal in the process, I also realize how disruptive it was to your lives. We all also missed my college-aged son Max during our stay in Ireland, and I realize that for him this was a different type of sacrifice, one of being separated from family for a long period of time. Lastly, I am especially grateful to my wife Karen, who basically stopped her professional life for eight months so I could research this book. She was more than a trooper all along the way, taking on many new responsibilities while keeping me in good spirits. She has offered me immense amounts of support in so many different ways as I have worked on this book. It simply would not have been possible to write without her love and encouragement. I dedicate this book to her, with my love. Michael Clancy 2009

Chapter 1

Introduction: Tourism, Development and National Identity

Globalization presents dual challenges for the nation-state in the early 21st century: National development and national identity. What role does the state have in achieving national development, or for that matter, is national development still possible? And, perhaps more fundamentally, how is a national identity maintained and reproduced, especially under conditions of rapid social and economic change? These questions are striking today in many parts of the world, from former eastern bloc countries and new nations in Eastern Europe, to rapidly developing countries in Asia and Latin America, to post-conflict and commodity rich nations in Africa. This book addresses these questions by examining the Republic of Ireland over the past two decades, with special attention given to the tourism sector. Ireland is a logical choice for two reasons: First, it constitutes a development “success story” having gone from one of the poorest countries in Western Europe in the mid-1980s to one of the richest in that span. Today it has the fourth highest GDP per capita in the world and is ranked fifth in the United Nations Human Development Index (UNDP 2007/8). Moreover, the country has achieved that status by embracing the world economy, high tech industries and foreign investment. As a result, Ireland has gained the attention of scholars and policy makers interested in developmental “lessons.” Second, due in part to this very economic transformation, along with accompanying social and economic changes, Ireland is facing challenges to its national identity. What does it mean to be Irish in 2008?

Tourism, Development and National Identity This book begins from two premises. One is that national development and national identity should be studied in tandem. Development constitutes a nationalist project. Development strategies—the package of public policies aimed at economic growth, increased revenues in state coffers, jobs growth and improved welfare for the population—are always undertaken in the name of the nation. The question of nationalism and national identity, in turn, is ongoing and will always be affected by social, economic and political changes associated with development. A second premise is that studying industries is particularly fruitful, and, more specifically, tourism has much to tell us about each topic. Tourism is, by many measures, the world’s largest single economic activity, accounting for as much as 10 percent of world economic output and one in 12 jobs (WTTC 2008). Despite the fact



Brand New Ireland?

that tourism has played a central role in Ireland’s economic transformation, it is surprisingly understudied. International tourism arrivals and receipts to Ireland between 1986 and 2007 grew faster than the overall economy. Yet most studies of the so-called “Celtic Tiger” tend to focus on leading high-tech industries such as computer software, pharmaceuticals and financial services. Undoubtedly they played a central role in the transformation of Ireland, but they only tell part of the story. Growth in tourism and travel is another key part and deserves attention as well. Beyond development, tourism and tourism marketing also tell us much about national identity. The Irish government has long been a leading international marketer of tourism and in the 1990s became a pioneer in the area of “nation branding.” Nation branding is a growing phenomenon among nation-states and constitutes a fruitful area in reading national identity formation. Although brands are presumably marketed to an external audience, the content of branding both says a great deal about the state’s vision of the nation—who it is or hopes to be—and also speaks to its own citizenry. In Ireland, tourism branding has been at the forefront of nation branding and therefore deserves attention. Indeed Tourism Ireland, Ltd., the government company charged with marketing Ireland abroad, introduced a brand update at the end of 2007 as a centerpiece of its current marketing strategy. The remainder of the chapter spells out these issues in more detail. The first part discusses development and national identity in an era of globalization. The second discusses Ireland as a case study and a third makes a more detailed case for studying tourism. These lead up to Chapter 2, which discusses theoretical approaches to each and specifies an analytical model

Globalization, Development and Reproducing the Nation Globalization is one of those murky yet seemingly all-powerful forces facing nations today. Definitions abound. O’Sullivan (2006, 1) is typical in suggesting that globalization “refers to the increasing interdependence and integration of economies, markets, nations and cultures.” In other words, what goes on in one nation not only delimits possibilities for others, but in fact is itself most likely connected to factors outside of its borders. Globalization also contains many facets. One can discuss the globalization of trade, finance, communications, technology and culture, for instance, yet each respective processes possess a pace and logic of their own (Appadurai 1996; Castells 1997). The debates surrounding globalization are many and, in many cases, already a bit tired. Can we measure globalization? Which measurements are most warranted? Is globalization really   In fact, the limited company represents the island of Ireland, in other words, both the Republic of Ireland and Northern Ireland. It was formalized in the wake of the Belfast Accords between North and South in 1998.

Introduction: Tourism, Development and National Identity



new? Is it good or bad? Who or what is driving it? Is it consistent with democracy/ equality/welfare? Can it be stopped? Brand New Ireland? is most immediately concerned with the implications of globalization for the nation. On the extremes, some claim that the nation-state as a political unit faces its final days due to the pressures of globalization. As long ago as 1969 Charles Kindleberger announced “the nation state is just about through as an economic unit” (cited in Wade 1996, 60). The response has been equally strong, with many contending the death of the nation-state as being premature. Others see nation-states not as a dying breed but as increasingly constrained by everything from ideology and identity (Huntington 2005), immigration (Sassen 1998), global markets (Ohmae 1995) to the environment (Conca 2005). This approach seems more balanced and also more promising, especially for purposes here. The increased global mobility of capital along with the internationalization of production undoubtedly constrain developmental choices made by governments much more today than even two decades ago. This is especially true for small, late developing economies. For many globalization boosters and critics alike, (Hirst and Thompson 1996; Fisher 2003; Stiglitz 2002; Wade 2003), these changing markets produce an imperative of orthodoxy: The global economy, which is experiencing an ever-growing rationalization and liberalization, is like a bus. Developing countries therefore face a stark choice. They can either get on the bus by rationalizing and liberalizing their own economy, government spending and regulatory frameworks, or they can stand by as it passes them by. The result is that the bulk of the development and globalization debate today is among pro and anti-globalization factions. Globalization is most commonly equated with neoliberalism and therefore the forces behind globalization (the WTO, IMF, World Bank, Thomas Friedman, Davos, the U.S. government) face off against opponents (anti-globalization protesters, Hugo Chavez, environmentalists, global justice movements, etc.). This is not to claim that there is no value to this line of research—it does, after all, directly address the politics of globalization— instead the point is simply that the debate is one dimensional. What it misses is what development in the early 21st century means. As McMichael (2000) and others have pointed out, globalization as development promises (truly or falsely) material benefits, wealth and westernization, yet states must sacrifice sovereignty and the ability to provide social safety nets in order to achieve it. Yet increasingly, the logic holds that there is but one path to such an outcome. In addition, much of the debate has been about the desirability of such an outcome while ignoring the political requisites necessary for achieving it. The question of national development today poses challenges for not only policy makers but for scholars as well. How do we understand national development in a globalizing world? To be sure, we may still use traditional indicators of economic development such as growth rates, GDP per capita, exports, etc., along with various social indicators. As Gereffi (1995) suggested, in a rapidly changing and fluid global economy, the primary unit of analysis students have been using—national development—may have lost its salience. Instead development is best considered



Brand New Ireland?

as nested in a basket of indicators and phenomena. O’Hearn (2001), among others, argues that local developmental change can only be understood within a larger regional or global context. This approach tells a different story of development, one not of national policy directly leading to development outcomes, but instead of incorporating comparison (McMichael 1990), where regional and global factors delimit possibilities. This remains a macro-oriented approach, and is consistent with regionalist approaches to development (Stallings 1995; Amin and Thrift 1996; Kumssa and McGee 2001). An alternative approach is one of studying sectors or industries. One method for doing so is examining the evolution of leading industries within the economy as part of mapping production profiles (Gourevitch 1986). Gereffi’s (1990) work on development patterns does just that, looking at the leading economic activities within a country, the extent to which they are inwardly or outwardly oriented, and identifying the leading firms in those industries. This approach is consistent with traditional understandings of the international division of labor, where wealthy countries concentrated on capital and technologically-intensive manufacturing activities while poor nations provided mainly commodities and some laborintensive manufacturing. Developmental progress under such a division took place when a country developed its own indigenous industries in, for instance, automobiles or consumer electronics. Import substitution programs did what they advertised, developing indigenous economic activities aimed at replacing earlier imported products. The shift to globally integrated production and distribution, however, changed all that. No longer was the goal to develop a wholly integrated (but often second rate and expensive) indigenous computer industry domestically; instead it was to develop a niche within the global computer industry. The goal of industrial development now became the goal of industrial upgrading within global production networks (Shapiro 1994; Evans 1995; Paus 2005). Also missing from this discussion of globalization is the more human element. For many analysts, globalization is primarily an economic phenomenon, and therefore can be measured through trade and monetary statistics. Stiglitz (2002, 9), for instance, defines globalization as: Fundamentally, it is the closer integration of the countries and peoples of the world which has been brought about by the enormous reduction of costs of transportation and communication, and the breaking down of artificial barriers to the flows of goods, services, capital, knowledge, and (to a lesser extent) people across borders.

Some of the more recent literature on globalization includes economistic aspects but goes further. Scholte (2002, 13-4), for instance, defines globalization as “the spread of transplanetary—and in recent times more particularly supraterritorial— connections between people. From this perspective, globalization involves reductions in barriers to transworld contacts.” In addition to its economic dimension, therefore, globalization involves a new spatiality that is “intimately

Introduction: Tourism, Development and National Identity



interlinked with shifts in patterns of knowledge, production, governance, identity, and social ecology” (Ibid., 15). Instead of experiencing their world as part of a community, locality or nation, “More people, more often, and more intensely engage with the world as a single place” (Ibid., 16). This explicitly raises the question of identity. Ibrahim (2004, 115) argues that globalization both homogenizes and fragments, challenging existing identities. This is especially true when existing communities face rapid social and economic change associated with globalization. Castells (1997) sees globalization and traditional identities to be inherently oppositional forces. While many claim that globalizing culture dominates and ultimately replaces indigenous culture and identity, however, he views resurging local identity as a source of resistance, a means of claiming and maintaining the unique self and sense of existing community and reacting against. Some go as far as to claim that globalization, in fact, is the true source various modern ethnic and nationalist conflicts (Anderson 1992). Yet such claims appear to be excessive and their direct correlation is unlikely. The relationship between globalization and identity is not, in fact, all together clear. This should not be surprising given that we know the scope and effects of globalization are temporally and spatially uneven. So, too, will be the effect on existing identities. Kennedy (2001, 1-2) asserts that despite the power of globalization, the nation and nationalism “continue to provide a pivotal axis around which individuals and collectivities frame their sense of cultural affiliation and feelings of belonging.” In other words, while ordinary people are increasingly exposed to global forces, their primary identity remains fixed to the nation. This may be the case, but we still need to address how ideas of the nation itself change. Undoubtedly, as globalization contributes to social, economic, environmental, cultural and demographic change, national identity must undergo reconceptualization. Most current understandings of national identity argue that re-imagining the nation takes place continually, but globalization may intensify this process while adding new actors and ultimately new possibilities. The task for scholars is to map the sources and substance of evolving national identity.

The Irish Case The Republic of Ireland constitutes an ideal case for studying globalization, development, and national identity. The country has been fundamentally transformed economically and socially over the past two decades. Economically, the “Celtic Tiger” was fueled by foreign investment and high-tech growth that revolutionized Ireland from one of the poorest countries in the EU-15 to one of its wealthiest. In the mid-1980s, Ireland’s unemployment rate was over 18 percent, more than double the European average. Despite extensive use of EEC regional development funds from Brussels, Ireland had one of the highest poverty rates in Europe. Real GDP growth between 1980 and 1986 was flat and in 1987 per capita

Brand New Ireland?



Table 1.1

Irish Economic Performance, 1981-2005

Period

1981-1986 1987-1993 1994-2000 2000-2005

Real GDP ( %)

2.1

4.8

9.0

5.2

Real GNP ( %)

0.1

4.1

8.4

4.2

Unemployment Rate (%)

13.8

15.2

9.5

4.3

2.5

2.7

3.4

Inflation (%)

Source: OECD; Government of Ireland, Central Statistics Office (CSO).

GDP was 63 percent of that of the European Union average (Breathnach 1998, 305). Meanwhile, overall debt was skyrocketing to 148 percent of GNP, with debt servicing eating up 12 percent of GNP and one-third of all tax revenues annually (NESC 1986). Irish debt servicing was among the highest in the industrialized world. Fueled by a new wave of foreign investment, low corporate tax rates, and a neocorporatist pact between government, business and labor, Ireland’s economic fortunes changed quickly. Ireland’s GDP growth outpaced every other OECD country between 1990 and 2000, growing by more than seven percent per year (Smith 2005, 39). During the last half of the 1990s, Irish economic growth also outpaced that of the East Asian Tigers of South Korea, Taiwan, Singapore and Hong Kong, as well as other dynamic economies in Asia such as Malaysia, Thailand and Indonesia. Although Ireland experienced its own high tech “bubble” and experienced a brief economic downturn in 2001-02, its economic growth has remained consistently higher than that of Western Europe. Aside from growth, the structure of the Irish economy was also transformed, led by what Ó Riain termed a “Developmental Network State” that was able to “nurture localized PostFordist networks of production and innovation within global investment flows by shaping the character of the various local connections to global technology and business networks” (2004, 4-5). As a result, by 2000 agriculture, long the backbone of the Irish economy, declined to just four percent of GDP; meanwhile services, including a booming ICT and financial services subsector, accounted for 58 percent (White 2001). By 2007, Ireland ranked fifth in the UNDP’s Human Development Index— behind Iceland, Norway, Australia and Canada respectively—with an adjusted per capita GDP of more than $38,000. Unemployment fell to below four percent by the early 2000s, and even after 2001 when the head of the Irish Central Bank claimed that the era of the Celtic Tiger was over, Ireland has continued to experience rapid economic growth fueled by a building boom, skyrocketing real estate values, and ever-increasing personal consumption. Table 1.1 summarizes improvements in

Introduction: Tourism, Development and National Identity



growth rates, unemployment and inflation. National debt fell to 81 percent of GDP by 1995 and 27.4 percent in 2005, one of the lowest among OECD countries. To be sure, economic dynamism in Ireland has not been without its problems. As Kuhling and Keohane (2007) point out, Irish people on average have the highest level of individual debt among OECD countries. Income inequality has increased and is now among the worst in the OECD (Kirby 2002). By the beginning of the current decade, Irish government social spending as a share of GDP ranked last by far among EU-15 members. The relative poverty rate remained near 17 percent, resembling the profile of post Soviet-bloc countries (CSO 2007). Social indicators also varied, with rates of binge drinking, depression and suicide all spiking. Dualism in health care and education has grown steadily, as those who can afford private options increasingly choose them over underfunded public ones. Although the Economist Intelligence Unit referred to Ireland as “the happiest country in the world” in 2004 (see Kuhling and Keohane 2007, 3), the label hides a myriad of social problems. Despite these challenges, the implications of this growth and change for Irish society cannot be overstated. After suffering through a series of stop-go growth cycles from the foundation of the state through the 1980s, Ireland has experienced the longest period of economic expansion in its history. Although inequality remains high (Allen 2000; Kirby 2002; Kirby and Murphy 2007), vast numbers of Irish citizens have become suddenly upwardly mobile. White (2001, 14) argues “[t]he success of the economy has also given a sense of confidence and pride to a nation who for so long lacked their own state and the capacity to improve their material standard of living.” Ireland’s developmental model has been predicated on globalization. Today Ireland possesses a very open economy with high levels of trade and foreign investment. Trade as a percentage of GDP increased from 50 percent in 1986 to more than 91 percent in 2000, ranking second highest among OECD countries after Luxembourg (OECD 2007). By 2005 the figure grew to 149 percent (AT Kearny/ Foreign Policy 2007). Ireland also became a full-fledged Newly Industrialized Country (NIC) during this period, with value added in industry moving from just over one quarter of the economy to more than 35 percent. Meanwhile agriculture, the traditional backbone of the Irish economy for many years, fell to just over 2 percent of the total value added in the economy by 2005 (Ibid.). Much of the success of the “Celtic Tiger” is also based on high-tech foreign investment. More than 1,000 transnational corporations (TNCs) have set up affiliates in Ireland, lured by access to the European Union, low corporate taxes, and a highly educated, Englishspeaking workforce (IDA 2007). By the 1990s Ireland became an export platform for many TNCs, especially those concentrated in the health care, electronics and computer software industries (O’Hearn 2001; Kirby 2002; Breathnach 1998). By 2000 more than 48 percent of all Irish workers in manufacturing worked for affiliates of TNCs, highest among OECD nations (OECD 2007). During that time Ireland has also become a hub in the international financial services sector.



Brand New Ireland?

As O’Sullivan (2006) summarizes, Ireland ranked as the world’s most globalized country from 2002-2005 according to the AT Kearney/Foreign Policy magazine globalization index. The index brings together 13 separate indicators of global integration, highlighting especially economic indicators but also including human development, political factors and technological integration. Although Ireland dropped to fifth in the 2007 index, it continued to rank higher in economic indicators of globalization. Explaining the Irish development experience has become a cottage industry in and of itself. Surveying existing literature, Kirby (2002) summarizes three positions: Mainstream, critical, and what he calls political economy approaches. Mainstream approaches stem from neoclassical economic theory and cite openness to trade and investment, industrial upgrading, and productivity gains in manufacturing as driving economic dynamism (Barry 1999; Barry and Crafts 1999; Sweeney 1999). Critical approaches, generally based in dependency and neo-Marxist theories, cite domination by foreign-owned firms, unequal distribution of economic benefits, and the tenuous future of Irish development in a highly globalized capitalist economy (O’Hearn 1998; 2000; 2001; Munck 1993; Allen 2000). The political economy model favored by Kirby (2002) and others adopts many aspects of the critical approach but allows ample room for firm strategies along with societal and state policy variables in accounting for outcomes. Favoring an interpretation that is at once more inductive and less theoretically constraining, this approach also more directly considers politics. O’Riain and O’Connell exemplify this approach in their claim that the Irish state made timely policy interventions that “…played a critical role in promoting the successful market participation of the new internationalized professional class…” (2000, 339). Kirby (2002, 140-4) offers similar conclusions that suggest the state “governed” the market through selective direct and indirect intervention in the form of tax policies, investment in education, provision of infrastructure, yet in doing so moved from a classic welfare state to what Cerny (2000) refers to a competition state. While promising, the political economy approach often begs political questions. How does the state move, in Evans’ (1995; 1992) words, from being the problem to solution when it comes to development? In other words, state development strategies may largely explain development outcomes, but this requires an explanation of state action itself. Ireland is no exception. During the 1970s and 1980s, when economic growth languished and debt skyrocketed, the Irish state was seen by many as being incapable of making effective economic policy. Years later, however, that same state is often credited for achieving economic success. Did the state change? If so, how do we explain it? State development policy is, of course, just one factor in explaining success. Others include demographics, such as Ireland’s young, increasingly educated, English-speaking workforce. As Breathnach (1998) points out, Ireland’s unique demographics within Europe meant that it added a large number of educated young people to the workforce in the late 1980s and 1990s, just in time to take advantage of regional and global economic trends, such as increased capital flows

Introduction: Tourism, Development and National Identity



from TNCs, especially U.S.-owned ones, in high technology sectors (O’Hearn 2001). This pattern was produced by a unique set of circumstances, including the globalization of the dot com revolution, the global boom in pharmaceuticals, and deepening of European economic integration (and related threat of regional protectionism). Meanwhile, domestically in Ireland, the signing of the first of several neocorporatist social pacts among previously feuding societal groups in 1987 created space for both a wider range of policy making and an improving business climate. The European factor also must not be overlooked. It contributed in at least two ways: First the European exchange rate mechanism (ERM) that preceded introduction of the Euro, helped achieve macroeconomic stability in Ireland. Second, billions of Euros in structural funds amounted to a massive development aid program and provided badly needed infrastructure and seed capital. An alternative approach for studying Irish development has focused on sectoral or industry studies. As both the discussion above on globalization along with Chapter 2 will lay out in detail, there are good reasons for utilizing this approach. Industry studies allow for linking the local to the global by focusing on leading industries, exploitation of niches and upgrading. With respect to the Irish development experience, industrial approaches have been utilized, and they tend to focus on the high tech sectors of computer hardware, software and ICT services, and health care. Ó Riain’s work (2004; 2000, Ó Riain and O’Connell 2000) on the software industry is the best known of the industry studies, but others have also explained much of Ireland’s developmental success through its ability to find niches and industrial upgrading in ICT, pharmaceuticals and medical device industries (Paus 2005; T. White forthcoming; M. White 2004; van Egeraat and Jacobson 2004; O’Malley and O’Gorman 2001; Green 2000). More recently, growing attention has gone into studying the financial services sector (M. White 2003). What these studies have in common is that they examine leading and dynamic sectors of the Irish economy within the larger context of global industries. In addition to explaining the development patterns that have emerged in Ireland over the past 20 years, a central, perhaps more crucial question is how that development has changed Irish national identity. Ireland today is a vastly different country than it was in the mid-1980s. In addition to economic transformation, the country has changed profoundly demographically, socially, religiously, and with the all-island peace process culminating in the 1998 Good Friday (Belfast) Accords, politically. Public opinion polls show that Irish people have become much more pro-Europe and identify with the European Union. Yet, simultaneously, they are much more attached to their country than other Europeans (O’Sullivan 2006, 40). Greater integration with Europe and rapid economic development, together with the peace accords with Northern Ireland, have led Ruane and Todd (2003) to hypothesize that the Irish are increasingly experiencing a “hybridity” of national identity. Undoubtedly, the nation remains a crucially important reference point for identity in Ireland, but exactly how that nation is conceived of deserves more attention.

Brand New Ireland?

10

Table 1.2

Tourism Annual Average Growth Rates 1985-2005

Period

Arrivals percent

Receipts percent

1986-1990

10.2

11.0

1991-1995

6.9

8.1

1996-2000

7.4

11.3

2001-2005

0.9

3.3

Total: 1987-2006

7.7

9.2

Source: Author’s calculations from CSO data.

Irish Tourism Although studying individual industries has been utilized in order to understand the dynamics of development under globalization, tourism has been left aside. This is surprising due to the sheer scope and size of Irish tourism, as well as its international orientation. International tourism arrivals to the Republic of Ireland more than tripled from 1986 to 2007, growing from less than 2 million visitors to 7.7 million. Earnings during that same time period nearly quintupled, growing from €927 million to just over €4.9 billion (Fáilte Ireland 2008). As Table 1.2 demonstrates, tourism growth gradually slowed down after 2000, yet remained impressive between the years 1986-2000. For the longer period of 1987-2006 international arrivals grew by an average of 7.65 percent annually while receipts grew by 9.2 percent. The most rapid growth took place between 1986 and 1990 when arrivals increased by average annual rates of 10.2 percent. Receipts grew by over 11 percent during that period. The contribution of tourism to the Irish economy is frequently underestimated. According to the national tourism agency, Fáilte Ireland (2006), tourism is the largest tradable service sector in Ireland. Tourism exports represented 3.4 percent of overall exports in 2005. Tourism had more than twice that share in the late 1980s, but that was prior to the TNC-led manufactured export boom in the 1990s. Including domestic tourism revenues and applying multiplier effects, the agency estimates that tourism accounts for some 3.8 percent of GNP in 2005. Employment figures are more difficult to estimate in that tourism cuts across several sectors of the economy, including accommodation, restaurants pubs, and tourism sites and attractions. The Irish government’s Central Statistics Office (CSO) does not estimate Irish tourism employment directly. Yet Fáilte Ireland and industry sources frequently cite figures from the CSO that simply total up employment from those sectors, thereby overestimating the total employment attributable to tourism. For instance, their totals of 2005 add those employed

Introduction: Tourism, Development and National Identity

11

in hotels, guesthouses, self catering accommodation, restaurants, non-licensed restaurants, licensed premises (bars and pubs) and tourism services and attractions to come up with a total of almost 246,000. This would represent about 14 percent of all those working in Ireland, most likely making tourism the country’s largest employer. Almost everyone close to the industry agrees that this number is inflated. Most estimate tourism to employ roughly 140,000 full time job equivalents. Nevertheless, despite this more sober, accurate estimate, tourism remains a central pillar of job creation. Finally, in addition to its importance to the economy as a whole, tourism is important to the state, accounting for some €2.5 billion in tax revenues in 2005 (Fáilte Ireland 2006). As subsequent chapters show, while the computer and pharmaceutical industries may have formed the backbone of the new development model for Ireland, tourism has served as a less high profile yet integral economic activity. Most significant, it generated high numbers of jobs during the early 1990s while overall economic recovery was nearly jobless. Moreover, tourism dynamism was not simply market driven. Instead, changes in state agencies and private sector peak associations helped to make the industry a higher priority within the overall Irish development strategy. A closer examination of development patterns within the accommodation and transport sectors also shows that Ireland has been able to achieve a certain level of industrial upgrading. In short, accounting for Irish development and globalization without paying attention to tourism is incomplete and inaccurate. Also central for this analysis, studying tourism aids in understanding the changing dynamics of national identity formation. Tourism marketing amounts to showcasing the nation, its land, history, and people—i.e., the very things that Kearns (2001, 886) argues national identities are built upon. The state is not the only player in providing tourist images, but it takes a leading role in this marketing. Therefore, examining how the state promotes the nation for tourism purposes provides a window into how the state imagines the nation itself. One might object that marketing materials, especially related to tourism, are just that and tell us nothing about national identity. Advertising is, after all, just advertising. Promotional materials seek first and foremost to earn money through drawing the attention of tourists and tourism providers. The content of such marketing may simply reflect what real or potential consumers desire, nothing more. Yet this is precisely the point. Outsiders frequently “know” nations largely through constructs experienced by tourism (or the possibility of tourism). Lindsay (2000) defines a brand as “the totality of the thoughts, feelings, associations and expectations that come to mind when a prospect or consumer is exposed to an entity’s name, logo, products, services, events, or any design or symbol representing them.” According to Clarke (2000), “[a] true brand exists as a collection of enduring intangible values in the mind of the user…and remain largely undetected by consumers.” Brands, therefore, are associational, with individuals (often unconsciously) assigning attributes of value to products, people, institutions, and places.

12

Brand New Ireland?

As the more thorough discussion on branding in Chapter 2 demonstrates, “nation branding” as a means to enhance national reputation abroad is not only on the rise; it is also oriented toward a home audience (Van Ham 2001). Although the desire of states to manage their reputations is not new (Aronczyk 2008), the utilization of modern marketing techniques is much more pronounced and systematic. As a result, in many cases branding and marketing materials present a novel set of data from which to examine the way in which the state constructs the nation. The Irish government, through its tourism board, first introduced “Tourism Brand Ireland” in 1996 and has revised the brand three times since. In late 2007 it rolled out the current brand: “Ireland: An Island of Unique Character and Characters.” In part this branding revision reflects the difficulty in marketing a rapidly changing country to foreign tourists. Analyzing the content of that branding is particularly promising in helping us understand the tensions and challenges of remaking national identity in an increasingly globalized society.

Outline of the Book This detailed case study of Irish tourism contributes to contemporary debates on development and national identity. Most commonly treated separately today, the two have in the past been considered in tandem (for example Young 1976). What is different here is the consideration of development and national identity within the larger context of globalization and nation branding. Ireland—with a rapidly developing and globalized economy—and Irish tourism present a useful case for investigating these issues. The next chapter interrogates the concepts of development, national identity and nation branding in detail, leading to the presentation of an analytic model for understanding development and national identity today. Chapters 3 and 4 are public policy chapters that first look at traditional understandings of the Celtic Tiger, and then integrate tourism into the story by examining the respective roles of the state and private sector in developing Ireland’s tourism sector. Chapter 4 takes an in depth view at the evolving relationship between the state and private sector in the tourism sector specifically. Institutional changes in the national tourist board, along with the emergence of more vocal private sector are highlighted. Other factors that contributed to that growth, especially European Union structural funds, are also discussed in detail. Overall, the chapter documents the changing patterns and performance of the Irish tourism sector in light of the analytic model spelled out in Chapter 2. Chapter 5 investigates the selling of Ireland as a tourism destination and its relationship to national identity. The chapter traces tourism marketing as a means of showcasing the nation and discusses how Ireland was portrayed to the world in earlier marketing programs. It shows that state officials “sold” Ireland very much as a developing country in that its people and place were portrayed as outside of

Introduction: Tourism, Development and National Identity

13

the modern world. The relationship between nation branding, visitor attitudes and identity is investigated more fully. Chapter 6 investigates developmental outcomes through an in depth examination of two subindustries of tourism: Airlines and accommodation. Finally, the closing chapter summarizes findings, reconsiders the model presented above, and discusses the future prospects of tourism in the Republic of Ireland. One question has to do with the current challenges confronting Irish tourism and is best understood as tourism after development. How does modern, cosmopolitan Ireland attract foreign tourists keen on finding a bucolic, traditional Ireland? It examines how tourism branding reflects (and fails to reflect) ongoing changes in Irish society? It assesses the sustainability of Tourism Brand Ireland and situations the implications of the Irish case for our broader understanding of development and national identity formation in the age of globalization.

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Chapter 2

Development and National Identity under Globalization

The previous chapter introduced the dual challenges of development and national identity under conditions of globalization. The task of this chapter is to flush out ideas and concepts associated with development and the nation. Three primary arguments are presented here: First is the idea that development is best understood at the industry level, and that examination of local industrial development must be considered within a larger global context. Second, despite some claims to the contrary, the state continues to play a central role in shaping development. The means by which it does so, however, has changed. Finally, the role of the state in development also reveals things about the manner in which it conceives of and promotes national identity, and therefore the two are best examined together. The growing use of nation branding is a relatively new tool for both promoting development but also constructing narratives of the nation. The discussion in Chapter 1 suggests that national development in the 21st century is best understood within a larger regional and global context. From the standpoint of development, the biggest challenges of globalization are the growing mobility of production and finance. Advances in transportation, technology, and management practices have contributed to the decentralization and increased mobility of production processes. Similarly, technological advances and deregulation have produced massive changes in global finance in the past three decades. In recent years direct foreign investment and portfolio investment have vastly outpaced that of global output and global trade. The rise of global production networks have decentralized many industries and created a new spatialization of economic activities. Where industries in the past spread horizontally, they now move vertically. This trend presents both challenges and opportunities for developing countries. Existing indigenous industries tend to fragment, leaving only specific links of the industrial production chain in tact while others move elsewhere. At the same time, the spatial fragmentation of industrial production means that new economic activities may arrive as specialization and comparative advantage become more fluid. The implication for students of national development is clear: Because global capitalism has changed, so must our models for understanding national development. In the past national development was often operationalized as moving up the international division of labor. Late developers looked to make transitions in their production profile from primary products, to moving into simple and then later more complex and technologically demanding manufacturing, and high-end

16

Brand New Ireland?

services. At the industrial level, this was done holistically. Although many analysts continue to view this as a typical trajectory of development (see for instance Paus 2005, 1-2 and O Riain 2004, 21), the story today is more complex. Now the more relevant question for late developers is not just which economic activities exist within the country but also which production processes take place within those economic activities. Because of this change toward global production, industry studies constitute the most fruitful means of studying modern development. Industry studies hold several advantages. First they are better able to capture developmental challenges and possibilities in a globalized economy. National development does not take place in a vacuum, but many global factors shaping local development possibilities exist at the industry level. Globalization is an uneven process and varies by economic activity due to factors such as capital and technology requirements, transportation and labor costs. As a result some globalized industries may undergo clustering in particular production processes, for instance, while others will not. A second reason for studying industries is that economic development policy tends to be made at the industry level. State officials and agencies prioritize some industries and de-emphasize others. Finally, industry studies allow for linking the local to the regional to the global by focusing on spatial specialization and industry dynamics. In recent years several monographs and comparative studies have utilized industry studies in order to better understand contemporary development patterns and outcomes (Shapiro 1994; Heeks 1996; Ernst 2000; Gereffi 1999; Bair and Gereffi 2003; Breznitz 2007; Ó Riain 2004). Analytically, one promising framework for examining changes in the new organization of global production is that of Global Commodity Chains (GCCs). Hopkins and Wallerstein (1986) define a commodity chain as “a network of labor and production processes whose end result is a finished commodity.” Commodity chains research therefore follows the temporal and spatial life of products, from natural resources, various production processes, wholesaling, marketing and consumption. By examining the organizational principles behind production processes, the research also highlights which links in the chain are most lucrative and powerful. In other words, at the heart of the research agenda is the question, “[w]here does the global commodity chain touch down geographically, why, and with what implications for the extraction or realization of an economic surplus?” (Appelbaum and Gereffi 1994, 43). Global commodity chains have their roots in materialist political economy, more specifically World Systems Theory. More recently, this body of research has paralleled that of Global Value Chains (GVC), which originated in business schools (Bair 2005; Gereffi et al. 2005). Both approaches begin by examining industries from the standpoint of global production systems. Each also assumes that a necessary, though not sufficient condition for improving many aspects of development—employment opportunities, a better standard of living, improvements in public health, welfare, infrastructure, education, etc.—is capturing and maintaining increased material benefits from the global economy.

Development and National Identity under Globalization

17

At the industry level, therefore, the task is to extract economic surplus at the local level, whether it be done by local subsidiaries of foreign firms, local private capital, or state-owned firms. Implicit in the GCC framework is that development is the result of not just gaining entry into global commodity chains but industrial upgrading or moving from less lucrative links in the chain to more lucrative links. Industrial upgrading is particularly important as leading global firms decentralize production not only geographically, but also organizationally. For example, a growing trend is for companies to externalize many practices that were once done in house. Originally popular with firms working in labor-intensive industries such as apparel, footwear and simple electronics, this practice has moved more recently into higher value added activities such as automobile production and computer hardware. Thus, Breznitz (2007) reports that such companies as Dell (laptops), Sun, Cisco and Microsoft’s Xbox division do not own any of their own manufacturing facilities but instead rely on a network of global suppliers. For potential suppliers, the key is to first to break into the commodity chain, and then to upgrade to more lucrative links. Bair (2005, 165) summarizes four types of industrial upgrading strategies, ranging from functional upgrading, product upgrading, process upgrading and inter-chain upgrading. Commodity chains contain three elements: A spatial structure, an input-output structure, and a governance structure. GCC researchers initially identified two archetypal governance structures: A producer-driven chain (PDC) and a buyerdriven chain (BDC). Producer-driven chains have been found in traditionallyorganized industries dominated by large manufacturers. These companies internalize core and peripheral activities along the chain, therefore controlling production processes and often distribution and marketing. As a result they garner a greater share of economic surplus. Found most commonly among capital intensive industries with high entry barriers and economies of scale, ownership and control by transnational corporations (TNCs) are present at most, if not all links along the chain. Globally integrated firms dominate in buyer-driven chains as well, but they are more commonly marketers, wholesalers and retailers who maintain an arms length relationship with producers. Through reliance on global sourcing strategies, much or all production in the industry is done in poor regions of the world and dominant firms act primarily as “big buyers” of the product. Global buyers concentrate on design and marketing within the industry. Meanwhile suppliers are frequently captive to the big traders and retailers, and, with competition fierce, are under constant pressure to reduce costs. Technology and capital requirements in BDCs tend to be low and few barriers to entry exist. Profit margins at many production nodes of the chain tend to be quite low and downward pressures on high proportionate labor costs predominate. More recent research within the GCC framework has uncovered alternative governance structures beyond PDCs and BDCs. Writing about the global computer software industry, for example, Ó Riain (2004) argues that neither archetype applies. He contends that within technology-driven commodity chains (TDCs),

18

Brand New Ireland?

creating the standards and platforms results in commanding a very high proportion of the value added across the industry as well as power in shaping the nature of the chain itself. Standards creators tend to lock in customers for the long term and also gain lucrative benefits through intellectual property rights. “Taken together, these characteristics mean the many ICT markets are characterized by increasing returns to the standards setters, often the first movers who are able to set the terms of the deals made throughout the commodity chain” (Ó Riain 2004, 80). Breznitz (2007), also writing about computer software as well as what he refers to as other rapid innovation-based (RIB) industries, concurs that the technology itself is often the product, but suggests that because technological change takes place rapidly and innovation is not necessarily cumulative, breaking into new niches of such industries is possible for late developers. The larger point for purposes here is that industries constitute a fruitful area for studying development under globalization because they highlight not just the general economic activities late developers may become engaged in, but more precisely the particular nodes of that industry and the logic of accumulation. The global organization of individual industries, however, varies, most commonly due to industry characteristics such as capital needs, technological intensity and rate of innovation, entry and exit barriers, mobility, and regulation. Therefore the task for researchers is to map specific industries and sectors at the global and local level in order to highlight these features. This allows us to better understand dynamics of the globalization of the economy as well as functional and spatial specialization. It should be pointed out immediately that tourism cannot have the same global spatial diffusion as many other industries. First, as is the case with most consumer services, production and consumption take place simultaneously. The product cannot be stored. Second is the requirement of localization. In its purest form, national tourism requires a physical visit to the nation in question. One cannot outsource the essence of Irish tourism to China. This isn’t to deny that in the postmodern age of simulacra and imitation this hasn’t been tried, and with considerable success—Irish pubs in Singapore, New York, New York casino on the Las Vegas Strip, Disney’s Small World, company-owned Caribbean islands for cruise ship passengers, to name a few—yet more than most industries, tourism tends to contain a relatively coherent and localized package of goods and services. On the other, tourism has always been much more fragmented than old, vertically integrated products. Although it is singularly consumed, the product itself is the result of multiple producers, suppliers and labor processes. Finally, under the umbrella of global tourism there are ever growing forms of niche tourism ranging from ecotourism, roots tourism, heritage tourism, activity-based tourism, adventure tourism and so on. While countries may specialize in one or more of these niches, it is still the material aspect of tourism that is of interest here. Tourism is not a single industry but instead is made up of several sub-industries. Tourism spending contains at least five major categories: Access transport (often not included in tourism statistics,) accommodation, food and drink, shopping, and attractions. To this add other miscellaneous spending and internal transportation.

Development and National Identity under Globalization

19

Depending on the sending and receiving market, these goods and services are packaged together or sold separately with varying frequency, although overall packaging appears to be decreasing. Again, unlike other industries, where various countries might specialize in one or two particular links of the global chain, virtually all links will be found in each country. The governance structure, however, may still be global due to international supplying and foreign ownership, each of which has a profound impact on the distribution of benefits derived from the industry. Because transportation and accommodation make up the largest proportion of tourism, this study will concentrate on these two sub-industries. Within the two broad areas, the bulk of attention will be given to airlines in the transportation sector and hotels in the accommodation sector. The task, consistent with GCC analysis of other industries, is to map the respective governance structures of each commodity chain globally and locally in order to highlight developmental possibilities over time. Particular attention will be given to efforts toward industrial upgrading.

The State and Development under Globalization The trajectory of global and local industrial development, of course, does not take place in a vacuum. Even though the economic forces of globalization are quite powerful, state action remains crucial in accounting for developmental outcomes. For at least the past two decades, the role of the state has been central to development studies. Much of this literature followed social science urgings in the 1980s to “bring the state back in” (Evans, et al. 1985) as well as early neo-statist studies of development in East Asia (Johnson 1982; Amsden 1989; 2003; Wade 1990; 1992; Woo-Cumings 1999). As Breznitz (2007) points out, this literature owes a debt not only to Weber and Marx, but also to the work of Alexander Gerschenkron (1962) and his work on late developing countries. Late developers face particular difficulties, including barriers to entry and competing with economies with better resources and organization. Gerschenkron, however, contends that state policy makers can use advantages associated with late development such as knowing the market and no prior sunken costs in now obsolete technology and as a result often race by those that developed earlier. Late national development, therefore, looks different than earlier development, and requires state intervention. The state, according to this view, may effectively intervene in the market in order to foster economic development, but only under certain conditions. One prerequisite is power. Every economic system, no matter how backwards, creates winners and losers, and earlier winners constitute a powerful force for the status quo. The state must be able to successfully confront—or work with—these forces in order to reorient the economic system. In other words it requires autonomy from powerful societal actors in order to put its program into effect. Such autonomy may or may not exist or alternatively, the state may itself be a main beneficiary of the existing economic system and therefore uninterested in structural economic change. A second requirement is institutional capacity. State personnel must

20

Brand New Ireland?

possess economic and planning expertise as well as direct or indirect command over resources. In other words, in order to know the market, the state must develop effective functional bureaucratic agencies staffed with professionals. Although subsequent work on developmental states have identified various strategies and political coalitions in cases of successful development, virtually all cite Weberian bureaucracies marked by rationalism, functional expertise and meritocracy as well as highly coherent development strategies originating from these bureaucracies. The state has therefore become a central variable—or set of variables—in recent development literature, especially among success stories. Although neoliberal accounts frequently focus upon what the state does not do while allowing market forces to operate unencumbered, most studies of success stories such as the so-called East Asian Tigers point to powerful and effective states that have successfully promoted economic development. Yet several problems remain. As Breznitz (2007) points out, most studies identify a single model of industrial transformation: This is a strategy of state-led development based on long term industrial planning and the nurturing of a few large industrial conglomerates operating across a broad array of industries with some managed competition (2007, 14).

Although this summary misses some of the nuances of the literature, it raises the question as to whether multiple possibilities exist in terms of state organization and specific action. This question is all the more important as globalization intensifies. Much of the developmental state literature of the 1980s and 1990s chronicled successful economic development from the 1950s through the 1980s, when global conditions were more open to state interventionism and various paths to industrial transformation. This statist literature challenged previously dominant modernization and dependency theory approaches to development by suggesting late development was possible if states intervened in a manner that “governed the market” (Wade 1990). Global economic conditions, however, have changed dramatically in the last 20 years. Much of the literature on globalization argues that states are increasingly squeezed by powerful economic forces ranging from global markets to international institutions. As a result, the range of policy options narrows and fiscal austerity and market-oriented development strategies prevail. For authors such as Cerny (2000; 1995), Rodrik (1997), Strange (1996) and McMichael (1996), globalization essentially neutralizes the state due to the market imperative. No longer is it able to serve as the welfare protector of its citizenry. To the contrary, the modern state must cut taxes and shed welfare provisions in the name of competitiveness in the global economy. The resulting “competition state” (Cerny 1995; 1990) is lean and market oriented in the name of attracting increasingly mobile global finance and industry. For adherents to this view, globalization constrains developmental choice and action toward market orthodoxy.

Development and National Identity under Globalization

21

Some analysts, however, challenge this view, arguing that under globalization, states continue to possess significant developmental choices. Breznitz (2007) goes further than most, contending the globalization has actually increased the range of policy options for late developers. He is critical of previous statist literature, arguing it is overly structuralist in nature: States exhibiting particular structural characteristics (state autonomy and capacity) are able to adopt specific development strategies and those without such characteristics are not (Breznitz 2007, 14-16). His study of RIB industries in three countries shows that 1) very different state structures have been able to foster and promote indigenous RIB industries through different strategies, in large part because 2) the rate of technological innovation in such industries is so rapid under globalization that while old fashioned state planning does not work, barriers to entry for indigenous start-up firms are surprisingly low. As a result the role of the state varies, but is quite different than the heavy handed state intervention of two or three decades ago. While Breznitz’s model may be criticized on a couple of accounts—first, by emphasizing choice it ignores structural variables such as the need for a certain level of infrastructure and educational and technical expertise in society and second its conclusions, however valid, should be confined to RIB industries—his analysis raises important questions for development studies. Particularly important is the nature of the state among late developers. Is there simply one model of state-led development under globalization? While acknowledging much of the neo-statist literature and its new emphasis on bureaucratic flexibility and networking with local and international actors, Breznitz contends that within this literature the state is still conceived of a unitary actor and that it is portrayed as either being a success or failure. That success or failure, in turn, leads one to label a state as “developmental” or not in a post hoc manner (Breznitz 2007, 18). What is important here both empirically and for theory building is the need to consider the nature of the state and its relationship to key actors in a more inductive and open-ended manner. Although globalization poses new challenges for states in late developing countries, they still possess a range of policy instruments with which to promote economic growth. Although it is undoubtedly the case that global capital and industry is much more mobile than in the past, making the threat of exit all the more real, we must not therefore assume that the state is now ineffectual in promoting development, or by doing so through more than one (neoliberal) model. For students of late development, three things are required here: First is to examine state-society relations in a more nuanced manner. Much of earlier statist literature considers state autonomy by examining the relationship between a unitary state and a unitary business class. At times the latter is broken down into modern/traditional, industrial/agricultural or domestic/international, but the point remains that this approach is overly simplistic. More useful is to disaggregate both the state and powerful interests in society further, most commonly by sector. In addition, as Evans (1995; 1992) points out, autonomy may in and of itself, not be sufficient for developmental states to successfully promote their programs. In addition bureaucrats must be connected or embedded in society or there will be

22

Brand New Ireland?

a danger of predation. Working from Evans, Ó Riain (2004, 30-3) considers state autonomy and embeddedness on a continuum, arguing that too much autonomy can lead to either ineffectiveness, predation, or exclusionary development while too much embeddedness contributes to politicized capitalism. Instead he conceives of a “flexible development state” or “developmental network state” that adapts to rapidly changing economic conditions, industry changes, and political coalitions. The role of the developmental network state is quite different than that of earlier developmental states due to globalization and the specific requirements of industries and firms. This model is similar to Castells’ (1997) and Ansell’s (2000) idea of a networked polity where the relationship between state and society is more complimentary in fostering development: Developmental states achieve their goals in the contemporary era not by taking on the tasks of development, but rather by shaping the capabilities of society and the markets to do so (Ó Riain 2004, 23).

The first requirement, then, is to consider the nature of state-society relations in a more open-ended manner, inquiring into how state policy does or does not fit together with private sector activity through identifying and examining networks. This leads to the second requirement, the need to disaggregate the state by function and to consider bureaucratic autonomy and capacity as well as broader internal state politics. Calling the state developmentalist ignores a more complex set of relationships within and across the state apparatus. Many studies of developmental states in fact identify powerful and autonomous bureaucracies and agencies (e.g. MITI in Japan, the IDA in Ireland) within the state apparatus that gain autonomy and power from that larger public sector. Part of the task, then, is to examine the politics of the public sector as well as state-society politics. How do particular agencies evolve, gain access to key resources and personnel, and what is their relationship to other such agencies within the state? The final requirement for analysts is to pay attention to sectors and industries. Generalizing about the state or state-societal relations often misses important nuances, because public and private sector organization varies by economic activity. As Cerny (1995) points out the state is both a “civic association” and an “enterprise association.” We are primarily concerned with its latter function here, but even within this realm, state agencies tend to vary by function. Many (ministry for agriculture, ministry for fishing) are devoted to one or two particular economic activities while others target sectors (such as industry or transport). It is inevitable that ministries and agencies will possess different levels of technical expertise, resources, and general clout. Moreover they will compete for all of these things with other bureaucracies. State agencies are frequently organized by function, and so are societal groups, especially economic ones. Although most countries possess general business and labor organizations, many contacts with state agencies take place at lower levels, in many cases sector and industry. We need to therefore pay attention to the trajectory of these organizations, their power, expertise and

Development and National Identity under Globalization

23

resources. Industry attributes themselves will often dictate these features, as some industries with high entry barriers and capital intensity will produce few firms while others may do precisely the opposite. In Ireland, for example, the state development agency Industrial Development Authority (IDA) long ago singled out pharmaceuticals and computer software as two industries it wanted to promote and actively sought out leading global firms to locate in the country. By the turn of the century it had done so, but the two industries looked quite different with a small number of very large firms in pharmaceuticals and contrastingly many smaller startups in software. Add to this mix the entrance and exit of outside multinational enterprises, and their own alliances or rivalries with leading domestic enterprises. The final point to make regarding the state and societal actors in the process of late development is that many relationships may lead to success. Ó Riain (2004) contrasts what he calls the earlier model of the Development Bureaucratic State (DBS) found most commonly in Asia from the 1950s through the 1980s with what he refers to as a Developmental Network State (DNS) today. The DBS refers to a state that either directs development directly, channels a weaker private sector into it, or some combination thereof. In contrast the DNS creates a synergy with private sector actors by providing a range of services, activities and resources that foster innovation and growth. Missing from this version of a development state, however, is the possibility of conflict. In fact developmental success may result from not simply synergy, but also conflict and struggles for power. In other words, the task for researchers is to uncover the various arrangements between state agencies and private sector actors, and detail how their interaction over time produces particular developmental outcomes. The key factors affecting these outcomes are summarized in Figure 2.1. They demonstrate that developmental outcomes are a product of a complex set of variables involving the structure of international industry, the capabilities of state bodies and local private sector actors, and the relationships between state agencies, local firms, and in many cases global firms.

Globalization, Development, and the Question of National Identity Development is an end unto itself, but it is also part of modernization and nation building. The broader realm of building the nation reveals a never-ending challenge for the state: Maintaining its own legitimacy and loyalty among its citizens. This becomes even more problematic under globalization. If states promote development through embracing global markets, do they sacrifice sovereignty and control of their own economy? Moreover, in an age of increasingly mobile capital and industry, do states risk their own political legitimacy by dismantling the welfare state in the name of attracting this investment? While a great deal has been written about the developmental consequences of replacing the welfare state with the competition state, less attention has been given to the question of the nation. In addition to weakening the economic power of the state, globalization

Brand New Ireland?

24

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Figure 2.1

Analytical Model for Industrial Change

challenges the link between state and citizen in other ways (Williams 1999). One is by promoting an ever growing set of additional overlapping identities, from local and group to ethnic and racial affiliation, religious and gender, supranational and consumerist identities. The same question pertains to those often cited as successful developers through globalization. For such countries there is still a need to renegotiate the relationship between state and society. Most often this is done through the language of the nation. National identity is a complex phenomenon. Although early studies of nationalism see “the nation” as fixed or given, more recent work views national identity as a contingent, and political project. Modernists such as Gellner (1983) and Hobsbawm (1990) place the rise of nationalism within a historical context, linking it with capitalism and advances in technology. Benedict Anderson (1991; 1992)

Development and National Identity under Globalization

25

introduces the power of narrative by calling the national community “imagined,” but he, too, situates the rise of nationalism to capitalism and technological advances. More recently, scholars have pursued the power of mythology further, but are still divided. For some ethno-symbolists such as Anthony Smith (1991; 2002) and Walker Connor (1994), modern myths and symbols related back to real grounded pasts. They are related to ancient depths, and they hit on important preexisting, pre-modern attachments and inheritances. Modern nationalist symbols invoke a sense of community precisely because they refer to something actually existing from the past. In this sense, nationalist imaginaries only work if they hit key and real historical notes (English 2006, 489; Zuelow 2007). Others, including social constructivists, contend that national identity formation is much more contingent and open ended (Kornprobst 2005). Nations are made, not given, and their making is produced by ideas. National identity in this view need not have much in common with actual history. If communities are imagined, that imagination can take countless forms. Most important, it tends to be invoked on one hand as part of a political project. Common history as we know it is embellished or even invented. In addition, national identity becomes routinized into everyday practices and popular culture (Billig 1995). The idea of national identity as a social construction is particularly attractive for several reasons. First, it is open ended, not in suggesting that any nation can be anything, but rather that the particular content of national identity is fluid and multifaceted. Certainly the most basic question of national identity is over who exactly is the nation, but it is by no means the only question. Nationalism constitutes a larger narrative of identity, community and often political project. The approach is most useful in that it views national identity formation as contingent in form, content and evolution. The content of nationalism therefore is neither given nor fixed. Instead it is best understood as situated in a specific political, social and historical context and embodied in narratives. This is most evident in the narratives of the nation and their relationship to history. As Cronin (1999, 27) argues, The mythology will present an image of the nation that, while not existing, will be a common currency for the majority of society, and may often be formalized through civic commemoration. The basic aim of the mythical or imagined nationalism was to motivate the whole of society around the idea of the nation.

Although there are many authors of the nation, the state remains one of the most prominent. State actors have a particular stake in promoting national identity because by furthering the idea of a political community as the nation, the ideology contributes to legitimacy and loyalty. In addition to participating in crucial activities such as paying taxes and military service, citizen consent is generated through identification with the nation. Lloyd suggests “control of narratives is a crucial function of the state apparatus since its political and legal frameworks can only gain consent and legitimacy if the tale they tell monopolizes the field of probabilities” (1993, 6).

26

Brand New Ireland?

As Williams (1999) points out, the fundamental idea of nationalist movements is to make the nation (political community) and state coextensive by first identifying the community and then by claiming the right of self governance. Once done, however, nationalist ideology demands maintenance through reformulation, especially during periods of social, political or economic upheaval. Hence we see a rise in nationalist rhetoric during periods of diplomatic crisis and war, or periods of mass migration. To suggest that globalization and nationalism are opposites, however, oversimplifies. Globalization is best thought of as an increase in global flows of all types, including ideas and ideology, leading to what Giddens (1990: 64) calls an “intensification of social relations” across the globe. Nationalism as an ideology therefore is part of these flows, which helps to explain growing phenomena such as long distance nationalism and diaspora patriotism. Yet it does so alongside of other competing as well as complementary ideas, ideologies and potential communities. Within this backdrop of globalization, the state possesses all the more need to promote the idea of political community as the nation. It does so in a variety of ways, including education, the honoring of holidays, and the creation of memorabilia such as flags and monuments. The task for scholars is to read the form and content of the state’s nationalist project as a continuing political strategy of constructing identity. Among the tools states have been utilizing in recent years is the growing practice of nation branding. As Chapter 1 points out, branding involves marketing, but is done in a more subtle manner than advertising. In fact, brand consultant Whisper Brand (2008) argues that branding can replace advertising: “At Whisper, brand strategy boils down to eliminating the need for advertising and PR…By establishing an engaging brand that consumers are drawn to, you can stop chasing them.” Peter Van Ham (2008; 2002), one of the first social scientists to study branding as it applies to nations, points out that in today’s modern consumerdriven world, individuals are bombarded by advertising and marketing on an almost continual basis. Not only is it companies and products that are branded and marketed; so too are individuals, groups and increasingly nations. States utilize modern marketing techniques, including branding, for different reasons. Olins (1999) argues that in today’s globalized world—with intense competition for foreign and domestic investment, tourists and consumers—states must engage in the same type of brand cultivation that companies do. Similarly Van Ham (2008) contends that nation branding is part of the rise of the competition state under globalization, as countries compete with each other for investment capital and tourists. States also promote branding for diplomatic reasons, as fostering good feelings about particular nation-states may serve to further broader political goals (Quelch and Jocz 2005). In addition to external consumption, branding is increasingly oriented toward internal audiences. According to Van Ham (2002), while traditional product branding is largely about selling products to consumers and gaining market share, today branding is increasingly inwardly focused toward employees and investors. In an age of buyouts, layoffs, spinoffs and internationalization, company branding

Development and National Identity under Globalization

27

requirements change and involve providing an identity to their own staff. For Olins (1999, 255), “Companies under such centrifugal pressure require branding to lend coherence, cohesion and a sense of unity” to their own employees and investors. The same point holds true for the nation-state. States utilize branding for an external audience of diplomats, investors, international bankers and the global public at large, but another important audience is their own citizens. Branding is simply another means through which the state narrates the nation. Branding and nationalism, in fact, have much in common. The parallels between national identity and nation branding or national image formulation are particularly striking. Both are about constructing meaning. Holt (2004) suggests that brands “perform identity myths” that address desires and anxieties, which is also true for nationalism. In addition, both are Janus faced, looking at once backwards and forwards, and both are relational. Brian Fanning (2006) argues that conceiving of and maintaining a brand requires answering four questions: • • • •

Where are we now? How did we get here? Where do we want to be? How do we get there?

The construction and maintenance of national identity centers on a series of similar questions: • • • •

Who are members of the community? How do we distinguish ourselves from others not in the group? Where did we come from? Where are we going?

Kornprobst (2005) argues that this dialogue is ongoing and is always relative. The answer to the first two questions always involves answering the latter two. Moreover, the answer to all four requires stories, most often stories of struggles against or differentiation from an “other.” Nation branding, or what Simon Anholt, one of the gurus of the practice now called “competitive identity” (2007), is a particular form of place branding, offering states a modern set of tools for narrating the nation. Yet two additional factors stand out: One is that nation branding is both old and new. Considered as reputation, nation-states have always had reputations and in some ways have sought to shape that reputation (Aronczyk 2007; 2008). What is new is that state elites are increasingly turning the maintenance of this aspect of statecraft to private consultants and marketing science. Two, following from the first, is that even before such consultants step in the door, nations already possess de facto brands (Van Ham 2007; Aronczyk 2008). Active branding is an effort at manipulating already existing brands in order to position the nation-state in an ever more competitive global political and economic system.

28

Brand New Ireland?

Since the 1990s more and more governments have embarked on branding campaigns, including Great Britain (Cool Britannia), South Africa (Alive With Possibility!), Egypt (Egypt: Keep Your Eye on It), South Korea (Dynamic Korea) and New Zealand (New Zealand, 100 percent Pure). The official brand, or what Anholt (2007, 5) calls the “brand identity,” however, is different than the “brand image.” The former is the slogan or logo such as those noted above, and is frequently the product of private consultants. The brand image, however, is what is truly important, because it is what consumers and observers perceive to be the brand. It is the background information through which other messages about the country are taken in: “Brand image is the context in which messages are received: It’s not the message itself” (Anholt 2007, 5). Brand identity (or official branding) therefore attempts to influence brand image. States may choose various areas in which they market the nation, but in practice tourism is a common area for branding. Gertner (2007, 5) points out that, “often the most visible aspect of a country’s brand, tourism is usually also the most competent marketing force. The tourist’s “idea” of the nation creates a visual image of the country which can impact many other areas of the nation’s performance.” Destinations already possess reputations for tourists. Tourism branding, then, is simply an effort to manage that reputation. Nuttavuthisit (2007) for instance, traces the government of Thailand’s efforts to utilize a brand strategy in order to replace the country’s image as a sex tourism haven with more positive imagery. Aronczyk (2008, 53) conducted interviews of more than 20 private sector officials involved in nation branding, and found that two themes or strategies predominate in branding campaigns: Normalcy and peacefulness. The latter, in particular, is emphasized in countries such as South Africa or in the Balkans that have experienced war, violence, and instability and is fairly straight forward. Normalcy is more complex and requires us to consider audience. Because most states adopt branding strategies in order to attract multinational investment and tourists first and foremost, it is their conception of normal that their country must be measured against. Traditionally the bulk of that audience has been Western. For nations that are not well known in the West or whose reputation (latent brand) has been relatively negative, the urgency is to show that their country is in fact very much like the West (or constructed sense of the West). For states that utilize nation branding, this brand strategy most commonly dovetails with broader nationalist ideology in that the national project involves material progress and modernization. Branding therefore not only attempts to reach the core audience of investors and tourists, but also sends a message to citizens regarding the states vision of the future nation. But what of nations that are already “peaceful” and “normal?” For them the task is more complicated in that it involves distinguishing themselves from nations that are very much like them. Great Britain and Belgium are examples of where states conceive of their nation as “normal” and yet need the power of branding to distinguish them from others. As a result, each utilized campaigns that emphasized straying from normal to emphasize uniqueness in one form or another. These

Development and National Identity under Globalization

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examples point to a key feature of nation branding: Because its messaging takes place in a crowded consumer marketplace, the primary task of the brand strategy involves distinguishing the product, in this case the nation. When brand repair is not the primary task, this may involve various strategies, from promoting a sense of coolness and innovation to alternatively evoking a unique sense of timelessness and the past. The final point regarding nation branding pertains to audience. As the discussion above points out, at least two distinct audiences for branding the nation may be identified. The first is external and is the nominal target of the brand. Including tourists, investors, governments, and broader global public opinion, this audience is invited to consume a particular narrative associated with the nation in question. This narrative competes with, and is meant to supplant, existing narratives built on news, popular culture, literature and general knowledge held by this audience. The second audience is made up of the country’s citizens themselves, but in addition to constituting an audience for internal branding (consumers), they also play a key role as distributors of the brand. Brands are not the same as advertising, and as the quote from the Whisper Brand web site above indicates, brand consultants utilize branding strategies as an alternative to advertising. This is precisely why branding is so pervasive and important. In an increasingly consumerist world where individuals are regularly bombarded with marketing messages, they are skeptical of yet another pitch. Because brand identity is meant to be adopted at an unconscious level by consumers, a primary challenge is brand diffusion. And what better messengers are there to convey the narrative of the nation but the citizens themselves? Citizens, therefore, are the second target of the brand strategy in hopes that they “live the brand,” in Aronczyk’s (2008) words. As she summarizes, “The need to inspire such allegiance and affiliation in the brand identity reveals a critical dimension of the practice: As a form of communication, the media of the message are effectively the citizens themselves” (2008, 54). This is not to suggest that citizens blindly adopt and internalize the brand identity constructed by states and their branding consultants. National identity formation and reformulation is more complex. But to the extent that the state writes the nation, we do need to pay attention to the form and content through which it does so. As the welfare state shifts toward more of a competition state, in many cases it also works to instill in its citizenry elements of a “competition nation” through internal branding. As with all national narratives, they are only likely to gain currency when they touch on something real or imagined that individuals find valuable as they construct their identities. It is here that branding and national identity intersect. As Holt (2004) points out, brands appeal to consumers at least as much for what they symbolize as for what they provide materially. These messages are similar to Beschhofer, et al.’s (1999) notion of “identity markers” when it comes to national identity. Both provide stories through which individuals see themselves and others within a larger world. The task, for researchers, then, is to examine changing narratives of national identity alongside development. The first step is to identify pre-existing dominant

30

Brand New Ireland?

notions of national identity. These are the product of many factors, but should be identifiable in existing literature on the nation in question. Developmental change, in and of itself, alters conceptions of the nation. Because elites have a particular stake in reconstructing national narratives (Kornprobst 2005), they are an important source for our understanding of changing conceptions of national identity. Nation Branding plays a very specific role here because it links modern development with questions of national identity and therefore promises a fruitful area for research. Nation branding, then, should be examined with these four key questions relating to nationalism in mind: 1) Who are we? 2) How do we distinguish ourselves from others? 3) Where did we come from, and 4) Where are we going? Branding, as with all national narratives, will contain elements answers for each question, but will likely focus on one or two. Finally, we need to examine the functional role that this new conception of the nation holds. What does this reformulated national identity promise for citizens?

Conclusion The remaining chapters in the book flush out these conceptual issues in detail. Chapters 3 and 4 place the role of the state and tourism within the larger story of the Celtic Tiger. They show that first, our traditional understanding of the sources of Irish economic dynamism are missing an important component by ignoring tourism. Second, they demonstrate that the state played a central role in promoting tourism for development purposes, and yet its relationship with the private sector looks very little like that of a Development Bureaucratic State or a Developmental Network State. Instead tourism dynamism was the product of a competitive and at times conflictual relationship between state and private sector. Chapter 5 examines the evolution of Irish national identity. It argues that traditional notions of Irishness have been uprooted by the Celtic Tiger phenomenon. Tourism branding, however, has not only been utilized as a marketing strategy to promote Ireland to international tourists; it plays the additional role of reconstructing a traditional vision of Irish identity in one of the most globalized countries in the world. Chapter 6 examines developmental outcomes in tourism. The final chapter reconsiders the model and looks at the future of tourism in Ireland.

Chapter 3

The Celtic Tiger and Irish Tourism

The story of the economic transformation of Ireland has become fairly well known. As Chapter 1 summarizes, Ireland’s export-led growth model was predicated on the welcoming of multinationals and led to unprecedented (in Ireland) economic growth rates. This dynamism was clearly fueled by exports, especially those in the high technology areas of computer hardware and software, pharmaceuticals and medical devices and later moved into financial services. Overall export growth, which had averaged eight percent from 1974 to 1985, grew to an average annual rate of 12.8 percent from 1991 to 1995 and 17.7 percent from 1996 to 2000 (OECD 2007). By the late 1990s Ireland’s export to GDP ratio reached 86 percent, second highest among EU members after Luxembourg (Bradley 2000). Ireland, already a small open economy, has now become one of the most open economies in the world. As Chapter 1 suggests, documenting and explaining the Celtic Tiger has become something of a cottage industry. Missing from virtually accounts, however, is the role that tourism might have played in the economic transformation of Ireland. Certainly the possibility that tourism was a following rather than leading sector must be considered. Undoubtedly high-tech dynamism created direct and indirect downstream effects throughout the economy. Hordes of construction workers, accountants, lawyers, car dealers and realtors, among others, were beneficiaries of the boom. Tourism also benefited, both from more business tourism and the growing domestic holiday market that came with increased affluence among the Irish. The key question is whether tourism was a leading rather than following industry. This chapter summarizes the Celtic Tiger and then places the tourism industry within it. It shows that not only was tourism a leading sector of industrial dynamism, but also that public and private officials “pushed” tourism early in the Celtic Tiger period.

Irish Economic Dynamism Most accounts trace the beginning of the Irish economic turnaround to 1987. Buoyed by unprecedented levels of foreign direct investment (FDI), especially from the U.S. and concentrated in the computer hardware and software sector, along with pharmaceuticals and medical devices, the Irish economy soon grew by exceptional rates. As Table 3.1 demonstrates, real growth in GDP averaged 7.9 percent during the 1990s, more than twice the levels of the 1980s. Gross National Product (GNP) growth is widely accepted as providing a more accurate assessment

Brand New Ireland?

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Table 3.1

Real Growth in GDP and GNP in Ireland, 1987-2007 (percent)

Year

GDP

GNP

Average 1987-92

4.2

3.5

1993

2.7

3.0

1994

5.8

6.5

1995

9.6

8.2

1996

8.3

8.3

1997

11.7

10.8

1998

8.6

8.4

1999

10.7

7.8

2000

9.2

9.3

2001

5.9

3.8

2002

6.0

2.2

2003

4.3

5.5

2004

4.3

3.9

2005

5.5

5.4

2006

6.0

6.5

2007

4.9

4.5

Source: OECD (2007); CSO (2008).

of the economy. This is due to Ireland’s especially high proportion of TNC concentration, along with the firms taking advantage of Ireland’s comparatively low corporate tax rates to engage in transfer pricing in order to maximize net profits. Yet GNP growth was also impressive during the period, especially the last half of the 1990s when it grew by average annual rates of 8.5 percent. More striking was the significant lowering of unemployment, which was still at 15 percent in 1994 and 10.9 percent in 1997, to a steady rate averaging 4.3 percent from 2000-2005. The decline is all the more impressive given the growing size of the Irish workforce, which increased from 1.46 million to 1.75 million from 19952000, and nearly doubled from 1.1 million to 2.1 million over the longer period of 1985 to 2007 due to a young population entering the work force, immigration and the return of earlier Irish emigrants (CSO 2007; 2008).

The Celtic Tiger and Irish Tourism

Table 3.2

33

Irish and EU-15 Growth and Unemployment Rates, 1974-2005

Period

1974-85

1986-90

1991-5

1996-00

2001-5

Ireland GDP ( percent)

3.8

4.6

4.7

9.8

4.7

EU-15 GDP ( percent)

2.0

3.2

1.5

2.7

1.6

Ireland Unemployment Rate ( percent)

10.6

15.5

14.5

7.8

4.4

EU-15 Unemployment Rate

—

—

9.5

9.2

8.5

Source: EU (2003; 2007).

Considering Ireland’s record in comparative perspective is even more impressive, although finding an appropriate peer group is somewhat problematic. Ireland has been part of the European Community/Union since 1973 but its economy had long resembled that of a developing country. Barry (1991, quoted in Kirby 2002, 13) remarks, “…the dual nature of its economy is very marked, and it might usefully be thought of as a high-income developing country rather than a low-income industrialized country.” Using World Bank data, Kirby (2002, 30) shows that from 1980 to 1990, Ireland’s average annual GDP growth of 3.2 percent was comparable to several European countries, marginally higher than Latin American Newly Industrialized Countries (NICs) Brazil (2.7 percent) and Mexico (1.1 percent), but considerably lower than East Asian NICs Singapore (6.7 percent), South Korea (9.4 percent) and Hong Kong (6.9 percent). From 1990 to 1999, however, Ireland’s annualized GDP growth averaged 7.9 percent, outpacing all the above except Singapore (8.0). Ireland’s record compared to the larger European Union is also impressive. As Table 3.2 shows, GDP growth, already higher than that of the EU-15 prior to the Celtic Tiger phenomenon, shot up to more than triple the EU-15 average after 1990. Meanwhile, Irish unemployment, traditionally much higher than the EU average, fell to an average of 7.8 percent from 1996-2000, slightly lower than the EU-15 average of 9.2 percent. From 2001-2005 the Irish unemployment rate, 4.4 percent, was just over half the EU-15 average. Living standards in Ireland have improved steadily. Kirby (2002, 33), using UNDP figures, shows that per capita GDP increased by more than 40 percent during the 1990s, outpacing that of OECD countries as well as other NICs such as Singapore, Hong Kong and South Korea. Annual incomes in Ireland, which averaged less than 64 percent of the EU-15 average in 1986, represented 111 percent of that average by 1999 (Bradley 2000, 12). Ireland’s progress, as measured by the UNDP Human Development Index, has also been impressive. The country’s raw index improved from .805 in 1975 to .959 in 2005. As Table 3.3 demonstrates, much of the overall improvement occurred in the last 20 years, and

Brand New Ireland?

34

Table 3.3

Ireland’s Human Development Index, 1975-2005

Year

HDI index

Country Rank

1975

.805

—

1980

.818

—

1985

.833

—

1990

.857

38th

1998

.907

18th

2003

.946

8th

2005

.959

5th

Source: UNDP (various issues).

Ireland’s HDI rank improved from 38th in 1990 (tied with Yugoslavia) to fifth in 2005 (UNDP various years). According to the 2000 Human Development Report, Ireland ranked first among high income countries in making the most progress between the years 1975 and 1998 (UNDP 2000, 150).

Explaining the Celtic Tiger The record of the Celtic Tiger is particularly impressive given that which preceded it, a period of economic stagnation and what is generally agreed to constitute failed development during the decade prior to 1987. Economic growth was uneven and of an unsustainable character. Most important Irish government debt doubled between 1979 and 1982, and then nearly doubled again between 1982 and 1986. Because Ireland’s economic fortunes were so closely tied to Britain’s, a long and severe recession in the latter carried over to the Irish market. By 1986 Ireland, following Britain’s lead, devalued its currency by eight percent. With Ireland’s unemployment rate growing from 7.3 percent in 1980 to 17.3 percent in 1985— the highest in Europe with the exception of Spain—emigration steadily increased. Equally, if not more discouraging, was that Ireland had much earlier opened its economy to trade and foreign investment. Unlike many other countries facing stagnant economic conditions, Ireland’s problems were not easy to diagnose. While fiscal policy was open to criticism (and even here much of the problem was structural), Ireland’s membership in the EU since 1973 and its open and aggressive policy toward attracting foreign investment dating back to the 1950s marked it as a relatively open economy. Yet from 1980-1986 growth in real GNP was flat. Despite economic openness, Ireland’s dualist industrial sector and small,

The Celtic Tiger and Irish Tourism

35

relatively inefficient agricultural sector made the Irish economy vulnerable. In fact, an economic assessment commissioned by the National Economic and Social Council (NESC) in the early 1980s, known as the Telesis Report, criticized the over reliance on foreign capital in the industrial sector and its failure to link to other sectors of the economy. Several sets of factors help explain the marked difference in economic performance between much of the 1980s and the 1987-2007 period and can be placed under four headings: Institutionalist/political, TNCs and the globalization of high technology industries, demographic and European. The four explanations are overlapping, not exclusive, and the debate in the considerable literature on the Celtic Tiger is one of emphasis. In addition, other secondary contributors also played a role along the way. Institutionalist/Political Explanations One common argument made in the Irish case is that economic dynamism is mainly the result of state policies. Political insiders Mac Sharry and White (2000) are representative, but the broad literature includes neoclassical accounts such as Barry (1999) as well as more state-interventionist interpretations such as Ò Riain’s (2000; 2004). Here the keys are institutional and political arrangements and making the “correct” policy choices. For Barry and Mac Sharry, the most important issue was putting Ireland’s fiscal affairs in order. Politically, the fall of the Fine Gael minority government in 1986 in the midst of economic crisis and the return of a Fianna Fáil-led coalition government ultimately resulted in significant cuts in government spending. New Taoiseach Charles Haughey and Fianna Fáil had run their campaign in opposition to the deep spending cuts proposed by Fine Gael to deal with the yawning budget deficit that was approaching eight percent of GDP. Once elected, however, the new minority government reversed course and imposed severe cuts of its own. Inspired by an earlier 1986 report from the National Economic and Social Council (NESC 1986), the Haughey government got agreement in October 1987 on a neocorporatist social pact among trade unions and employers that held wage demands down while ensuring job security and personal income tax cuts (along with an amnesty for widespread tax evaders) over a three-year period. As one former government official who was directly involved in the negotiations put it, by now a new environment had taken shape among the political parties as well as the sectoral actors involved in the negotiations: Everybody recognized this [fiscal situation] was the biggest problem. Mr. Haughey saw this and the government that preceded it saw it. It had tried to cut back on government spending but it couldn’t do it. Fine Gael [earlier] proposed big cuts and labour walked away. The dilemma was how do you take action and not become so unpopular with the electorate (author interview, January 2008).

Brand New Ireland?

36

The resulting Programme for National Recovery achieved industrial peace and macroeconomic stability. This agreement, which would be renewed in different forms through 2008, followed Fine Gael’s new leader Alan Dukes announcement of his “Tallacht Strategy” in September 1987, pledging his party’s support for the difficult economic reform package proposed by the minority Fianna Fáil government. As a result of these new political and social arrangements, the government was able to achieve macroeconomic stability and significantly reducing borrowing requirements, thereby enhancing business environment for both domestic and foreign investors. Aside from macroeconomic stability, a second institutional factor contributing to the Celtic Tiger was the actions of the Industrial Development Authority (IDA), the government agency charged with attracting foreign investment into the country. Created in 1949 and reorganized in the 1960s and again in the 1980s and 1990s, the IDA provided land, grants, tax incentives and logistical support for TNCs willing to invest in Ireland. Ireland had long been active in promoting itself as an export platform for TNCs, setting up the Shannon export processing zone (the world’s first) in the 1950s, but two changes helped the IDA recruit a new wave of foreign investment in the late 1980s and 1990s. First was a revision in tax incentives in the late 1970s, creating a flat 10 percent tax rate on manufacturing profits guaranteed for 20 years. This made Ireland “probably the most pro-business location in the EU” from a tax standpoint (O’Hearn 2001, 171). The second was to target FDI in high-growth and high-tech industries. A government white paper produced in 1984 proposed such a shift, and this led the IDA to begin focusing on attracting TNCs in the health care (pharmaceuticals and medical devices), electronics (including computer hardware) and computer software industries. During this period (1980-1986) the IDA also began introducing initiatives in internationally traded services, targeting 12 sectors, including data processing, software development and publishing houses (Mac Sharry and White 2000, 208). Work also began on global call centers and attracting international financial services companies. The International Financial Services Centre (IFSC), launched in Dublin in 1987, would itself come to create some 10,000 jobs through attracting international banking and financial services firms (M. White 2003) and also served as a hub for broader Dublin docklands redevelopment. Ruane and Buckley (2006, 6) summarize these changes as an “enterprise approach” to foreign investment in that it focused on industries and specific firms and comprised of four stages: 1. 2. 3. 4.

Finding niche, high value economic activities Identifying leading firms in these markets Persuading these enterprises to consider Ireland Providing incentives and technical expertise to secure the investment.

By the year 2000 some 1100 affiliates of multinationals had come to Ireland, many of them responding directly to IDA marketing, incentives, and cajoling. In

The Celtic Tiger and Irish Tourism

37

many cases Ireland beat out strong competition from European and even global competitors, landing such high-profile companies as Intel, Dell and Microsoft. By the late 1990s the IDA’s hope for establishing internationally competitive industries in health care, electronics, software and internationally traded services had come to fruition. The role of the state in achieving this outcome should not be underestimated, but does raise further questions. Foremost among them is how the state, which had earlier failed to lead Ireland into economic prosperity, now suddenly did so. Put differently, and to paraphrase Evans (1992), how did the state, for so long the problem, suddenly become the solution? In part the answer lies with disaggregating the state. Ireland possesses a state apparatus that has traditionally had strong agencies and weak departments. Departments have little longevity, relatively small levels of staffing, and in many cases, have been penetrated by private interests. This is true of some agencies as well, but others have a long tradition of independence and autonomy. As shown in Ó Riain’s careful study, the IDA, despite being reorganized on more than one occasion, is certainly one of them. Not only did the agency develop a sense of élan, far-sighted vision, some budgetary independence, and technical expertise, it also achieved the delicate balancing act of maintaining autonomy from powerful societal actors while still being embedded in that society (Ó Riain 2004; Ó Riain and O’Connell 2000, 314). While other areas of the Irish state have been plagued by inefficiencies, favoritism and in some cases outright corruption, the IDA, according to this view, has been able to successfully channel productive investments into new and lucrative economic activities in a manner that shaped development outcomes. TNCs and the Globalization of High-tech Industries Demand for foreign investment, of course, is worth nothing without supply. Although the IDA aggressively sought out such investment in selective hightech industries, changing strategies among leading firms in these industries were crucial to changing Ireland’s place within the international division of labor. Ó Riain (2004, 4) criticizes neoliberals and neomarxists for essentially telling the same story of Ireland’s dynamism with the only difference that the former act as apologists and the latter as critics. The state, according to both approaches, opened the economy to global market forces, with the IDA acting mainly as a bullhorn to call attention to global capital. Yet O’Hearn (1998; 2001), one of the most prominent neomarxist analysts of the Celtic Tiger, offers a more complex analysis by suggesting two additional factors. First, the Irish state, rather than following market signals, violated such principles by openly subsidizing foreign capital. He contends grants and subsidies served to underwrite the costs of TNCs locating to Ireland by as much as 40 percent as far back as the 1970s and 1980s after Ireland joined the EEC, and these subsidies continued through the 1980s and 1990s. For instance, Intel’s celebrated entry into Ireland in the early 1990s ultimately cost the Irish state IR£30,000 per job in grants alone (O’Hearn 2001, 173). In addition dual

38

Brand New Ireland?

tax rates also favored foreign capital and exporters while the state increasingly took on much of the research and development costs traditionally performed by TNCs. Second, however, is the trend of broader TNC behavior both globally and regionally. O’Hearn tracks foreign investment patterns to show an increase in broad flows in the 1970s, a decline in the recessionary 1980s, and then a boom in the 1990s. These trends in part reflect the global ebb and flow of global economic growth and decline cycles, and also coincide with integration politics in Europe along with economic developments in Great Britain and the United States, the two economies most influential on Ireland’s. O’Hearn (2001, 145) argues that growth in foreign investment to Ireland in the 1970s was mainly the product of the changing international division of labor combined with Ireland’s accession to the EU (also serving, not incidentally, to displace a considerable number of indigenous firms and jobs). The latter boom, in the 1990s and beyond, is more complex. In part the second boom was driven by new economic dynamism after the stop-go cycles of the 1980s both globally and in Europe. It was also inspired in part by fears of Fortress Europe once the single European market was initiated in 1992. This led to considerable U.S. investment in the EU as part of a strategy of hopping potential trade barriers. Unlike earlier expansion abroad, however, new investments were predicated on lean and flexible production modeled after Japanese and East Asian models, just-in-time (JIT) inventories and global sourcing. Containerized shipping, new management models and the growing use of information technology all made specific location less important than before. As a result, rather than replicating home operations abroad, much of the new foreign investment was part of larger global strategy and was more capital and technologically intensive. In short, many firms went from being national firms with foreign operations to truly global companies. A large proportion of foreign investment coming to Ireland in this latter period was concentrated in pharmaceuticals and medical devices, on one hand, and electronics and computer software, on the other. Several pharmaceutical companies had originally arrived in Ireland earlier in the 1970s and now they expanded operations and were joined by new entrants. From 1990 to 1998 some 65 new projects invested $3 billion of new DFI in the sector and by the turn of the century 13 of the world’s top 15 firms had significant operations in Ireland (T. White 2008). The particular economics of the industry also drove investment. In an extremely profitable sector involving high R&D costs but protected by intellectual property rules, entry barriers were high and growing numbers of firms made disproportionate profits from one or two especially lucrative drugs or devices. These included “lifestyle” drugs that dealt with afflictions most prevalent in wealthy, aging societies such as male impotence, high blood pressure and cholesterol levels, and male pattern baldness. Ireland not only presented access to the overall European market; its liberal tax regime also all but invited transfer pricing from other global operations, essentially the same reasons many big pharmaceutical firms had earlier set up operations in Puerto Rico. As late as 2007

The Celtic Tiger and Irish Tourism

39

Ireland drew 25 percent of all the DFI going to Europe in the life sciences category, which include pharmaceuticals, medical devices, health care and biotechnology (OECD 2008). In contrast, the high-tech computer hardware and software sectors were, of course, much newer. The hardware sector was made up of a combination of newer startups along with older firms that had moved from other electronics into computer hardware, and they were joined by software and peripheral companies. Most firms were U.S. based and were now expanding globally from places such as Silicon Valley and Route 128 around Boston. The business and personal computer boom in the 1990s also required regionalized telesales and services. Again, Ireland was uniquely placed to capture a big proportion of this wave of high-tech investment moving toward Europe. Comparatively low wages, low taxes, relatively good infrastructure and English speaking labor were all attractive to these firms. As a result, between 1991 and 1994 Ireland attracted 40 percent of all U.S. electronics investment in Europe (O’Hearn 2001, 172) and in the early 1990s Ireland, led by TNCs such as Microsoft, Apple, and Lotus, became the world’s largest exporter of computer software (Terjesen et al. 2007, 839). By 2006 the broad ICT sector contained seven of the top 10 global firms and employed more than 80,000 people (ICT Ireland, n.d.). Due in large part to the pharmaceutical and computer hardware and software industries, foreign companies had by the turn of the century firmly become the driver of the Celtic Tiger and increasingly those firms were headquartered in the United States. As early as 1995 foreign firms accounted for almost half of manufacturing employment, two thirds of manufacturing output, and threequarters of non-food manufacturing exports (Breathnacht 1998, 308). O’Hearn (2001, 173) shows that U.S.-based firms came to account for the bulk of fixed industrial investment in Ireland, upping their share of the total from less than 30 percent in 1987 to 68 percent in 1997. U.S. and other foreign firms also came to dominate the export sector, with 40 percent of Ireland’s manufactured exports now coming from the chemical and related products (mainly pharmaceuticals) (PharmaChemical Ireland, n.d.). With a population of just four million (one percent of the EU total), Ireland by earlier this century received almost a third of all U.S. manufacturing FDI into the EU (Ibid.) and became one of the top 10 destinations of all U.S.-based manufacturing FDI, ranking as high as fourth in 2002, ahead of China (Sullivan 2006; Deloitte 2003). There is little debate as to the importance of foreign investment to the emergence of the Celtic Tiger, and interestingly, the prevalence of so many foreign firms dominating the Irish economy has largely been politically uncontroversial. Debate about the implications of TNC-driven growth for development, however, has been more pronounced in academic circles. At one end are critics like O’Hearn (2001; 1998) and Allen (2000), who view Ireland’s growth as being based on an economy of disarticulated dualism. The vibrant, high-tech export sector, dominated by TNCs, accounted for the overwhelming amount of growth during the Celtic Tiger years, and TNC profits from increased throughout this period, peaking from 1997-1999

40

Brand New Ireland?

when they accounted for the equivalent of two thirds of overall economic growth (O’Hearn 2001, 176). Worse, this dynamism was delinked from the indigenous sector of the economy. While more than one-third of all manufacturing employment was in the (mainly foreign owned) high-tech sector by the year 2000 (Paus 2005, 60, 58), employment in services grew faster than those in manufacturing from 1991-2001 and by that year made up almost 64 percent of overall employment in the country (OECD reported in Ó Riain 2005, 44). Meanwhile manufacturing employment grew by less than half a percentage point, from 28.8 to 29.1 percent of total employment. Moreover, according to critics, in such an environment the primary beneficiaries of development are quite limited and the danger of firms abruptly leaving is ever present. At the other end of the debate are those such as Ó Riain and Barry, who, although arguing from very different theoretical standpoints, contend that the TNC-based development strategy has created multiple linkages and spillover effects. Barry (2004) has estimated that for every 100 jobs in the foreign-owned sector, another 100 are created in the service sector in addition to ten more in manufacturing due to backward linkages. Ó Riain (2004) is less global in his conclusions, but suggests the existence of foreign firms, combined with state action, has helped to create a vibrant indigenous software sector in the country. His model of a Developmental Network State sees a partnership between the state, foreign capital, and a fledgling new indigenous entrepreneurial class. Similarly, Terjesen, et al. (2007) report the number of indigenous software firms in Ireland more than doubling since 1991, but critics contend that such firms tend to be small, tenuous, and in most cases fringe players. Overall debate over the desirability of foreign dominated leading sectors continues but what is certain is that with more than 1000 foreign firms now in Ireland, employing 135,000 workers, TNCs lie at the heart of the Celtic Tiger. Demographic Explanations A complimentary, rather than alternative explanation to those above involves changing Irish demography. In essence, this position holds that factors associated with Irish society help to partially explain the desirability of Ireland to foreign firms. To be sure, features such as IDA activities and the comparatively low corporate tax rates are still of central importance. Yet Ireland has been attractive to foreign capital for additional reasons. As IDA advertisements going back to the early 1980s pointed out, Ireland possess a young, English speaking, and increasingly welleducated society. Common language has been especially attractive to U.S.-based foreign investment, making the transition into a new market considerably easier. Moreover, although much of the earlier employment in the high tech sector was in fact very low tech (including assembly line work boxing materials), increasingly a greater share has gone to technical and service work that does in fact requires language skills. Unlike much of Europe’s aging societies, Irish birth rates have remained comparatively high until very recently and the country experienced a baby boom

The Celtic Tiger and Irish Tourism

41

in the late 1970s and early 1980s. Today Ireland possesses one of the youngest populations in Europe, with a median age of 34 and one-third of the population under the age of 25. Yet the IDA (2007) points out that Ireland’s dependency rate—the percentage of young, old and infirmed outside the workforce—remains among the lowest in Europe at 47 percent (second lowest after Spain). The IDA touts the figure, suggesting the low dependency rate allows for lower state welfare expenditure and as a result lower corporate taxes. Finally, earlier changes in Ireland’s educational system helped to improve the quality of the workforce by the 1980s and 1990s. The Irish government instituted free secondary education in 1967 and free third-level (university) education in 1987. As a result average years of schooling improved from 7.6 years in 1980 to 9 in 1999 (O’Sullivan 2006, 63) and the retention rate at second level grew from 52 percent in 1980 to 76 percent in 2000 (IDA 2007). Meanwhile the percentage of people in the labor force with third level education jumped from 11 percent in 1981 to 35 percent in 2006 (O’Sullivan 2006). Among younger workers (aged 25-34), the percentage with third level education reached 40 percent by 2006, compared to an EU average of 28 percent (IDA 2007). In addition, the proportion of younger university graduates with science, engineering or computer backgrounds is also among the highest in Europe (Barry 2006). While the share of GNP going to education remains low compared to EU peers (and has been getting worse in recent years) the Irish labor force has benefited from earlier reforms and spending. Without this attractive workforce, global firms would likely have chosen alternative locations. European Explanations In addition to the factors outlined above, several commentators give considerable weight to European factors in helping to foster the Celtic Tiger. Most directly, Ireland was one of the biggest beneficiaries of EU structural funding, the net transfers aimed financing infrastructure and jump starting poorer European economies. Since joining the EEC in 1973 Ireland has received more than €17 billion in structural funds (NDP 2007). The EU structural funding mechanism was reformed and vastly expanded with the 1987 Single European Act in preparation for the single market in 1992. Three subsequent rounds of EU funding, 1989-1993, 1994-1999 and 2000-2006 followed. During the first two rounds all of Ireland was treated as a single NUTS II region, signifying that the country as a whole fell well behind the EU economic average and therefore was eligible for structural funds. From 2000-2006, even after much of the economic growth associated with the Celtic Tiger had taken place, Ireland was divided into two regions, with the Border, Midland and West region retaining “developing” status. As McAleese (2000) shows, incoming structural funds amounted to more than three percent of GNP in Ireland during the early 1990s and for the decade between1989 and 1999 they equaled about 2.6 percent of GNP. From 1994-1999, Ireland received the highest per capita allocation of all structural funds within

42

Brand New Ireland?

the EU (Mac Sharry and White 2000). Much of the funding went for the building or critical upgrading of roads, ports, and telecommunications infrastructure. Including Community Agricultural Policies (CAP) subsidies for agriculture ups the total figure to between five and seven percent of GNP (Ibid.), a huge boost to the economy. Mac Sharry and White (2000) point out that European aid also helped Ireland prepare for European Monetary Union by helping to foster financial order. Deepening integration and Ireland’s membership within the EU also aided the country. Trade integration helped diversify Ireland’s trading partners, lessening long-term dependence on Great Britain. Fears of fortress Europe also fueled much of the above mentioned boost in DFI into the region. Meanwhile, monetary integration, culminating in the introduction of the Euro, contributed to growing fiscal responsibility and stability. This lowered the cost of credit (as did the later establishment of the European Central Bank) and increased business confidence. European influence may also have been felt in less tangible but equally important ways. New and more transparent regulatory frameworks coming from Brussels may have influenced both bureaucratic norms within government and Irish regulation of the economy. O’Donnell (2000, 193) argues that the net effect was a gradual but noticeable rationalizing of government, with new forms of auditing, planning and regulation. Finally, modeling should not be underestimated. Industrial policy is often said to have been influenced by that of Scandinavian countries and the initial emergence of social partnership itself was influenced by the European experience, especially that of Germany. To sum up, the consensus among students of the Celtic Tiger is that Ireland’s record is based on its ability to capture significant foreign investment in lucrative and dynamic high-tech industries. Weighing the factors that contributed to Ireland’s attractiveness is where the debate continues. They are joined by questions over the desirability and sustainability of such a model. What is clear is that Ireland has achieved significant industrial upgrading within the globalized economy and reaped considerable material benefits along the way.

Irish Tourism Overview Since the dawning of the Celtic Tiger, tourism has played an important though often hidden role. Overseas tourist arrivals to Ireland grew from less than 2 million visitors in 1986 to 7.7 million in 2007. Adding tourists from Northern Ireland puts total tourists over eight million. Earnings grew from 927 million Euro to just below €4.9 billion during that same period. As Figure 3.1 demonstrates, tourism growth gradually slowed down but remained impressive between the years 1986-2007. For the entire period arrivals nearly quadrupled and international receipts roughly quintupled. During the 1990s, Ireland became the fastest growing tourism destination in Europe, with arrivals growing by almost 130 percent over the decade. Growth slowed down considerably between

The Celtic Tiger and Irish Tourism

43

   

$UULYDOV ¼0LOOLRQV

    

Figure 3.1

 

 

 

 

 

 

 

 

 

 

 

 



Overseas Arrivals and Receipts

Source: Fáilte Ireland (2008); CSO (various years).

2001 and 2005 as the Irish economy cooled and the country became a highercost destination, but performance was also affected by the attacks of September 11, 2001 as well as foot and mouth disease which struck the U.K. that same year. As a result, tourism arrivals fell by more than five percent between 2000 and 2001 and only slowly recovered, with arrivals up by 6.1 and 10.5 percent in 2005 and 2006 while receipts grew by 5.1 and 9.9 percent during that same period. Tourism arrivals, which grew by six percent annually during the 1990s, increased by an average of just two percent annually between 2001-2005. To a certain extent, the Irish record reflects larger global trends. World tourism also grew rapidly during this period, as it has since the end of World War II. Figure 3.2 below shows the steady growth of tourism over more than half a century. Europe had 54.4 percent of the world tourism arrival market in 2006, but that figure has been steadily dwindling over the decades. In 1980s, for instance, Europe captured 68 percent of all international arrivals. By 2020 it is projected to hold just 46 percent (UNWTO 2007). From 2000-2006 European arrival growth was 2.7 percent, about the global average, but much below Asia’s 7.1 percent and also below that of Africa and the Middle East (UNWTO 2007). Similarly, Ireland’s share of world tourism arrivals declined slightly over the two decades, but the country’s share of European tourist arrivals and receipts improved somewhat, growing from 1.4 to 1.7 percent and 1.0 to 1.4 percent respectively between 1990 and 2005 (UNWTO 2006). It is important to note that these means of measuring tourism, while standard, are partial at best. Most notably, figures such as those above only account for the international portion of the tourism sector. In recent years domestic tourism has been the most rapidly growing area in Ireland, with the number of domestic trips

44

Figure 3.2

Brand New Ireland?

World Tourism Growth, 1950-2020

Source: © UNWTO, 9284405008 (2007).

growing by 31 percent from 2000-2005 (CSO 2006). Although more difficult to measure, government figures show that domestic tourism revenues have grown by 47 percent from 2000-2004 and exceeded €1 billion for the first time that year. In 2007 they were estimated at just under €1.55 billion (Fáilte Ireland 2008). The agency estimates that together international and domestic tourism directly contributed €6.5 billion into the Irish economy in 2007. The contribution that tourism makes to the Irish economy is frequently overlooked. According to Fáilte Ireland, tourism is the largest tradable service sector in Ireland, totaling €4.3 billion in overseas revenues in 2005. Tourism exports represented 3.4 percent of overall exports in 2005. Tourism had more than twice that share in the late 1980s but that was prior to the foreign-firm led manufactured export boom of the Celtic Tiger which took off the following decade. Including domestic tourism revenues and applying multiplier effects, the agency estimates that tourism accounted for some 3.8 percent of GNP in 2005. Employment figures are more difficult to estimate in that tourism cuts across several sectors of the economy, including accommodation, restaurants, pubs, shops, and tourism sites and attractions. The Irish government’s Central Statistics Office does not estimate Irish tourism employment directly. Yet Fáilte Ireland and industry sources frequently cite CSO figures that simply total up employment from those sectors, thereby overestimating the total employment attributable to tourism. For instance, their totals of 2005 add those employed in hotels, guesthouses, self catering accommodation, restaurants, non-licensed restaurants, licensed premises   Export figures for many TNCs are also inflated due to transfer pricing in order to take advantage of Ireland’s low tax rates. Estimates on this practice may be found in O’Hearn (2001).

The Celtic Tiger and Irish Tourism

Table 3.4

45

Overseas Tourist Arrivals by Region of Origin, 1960-2005 (000s)

Year

1960

1970

1980

1985

1990

1995

2000

2005

2006

2007

Great Britain

827

1061

1068

1123

1785

2285

3428

3640

3841

3776

North America

69

258

260

423

443

641

1056

937

1034

1071

Other Europe

25

110

336

336

744

1101

1436

1903

2252

2577

Other

20

30

67

69

124

204

261

284

310

316

Total

941

1459

1731

1951

3096

4231

6181

6763

7417

7739

Source: Fáilte Ireland.

(bars and pubs) and tourism services and attractions to come up with a total of almost 246,000. This would represent about 14 percent of all those working in Ireland, most likely making tourism the country’s largest employer. Several attempts have been made to come up with more precise measurements of tourism employment. The Tourism policy document produced by the Department of Art, Sport and Tourism for the OECD estimated tourism to account for 140,000 full time equivalent jobs in 2002, equal to about eight percent of the Irish workforce or one in 12 jobs. This figure is up 70 percent since 1990, with employment growth in tourism outpacing overall employment during this period (OECD 2004, 4). Deegan (2006), using the increasingly internationally-accepted Tourism Satellite Accounting (TSA) method promoted by the U.N. World Tourism Administration, contends that many of the figures surrounding Irish tourism remain underestimated. Using CSO input-output data he argues that international and domestic tourism generate 94,000 direct jobs and a total employment of more than 190,000, equivalent of 9.8 percent of the Irish workforce. Moreover, his estimates of a much more vibrant domestic tourism sector lead him to conclude that more than seven percent of the overall Irish economy is attributable to tourism. Breakdown of the Tourism Market to Ireland The global sending market to Ireland is summarized in Table 3.4 and is marked by a couple of features. One is the continuing importance of Great Britain as the leading sending market. The British accounted for 88 percent of the overseas market to Ireland back in 1960. That proportion has come down steadily as other markets have grown, and between 1985-2006 its share declined from 58 to 52 percent of the total. During that same period, the share of the North American

Brand New Ireland?

46 



   

 

 







































































   

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Figure 3.3

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Overseas Visitors (000s) by Reason for Visit, 1999-2006

Source: CSO and Fáilte Ireland.

market has dropped from almost 22 percent of the market to below 14 percent, while mainland Europe has become Ireland’s second most important market, with its share of arrivals growing from 17.2 in 1985 to 28.1 percent in 2005 and 30.4 percent in 2006. Within mainland Europe, Germany, France and Italy have long been the leading sending countries, although in recent years Poland, which has a large immigrant community in Ireland, has grown faster than all other European markets and today ranks fourth among mainland markets (Fáilte Ireland 2006). A second major feature relates to the purpose of visit and is the importance of the visiting friends and relatives market (VFR) to Ireland. With its historically high patterns of emigration, Ireland continues to possess a large diaspora community, especially in Great Britain, the United States, Australia and Canada. Figure 3.3 below shows the breakdown of overseas visitors to Ireland based on the purpose of their visit. In 2006 some 31 percent of all overseas visitors to Ireland were VFR tourists, among the highest rate in the world, and although decreasing, VFR tourists remain an especially large proportion of the British market. This segment is important in that VFR tourists tend to spend less money, especially on accommodation, and also take shorter trips. This helps to explain that per capita spending North American traveler was €840 in 2002, it was less than half that (€372) for British traveler that same year (OECD 2004, 10). The final notable trend over time has been an overall shift in where visitors go within Ireland as well as their decreasing length of stay. Tourism officials break the country into seven regions. By way of regional breakdown, a steady tendency has been the growing importance of the Dublin region as well as the east in general. In 2006, of the 5.7 million overseas visitors to Ireland, almost 76 percent visited Dublin. As a result, while the Dublin region captured 22 percent of tourism revenues to Ireland in 1990, that share grew to 30 percent by 2002 and 36.1 percent in 2006 (Fáilte Ireland 2007). Dublin, together

The Celtic Tiger and Irish Tourism

47

with the East and South regions captured almost 79 percent of overseas tourism revenues in 2005. Meanwhile, all other regions have been essentially flat or have lost revenue share between 1990s and 2005 (OECD 2004). Especially hard hit have been the West, Northwest and Shannon regions. The dynamic growth of domestic tourism since 2000 has offset this trend somewhat. In fact, regional trends for international and domestic tourism in Ireland have been on opposite tracks: Although overseas arrivals have grown by 10.6 percent from 2000-2005, outside of Dublin they actually declined during that period. Total overseas revenues from 2000-2005 grew from €2.68 billion to €3.49 billion, an increase of €810 million. Of that total, €423.5 million, almost half the total growth, is attributable to tourism to Dublin. Put another way, outside of Dublin, revenues to Ireland during that period grew by just 2.8 percent annually in nominal terms, and declined in real terms. Yet domestically, the reverse was the case. According to Fáilte Ireland (2006b) more than 94 percent of domestic trips and 97 percent of holiday nights spent were outside of the Dublin region.

State, Market and Tourism Dynamism As Chapter 2 summarizes, most accounts of economic dynamism and industrial transformation posit a synergy between state and market actors. Among more stylized neoliberal accounts, this involves the state merely complimenting the private sector while largely withdrawing from markets. For neo-Weberian statists, institutional capacity and autonomy are necessary but not sufficient. Also crucial is an innovative private sector, be they domestic, international or some combination thereof, as well as state embeddedness (Evans 1995; Ó Riain 2000; 2004; Breznitz 2007). Within Irish tourism, however, no such synergy existed prior to 1987. Although most of the attention toward state and societal relations in the tourism sector will be dealt with in the next chapter, some background is necessary here. Prior to that point, tourism policy is perhaps best summarized as a “weak state, weak society” situation. Institutionally, tourism policy was led by Bord Fáilte, a state agency that was created in 1955 to replace the Irish Tourist Board. Tourism was more important to the overall economy during the 1940s and 1950s, with tourism exports rivaling those of agriculture by the late 1940s, but earlier state attitude toward tourism was neutral at best and at times somewhat hostile. Bord Fáilte began actively promoting international travel to Ireland in the 1950s and began a series of domestic programs to upgrade facilities. Its record over the decades was uneven, and tourism arrivals and revenues ebbed and flowed, growing steadily in the 1960s, stagnating in the 1970s, showing some recovery toward the late 1970s and early 1980s, but   Bord Fáilte and its sister organization Fogra Fáilte were created in 1952. With a change in government in 1955. Fogra Fáilte was disbanded and Bord Fáilte took over its marketing responsibilities.

48

Brand New Ireland?

then faltering again. To be sure, this record was affected by periods of economic stagnation and dwindling state support, along with the Troubles that broke out in Northern Ireland in the early 1970s and spread to the south. The Republic of Ireland’s support for Catholics in Northern Ireland also led many in Northern Ireland and Britain to boycott tourism to the South. The one constant was that tourism remained secondary among national development priorities. To be sure, there were tourism constituencies both in and out of government, but they remained on the fringe of economic policymaking circles. Ireland’s first big export push, coming in the late 1950s and early 1960s, for example, witnessed a broad spike in government spending as part of the First Programme for Economic Expansion, but the bulk of support went to manufacturing while less than one percent of the total went to tourism (Deegan and Dineen 1997, 25-6). Institutionally, tourism policy essentially began and ended with Bord Fáilte. In part because tourism remained a low priority, the agency enjoyed broad autonomy from government departments. The only other actor that had a significant official voice was the government-owned air carrier, Aer Lingus, and to a lesser extent CIE, another state company running domestic transport and some hotels. Tourism was not included in ministerial level status until 1978. Meanwhile societal actors were small, dispersed, and largely unorganized. The Irish Hotels Federation (IHF) was perhaps the best known, but during the 1960s and 1970s its influence was still limited. Overall societal actors remained passive through the 1980s. As one former Bord Fáilte official summarized, private sector input mainly amounted to “How many tourists are Bord Fáilte bringing us this year?” (author interview, November 2007). Yet the tourist board itself was also fairly passive, focusing on traditional markets such as friends and relatives, along with ethnic tourists (Deegan and Dineen 1997). The first seeds of a more activist policy toward tourism were sown in 1980s with a report from the National Economic and Social Council in 1980 that evaluated the sector and previous policy. Growth in international tourism receipts, which had grown by 50 percent in real terms from 1960 to 1970, suffered badly during the 1970s as a result of the Troubles, oil shocks, global recession and domestic inflation. For the decade, growth averaged less than two percent annually, much lower than the previous decade and also lower than other European destinations. As a result, Ireland’s share of the European market fell from 1.6 percent to 1.2 percent over the 1970s (Deegan 2005, 11). More disturbing was that real tourism revenues actually declined between 1968-1978 and spending per tourist fell by 16 percent during that period (NESC 1980, 12). By 1980s the tourism proportion of GNP had also fallen to 3.9 percent, down from 5.3 percent a decade earlier (Deegan and Dineen 1997, 54) and as a share of exports, fell from 15 percent in 1967 to 6.2 percent in 1977 (NESC 1980, 32). The NESC report was notable in that first it demonstrated that tourism was newly on the radar screen and second that it raised several criticisms of previous tourism policy. Most significant, it noted that the accommodation sector went from badly needing updating and expansion in the 1960s but now had an oversupply of by the end of the 1970s due in part

The Celtic Tiger and Irish Tourism

49

to government grants and tax incentives. In addition, the report noted the poor performance of the sector as a whole, as well as a deterioration of accommodation and tourism attractions. It closed by making a series of recommendations for improving policy instruments and achieving a more strategic vision. The report, written primarily by a Bord Fáilte staff member, raised hackles within the organization, but due to more acute economic problems such as inflation, growing debt and increased unemployment, it mainly collected dust on the shelves. Tourism performance continued to suffer during the first half of the 1980s, as did the economy as a whole. Tourism arrivals between 1980 and 1985 were almost flat. More disturbing was that annual visitor surveys showed growing dissatisfaction with the tourism product, reaching all time lows in some categories (Nevin 1995, 364). It was in this environment that the government produced a White Paper on Tourism Policy in 1985. The new paper, which notably did not involve consultation with the private sector, reinforced many of the observations made in the NESC report five years earlier but added more urgency to calls for reform. More importantly it placed tourism on the table as an area of potential emphasis as policy makers searched for solutions to prevailing economic woes. In a tight budget environment the paper did not call for significant new public sector investment and instead focused on the Irish tourism sector as a somewhat neglected and untapped source of employment and revenues. It especially touted tourism as a creator of jobs, of central concern to policy makers with unemployment peaking during this period. Although the report was widely discussed within government, it did not lead to immediate changes in tourism policy. Overall, in fact, government moneys for tourism promotion and development began to fall as overall revenues stagnated and debt ballooned. Meanwhile, as the economy continued to falter, so too did tourism, with international arrivals falling by 1.7 percent in 1985 and 2.7 percent in 1986. A year after the White Paper on Tourism Policy appeared, however, two additional reports were commissioned, one by government, the other by the private sector. The government study, commissioned by the new Department of Tourism and Transport in July 1986 and conducted by consultant Price Waterhouse, came out the following year. Meanwhile, the Tourism Policy Committee of the Irish Hotels Federation commissioned their own report in September of that year, and it was prepared by a group of Irish-based consultants. To this day, public and private sector actors involved in tourism cite their own respective reports as having sown the seeds for subsequent tourism dynamism. The reports share several conclusions but differ considerably in tone. Common to each report was an assessment that tourism had underperformed as well as a call for much more activist tourism policy in the service of national development. The main points of the two reports are summarized in Table 3.5. The private sector report, “Tourism Working for Ireland: A Plan for Growth,” was more strategic in nature, beginning with the target of doubling real tourism revenues in five years. Its primary conclusion was that the target was reachable, although it might take six to seven years, and that reaching it would require

Brand New Ireland?

50

Table 3.5

Summary of Government and Private Sector Reports on Irish Tourism, 1987

Government Report

Private Sector Report

•

Government must recognize importance and potential for tourism

•

What if tourism revenues could double in five years?

•

Tourism is neglected by government

•

Tourism is neglected by government

•

Greater policy coordination needed

•

Greater policy coordination needed

•

Bord Fáilte spending and activities must be more effective

•

Government spending on promotion must increase significantly

•

Stronger Departmental role, weaker Bord Fáilte role

•

Access transport must be cheaper

•

Access transport must be cheaper

Source: IHF (1987); Department of Tourism and Transport (1987).

increased government spending on promotion, better coordination among state agencies and departments, and a strengthening of the Department of Tourism, and cheaper access transport (IHF 1987). In contrast, the Price Waterhouse report for the Department of Tourism and Transport, while also touting the possibilities for tourism growth, was much more narrow in focus, concentrating on institutional arrangements and policy efforts. Most important, it called for greater departmental (ministerial) control of tourism while restructuring Bord Fáilte. Both reports were intended to be bombshells. Each attempted to raise the profile of tourism within the country’s larger political economy. The PriceWaterhouse/ government report stated at the outset that it “expects this document to stimulate a widespread and comprehensive national debate on Irish tourism performance and on policy measures needed for this important industry to achieve its full potential” (Department of Tourism and Transport 1987, 1). The IHF called the commissioning of its report as a “radical step” (IHF 1987). In a sense it was. In the past the hotel group had long been a powerful but relatively quiet player in tourism policy. This was the result of internal politics within the Federation and the dominance of a few leading family-based hotel groups. If anything, these groups had in the past taken a more protectionist stance toward tourism, limiting pressure on government primarily to taxation and regulatory issues. Many hoteliers held distrust for Bord

The Celtic Tiger and Irish Tourism

51

Fáilte going back to the 1950s when the agency all but forced expensive upgrading to meet international standards and still had a “love hate relationship” in the 1980s (Corr 1996, 69). The IHF had seldom if ever been at the forefront of promoting more tourism to the island. The change in IHF’s position came shortly after the formation of a more broadbased tourism industry group, the Irish Tourism Industry Confederation (ITIC) in 1984. ITIC replaced a similar but ineffectual organization, the National Tourism Council, which had been set up in part by Bord Fáilte. ITIC included the IHF (the IHF had declined to join the earlier organization), but also brought together other tourism providers, including airlines, ferries, tour operators, car rental agencies, B&B operators, travel agencies, airports and bus lines. In fact, while the 1987 study was commissioned by the IHF (and also funded by Coca Cola) pressure for the report also came from within ITIC. The report signified three things: A change in policy positions from the IHF, the emergence of a broader coalition to speak on tourism policy with ITIC, and the growing unhappiness of each body with the performance of Bord Fáilte. For their part, government was also growing increasingly unhappy with the tourism agency. Although it had earlier been quite innovative in its marketing activities—it was one of the first tourism agencies to make widespread use of television advertising for instance—its record in drawing tourists to the island was faltering. This was compounded by a perception of institutional arrogance and lack of accountability, growing both inside and outside of government. One former private sector official said of the attitude, At the end of the year, we would get together and have a couple of pints and discuss how the year was. The joke about Bord Fáilte was, you’d ask how the year was for tourism and they’d say, “pretty good. We opened up two more offices in such and such countries” (Interview, former private sector official, December 2007).

The most notable result of the two reports was that economic policy makers and politicians began to take note of tourism and its potential contribution to the economy. Prevailing economic conditions undoubtedly had much to do with this change in attitude, as did the upcoming election. As Chapter 1 summarized, the economy but 1986 had continued its downward spiral and the Fine Gael-led coalition government had been unsuccessful in implementing a stabilization and recovery plan and by January the coalition fell apart when Labour left government after a budget dispute. As the 1987 election campaign progressed, the rival center-right Fianna Fáil party capitalized on the private sector report and placed doubling the number of tourists to Ireland as a centerpiece of its economic campaign platform. Suddenly tourism had gone from what one official called “the Cinderella child” of the Irish economy, to a significant part of an electoral campaign. Fianna Fáil’s campaign literature said of tourism, “Yet, we have been neglecting the development

52

Brand New Ireland?

of this vital resource. At a time when world tourism has been growing, our market share has slipped” (Fianna Fáil, n.d., 3, Emphasis in original). Led by the resurgent Charlie Haughey, Fianna Fáil regained power in the February 1987 election and Haughey returned to the Taoiseach’s office for the third time. In addition to getting government finances in order in an effort to stave off the International Monetary Fund, the main item on the agenda for the new government as well as bureaucrats was employment. More than 230,000 people were unemployed that year—more than 17 percent of the workforce—and many more had emigrated. Long term unemployment—more than one year without a job—also reached almost 45 percent of the total. Here tourism offered particular promise. The IHF study had argued that doubling tourism would create 40,000 new jobs (1987, 113) and Fianna Fááil tourism campaign documents (n.d., 7) readily adopted that number. Moreover the projected government expenditure per job created was quite low, making tourism especially attractive. The changing environment was primarily one of expectation. The new government now saw tourism as a generator of employment, balance of payments income and tax revenues. Bord Fáilte tourism officials, if anything, were taken by surprise: In my view, in some ways the Tourist Board was almost setting its own terms. It would go to government every year and propose that tourism would grow by some modest amount. There’s an old expression “the hind tit” or “the runt of the litter.” That’s how tourism was viewed by government when it came to developing the economy…We sent in our targets for the coming year to the minister and we got a letter back. It was one of the strongest letters I had seen. It more or less told us to stuff our three percent [growth]. That, to me, was a sea change. All of the sudden you had government saying that it was seeing tourism as important in economic development. We were a bit shell shocked to be honest (author interview, former public sector official, December 2007).

While expectations changed, immediate government action was mixed. On one hand, for the first time tourism was integrated into national economic policy. Upon taking office in May 1987 the Haughey government almost immediately reduced airfares and ferry rates on Irish national carriers between Ireland and Great Britain, and also created gasoline subsidies for British car ferry tourists. Both were largely symbolic gestures signaling tourism as an important sector of the economy, although as then Minister of State and Fianna Fáil politician Dennis Lyons put it, “Let there be no mistake. This was not a once-off burst of energy on the Government’s part. It was the first step towards the intensive and comprehensive development of the national tourist industry” (Dáil Debates, March 2 1988, (page) 2009). More significant, The two dominant planning documents of that period, the Programme for National Recovery 1987 (based very much of NESC’s (1987) The Way Forward) and the National Development Plan, 1989-1993 gave tourism a prominent role, especially in the area of employment, where it now called on the

The Celtic Tiger and Irish Tourism

Table 3.6

53

Tourism Budget Totals for 5-year Plan, 1989-1993 (millions of 1989 constant Irish pounds)

Year

EC Financing

Irish Government Financing

Private Sector

Total

Public financing /total (percent)

1989

17.54

0.96

27.00

45.50

41

1990

32.17

7.50

26.00

65.68

60

1991

32.80

8.35

22.00

63.15

65

1992

31.61

8.31

19.00

58.93

68

1993

32.88

7.52

26.30

66.71

61

Total

147.00

32.65

120.3

299.96

60

Note: Of EC participation, 118.475 was in ERDF aand 28.528 was ESF (same as figures above). Source: Department of Tourism and Transport (1988).

industry to double both arrivals and receipts in five years and create 25,000 new jobs in five years (Wright and Linehan 2004, 10). While these new ambitious targets were widely publicized, however, the strategy and resources needed for reaching them were initially lacking. Bord Fáilte was expected to spearhead the doubling of tourism revenues during the next five years, but funding for agency promotion and administration actually declined in real terms by 30 percent between 1985 and 1990 (Henry 1991). More proactive was the Operational Programme for Tourism, 1989-1993, a strategic plan coming from the Tourism and Transport Department in 1988 as part of the five-year National Development Plan, itself a requirement for EU structural funds. The document laid out a four-pronged approach toward reaching the goal of doubling tourism revenues, emphasizing targeted promotion, competitiveness, improved distribution and product investment (Wright and Linehan 2004, 10). The Programme (OP) called for IR£300 million in constant 1989 Irish pounds (roughly $450 million) to be invested in the sector over the five-year period, with 60 percent coming from public sources and 40 percent from the private sector (Department of Tourism and Transport 1988). This was a considerable upgrade in investment, given that the entire Bord Fáilte budget in 1988 had been just IR£23 million. The most notable factor in the financing was the prominent role that EU structural funding would play, a feature to be repeated throughout the 1990s. As Table 3.6 shows, for the five years in question EU funds would pay for 82 percent of all public funding and nearly half the overall total (Department of Tourism and Transport 1988, 9). Again, however, the target of doubling tourism was more

54

Brand New Ireland?

a wish than it was a plan. As Deegan (2005) points out, the goal was to double tourism simply by doubling arrivals and revenues in each sending market. This ignored prevailing global and regional trends, most important the leveling off of the North American market and growth in mainland Europe. The Operational Programme was also the first government plan that offered ideas on how tourism to Ireland could grow. Interestingly, it involved almost no private sector input, and targets for private sector investment were never met. Earlier government documents noted the underperformance of the sector or set somewhat arbitrary targets but, coming on the heels of the call to double tourism in five years, the Programme identified five “product themes”: 1) Specific interest (active), 2) specific interest (passive), 3) cultural, heritage and entertainment, 4) leisure, fitness and health, and 5) business. To be sure, all five were broad and represented the major areas of tourism outside of the VFR market, but the government set specific targets within these broad categories. For example, the plan called for increasing the golf market by 330 percent over the period and those pursuing genealogical research by 268 percent (Department of Tourism and Transport 1988). In addition to the growing contribution of EU funds to the tourism sector beginning in the late 1980s, the other significant early initiative that aided tourism was a partial liberalization of air transport. Overall air transport policy and performance will be detailed in Chapter 6, but it is important to note that both public and private policy documents cited high transport costs as a significant bottleneck in the sector. The Irish government liberalized certain British routes with a revision of the Irish-British bilateral air services agreement in 1986 in a move that immediately increased access, added carriers and subsequently reduced costs. Ultimately the move to raise the profile of tourism within Irish economic development in the late 1980s was the product of several factors. First, the sector clearly underperformed during much of the 1970s and early 1980s and rightly or wrongly, Bord Fáilte took the brunt of criticism over this performance. Oil shocks, severe recession in the primary sending markets of Great Britain and the United States, and the Troubles in the North, were undoubtedly outside of the board’s control, but its perceived aloof attitude, along with long held autonomy from both public and private actors, meant that when things went bad, Bord Fáilte was the only political target on the radar screen. Second (and not unrelated) was that industry actors became organized and more sophisticated in their activities. The IHF became more activist and was joined by the relatively new ITIC in presenting a united front to government. Third, tourism policy moved from the realm of functional agencies and interest groups into the broader political and economic policy-making landscape. After Haughey and Fianna Fáil integrated tourism into their electoral platform, priority for the industry followed them into government and specifically into the Taoiseach’s Department, thereby raising the profile of the sector. Without this the respective IHF and Price Waterhouse reports would likely to have remained unheard calls from the wilderness.

The Celtic Tiger and Irish Tourism

55

These factors all mattered in raising the profile of tourism, but they beg the question of why the industry, which had in the 1940s accounted for as much as eight percent of the economy, only now took on new significance for policy makers in the late 1980s. Deegan and Dineen (1997, 221) argue that at this point the growth in profile and public expenditure was driven more by the EU Commission’s newfound discovery of tourism as en economic growth engine rather than any sea change in thinking on behalf of Irish policy makers. Yet the evidence runs counter to this conclusion. By the mid and late 1980s tourism as a sector drew renewed attention from political party leaders, powerful politicians and the economic policy-making bureaucracy. The most convincing answer to why this was the case is the backdrop of economic stagnation and sense of crisis (O’Connor 2008). Even within that general economic framework, which included crushing debt, a declining agricultural sector and a languishing manufacturing sector, the central concern was for jobs. Here tourism looked especially promising to policy makers. In the words of one civil servant actor closely involved in crafting the Programme for National Recovery out of the Taoiseach’s office, “That’s why we put it in there, because we saw it as one of the opportunities—along with the financial services centre and other areas—to create jobs and reduce unemployment. Given the growing unemployment situation everyone was desperate to think where could we employ people” (author interview, January 2008).

Tourism Sector Planning and Performance Measured on its own terms, results for the initial tourism push were somewhat mixed. The five-year goals of doubling tourism revenues failed, with arrivals up by 38 percent cumulatively and revenues up by 68 percent in nominal terms (including domestic carrier receipts), but that performance was a vast improvement over years previous. Moreover, the number of higher-spending holiday makers grew from 710,000 in 1987 to 1.56 million in 1992. What tourism growth did create were many of the promised employment benefits. Nevin (1995, 364) summarizes research studies, arguing a net gain in tourism jobs of 31,000 between 1986 and 1990, accounting for more than 70 percent of all new jobs created in Ireland during that period. Tansey, Webster and Associates, in a widely cited study commissioned by ITIC (1991, ii), come up with much lower estimates of 15,000 new tourism jobs between 1985 and 1990, 37 percent of all new Irish jobs, but their subsequent estimates for the exact five-year period in question (1987-1992), projected tourism employment growth to total 24,400, just under the stated target of 25,000. Similarly, Wright and Linehan (2004, 10) conclude that from 1988 to 1993 some 30,000 new jobs created in the industry, fully half of all new jobs in the economy during this period. The importance of the employment contribution of tourism to the Irish economy during this period should not be underestimated. Although economic growth in

56

Brand New Ireland?

Ireland rebounded after the 1987 crisis, the recovery was largely a jobless one. Real GDP growth averaged a healthy if unspectacular 4.3 percent annually during that period, but the government budget deficit was brought under control. Jobs data, however, were much gloomier. Official unemployment numbers, 225,000 in 1985, fell to 176,000 in 1990, but increased again to 230,000 or 16.6 percent of the workforce, by 1993 (Kirby 2002, 22). Ronayne (1994, 3-4) argues that official numbers often understated true unemployment rates by referring only to those on the Live Register. Even so, by his calculations, based on CSO data, registered unemployment reached nearly 300,000 people in April 1993 and, combined with those not counted, likely reached between 21.5 and 24.7 percent of the overall workforce. In short, the recovery—and the onset of the Celtic Tiger—was a jobless one. The only significant source of employment growth in this period came from tourism. Although tourism performed quite well during the first five-year period, much of the growth was driven by a combination of pent up demand, lower transport costs, and related growth in the return of Irish immigrants for visits home. Barrett (1997) even goes so far to attribute virtually all the early growth to the liberalization of air transport with Great Britain, noting that traffic on the busy Dublin–London route grew from 1 million in 1986 to 2.3 million in 1989. Others contend that the early boost in tourism numbers after 1987 mask Irish emigrants returning now that the economy entered an upswing. Whether true or not, the initial tourism investment spent through the first OP is best thought of as seed money. More than three-quarters of program spending went toward product development to remedy what was seen as a serious deficiency in Irish tourist offerings. Prior to that point, “Ireland was like a green desert” summarized one former public sector official (author interview, October 2007). Tourists might come to Ireland but infrastructure was poor and beyond viewing the scenery there was little to do. Visitor attitude surveys prior to 1987 showed growing dissatisfaction with the Irish tourism product. Public money for product development went mainly toward visitor centers, museums, houses and castles, leisure facilities, waterway restoration for boating and angling, traditional resort rehabilitation and construction of new golf courses. Bord Fáilte (1989) documents at the time discussed plans for “themed towns” such as Kilkenny (“Medieval City”) and Adare (“Estate Town”). Initial plans for a revitalized Temple Bar tourism and entertainment district in Dublin also originated here. Private investment in tourism also grew considerably during this period, in part spurred on by the general economic upswing, but also nudged by state action. Public investment in tourism signaled the private sector that the industry was now a priority. In addition, tax breaks lured private investment. Some breaks, such as those tied to traditional seaside resort renewal or development of Temple Bar in Dublin, were targeted toward specific geographical areas, but others, such as the Business Expansion Scheme (BES) were broader. The BES, which reduced taxable income by the amount invested, was created in 1984 and extended to tourism in 1987. It granted tax relief on qualifying investments in targeted sectors. Deegan

The Celtic Tiger and Irish Tourism

Table 3.7

57

Budget for Operational Program for Tourism, 1994-1999

Sub-programme

Total (€ millions)

EC contribution (€ millions)

Natural and cultural heritage

155

116

Development of new products

355

171

Marketing

154

63

Training

136

102

Total

800

452

Source: Stationery Office (1994).

and Dineen (1997, 239) show that tourism accounted for as much as 44 percent of all BES-related investments in 1991/1992 and 1992/1993 and went especially into accommodation. The result was a significant upgrade in accommodation stock and quality that has continued through today. While the five-year targets for tourism went unmet, the growth in arrivals, receipts, tax revenues and employment were viewed positively by policy makers and created optimism for continued growth in the future. A new five year Operational Plan (1994-1999) called for €806 million to be invested in tourism, with 57 percent to be funded by EU structural funds. As Table 3.7 shows, the largest proportion of the budget, €355 million, again went to product development. It also called for €244 million of private sector investment. Eleven percent of the European Regional Development Fund (ERDF) funding to Ireland from 1989-1993 went to tourism, and now, with the second OP, that proportion grew to 14 percent (Deegan and Dineen 1997, 170). Notable features of the budget included more spending on marketing and focus on improving national cultural institutions such as theatres and art galleries. Additional funding went to castle and country house restoration. Moneys also went to visitor and interpretive centers including those of iconic, yet private Irish companies such as Guinness and Waterford Crystal. Considerable funding continued to go to special interest tourism such as golf courses, equestrian facilities, and waterways for boating. The program also called for funding and construction of a National Conference Centre in Dublin, to be operational by 1999. Policy makers continued to promote tourism as a generator of foreign exchange, tax revenues and jobs, but the target of increasing visitor numbers received less emphasis. The program envisioned job growth of more than 40 percent over the life of the program. Emphasis on job training was accompanied by a three percent increase in the share of the total budget devoted to employment training. Overall Deegan (2005, 14) estimates that the Irish government, private sector and the EU invested upwards of €4.3 billion in Ireland between 1989 and 1999.

58

Brand New Ireland?

The years 1995-2000 represent the height of the Celtic Tiger. Real GDP grew on average by nine percent a year during this period while unemployment dropped to almost four percent. While arguing that tourism was a catalyst here would be too strong, the sector continued to perform well. Overseas arrivals from 19942000 experienced annual average growth of 9.4 percent and revenues grew by 11.4 percent. Growth was especially strong again among the European market. In the year 2000 more than 6.6 million international visitors came to Ireland, almost triple the 2.4 million that arrived in 1986. The growth was not simply market driven. During the 1990s the Irish government, private sector and the EU together poured some €4.3 billion in tourism (DAST 2003). Employment in the sector grew from 91,000 in 1993, the final year of the first OP to 138,000 in 2000, a 52 percent increase (Ibid.). Tansey and Associates (2003, 3), in assessing the contribution of Irish Tourism to the overall economy, estimate that tourism was by the end of the century Ireland’s sixth largest employer, behind construction but ahead of farming, and accounted for eight percent of all jobs in Ireland. Tourism growth has slowed considerably since 2001, as has the broader Irish economy. With respect to tourism, 2001 saw an actual decline in arrivals, spurred on by a recession in major sending markets, a foot and mouth disease scare along with a decline after September 11. Growth resumed the next year and subsequently, but has been at a much slower pace. In recent years Ireland has experienced one of the highest inflation rates within the EU 15, which, combined with the steadily increasing value of the Euro since 2002, has made the country a high cost destination. Table 3.8 shows the performance of both the overseas tourism sector and the economy as a whole from 2001 to 2007. It demonstrates the lower growth levels in tourism, but also shows that growth in tourism receipts grew just slightly slower than the GNP during the period in question. Growth in arrivals was especially hurt by poor performance of the two largest markets to Ireland, Great Britain and the United States. Growth in Europe and other markets has continued to be strong. British arrivals to Ireland grew by only six percent cumulatively between 2000 and 2005 while the U.S. market actually declined during that period by 11 percent. Tourism policy during this period changed in several ways. Institutional changes initiated in the 1990s led to a splitting of Bord Fáilte into two bodies. The first, Tourism Ireland, Ltd., was created as a result of the 1998 Good Friday (Belfast) Accords between the Republic of Ireland, Northern Ireland and Great Britain. One aspect of the various North–South cooperation areas emerging from the Good Friday agreement was the creation of a one-island tourism marketing body to promote the Republic and Northern Ireland abroad. The body, named Tourism Ireland, came into being in 2000 and took the then nearly €30 million overseas marketing portfolio from Bord Fáilte and the corresponding body in the North, the Northern Ireland Tourism Board. Tourism Ireland was charged solely with overseas marketing of the island of Ireland. Subsequently the Irish government created a new National Tourism Development Authority, Fáilte Ireland, which

The Celtic Tiger and Irish Tourism

Table 3.8

59

Irish International Tourism Arrivals and Receipts, GNP Growth, 2001-2007 Arrivals (millions)

Annual percent Growth

Receipts (€ billions)

Annual percent Growth

Percent GNP Growth

2001

5.99

-5.1

3.93

8.1

4.0

2002

6.07

1.3

3.99

1.4

2.9

2003

6.37

5.0

4.06

1.7

5.7

2004

6.57

3.2

4.07

0.2

3.7

2005

6.98

6.1

4.27

5.1

4.9

2006

7.71

10.5

4.69

9.9

6.5

2007

8.02*

4.0

4.90*

4.6

4.5

Average 2001-07

—

3.57

—

4.43

4.60

Note: * = Provisional. Source: CSO (2007; 2008).

continued to work on product development, training and promotion of domestic holidays. Tourism policy and targets were laid out in the National Development Plan (2000-2006). The Irish government also produced a €130 million Tourism Product Development Scheme (2000-2006) that was funded under two regional Operational Programmes and included €55 million in EU funding. The National Development Plan shifted the emphasis on tourism from arrival numbers and job creation to earnings and regional balance (NDP 2000). This is not surprising given first that Ireland had nearly full employment and second that tourism growth was becoming concentrated in Dublin and the South and East of Ireland. The NDP also included for the first time a significant discussion on tourism and the environment. In 2002 the Minister for Art, Sport and Tourism appointed a high-level Tourism Policy Review Group (TPRG) to study tourism in Ireland and come up with a long-term strategic plan for the sector. The resulting report, New Horizons for Irish Tourism, argued that tourism was now a central element of the Irish economy, accounting for one in 12 jobs €4 billion in exports and more than €2 billion in tax revenues each year. It also set ambitious targets for growth over the next decade, including doubling overseas visitor spending in real terms and increasing arrivals to 10 million, both by 2012. The report also called for increasing the share of more lucrative promotable visitors (those traveling for purpose of holiday, conference, language study or incentive travel) from 45 percent of the total to 50 percent

60

Brand New Ireland?

(TPRG 2003). The report was accepted and has formed the basis for subsequent government actions, including tourism policy implementation as well as the new National Development Plan (2007-13), which includes some €800 million in tourism funding.

Conclusion: Tourism and the Celtic Tiger This chapter lays out both the trajectory of the Celtic Tiger as well as that of tourism in Ireland over the past 20 years. It shows that rather than being separate from—or lagging behind—the dynamic industries within the Irish economy, tourism has been very much at the forefront. In 2007 international tourism to Ireland accounted for €4.91 billion, including carrier receipts on Irish carriers, as well as an additional €1.55 billion in domestic tourism. A year earlier international receipts accounted for 3.3 percent of all exports, 19 percent of service exports, and, with multiplier effects, 3.8 percent of GNP (Fáilte Ireland 2007a). Direct government revenues were estimated to be €2.2 billion. Government officials also tout the industry as the largest “Irish owned” industry in the country as well as one dominated by small and medium-sized companies. Most notable has been the role of tourism as a quiet and yet leading economic sector. Employment in the sector grew by more than 70 percent between 1990 and 2002, considerably higher than the 50 percent overall employment growth during that period (DAST 2003, ix). Evidence provided above also suggests that the industry wasn’t simply left to the market. Beginning in the 1980s government officials, along with private sector organizations, cited tourism as a sector to be targeted as a developmental priority. They successfully attracted EU structural funds and channeled public and private investment into refurbishing and expanding tourism accommodation, facilities, products and marketing in order to make the country a much more attractive destination. As the next chapter will detail, Tourism also moved from the fringes of economic policy-making to the center, and although never as high profile as the high-tech industries, began to take on a more respected place among policy makers. Yet as it will also show, the models of bureaucratic expertise combined with state-societal synergy common to most developmental success stories do not apply here.

Chapter 4

State, Society and Tourism Development

The role of the state has returned to development studies with a vengeance over the past two decades. Most accounts of both developmental success and failure rest with the structures, policies, histories, organization, autonomy, embeddedness, or technocratic know-how of the state apparatus as well as its relationship with societal actors. Yet as Chapter 2 summarizes, we lack precise indicators of many of these state attributes. Instead, at times it appears that developmental outcomes lead analysts to place a label on the state or particular bureaucracies within it: Developmental successes are therefore the result of a developmental state, and failures of predatory or corrupt states. This chapter considers the role of the state and key societal actors in the Irish tourism sector in order to challenge and refine several themes found commonly in the neo-statist literature. I return to three broad arguments made in Chapter 2: First, the state must be disaggregated into constituent parts. Ministries and agencies are functionalist in nature. Although state organizations may, and frequently do, overlap, pursue conflicting polices and interests, much developmental state action is segmented by economic area or function. Second, different industries require different state action and attributes. Even within the high-tech sector the software and hardware industries have widely varying financial requirements, educational needs and technical expertise. The chapter details the particular requirements of tourism and how they change over time. Finally, the chapter shows that there is no single optimal relationship between relevant state bureaucracies and private sector actors. Too often the developmental state literature posits a one-dimensional, synergistic relationship between these actors. In Ireland, however, the relationship in tourism has been fragmented, competitive and at times confrontational. Yet this more competitive model has ultimately served the tourism sector well.

State and Society in the Celtic Tiger As Chapter 2 summarizes, the state has become central to most major strands of developmental theory in recent years. Neoliberals posit the need for a night watchman state that monitors and enforces open markets and protects property rights. Failure to do so suggests underdeveloped, mistaken or even corrupt behavior on behalf of state actors. Developmental state approaches see a need for the state to provide certain elements necessary to development that tend to be absent among late developers. Whether the state does so or not is an open question, but their provision is seen as a crucial element in developmental success. Importantly, these

62

Brand New Ireland?

elements often violate market principles. Neo-Marxist approaches view the state as a key actor as well as environment where class struggles are played out. Yet state action here tends to be viewed as a result rather than cause. Tax cuts for capitalists, while leading to particular development outcomes, are seen as evidence that capitalists have been successful in getting the state to do their bidding. Literature on the Irish state has reflected these theoretical debates, but with the onset of the Celtic Tiger, the consensus regarding the state in Ireland is that it has played a beneficial and developmentalist role. By actively pursing foreign capital into leading sectors, holding wage demands down and maintaining extremely low corporate tax rates, the state in Ireland has increasingly taken a very probusiness stand, leading Breznitz (2007, 181) to label state action as “neoliberal interventionist.” Ó Riain (2004; 2000) contends that the state violated market principles in intervening in the economy, but did so in a much different manner than previous development states such as South Korea or Taiwan. Moreover, in the age of globalization the heavy handed methods of the latter cases were unlikely to be successfully replicated. Instead he argues the state has intervened selectively and with a light hand, helping to foster developmental networks in leading sectors of the economy. This Developmental Network State possessed organizational cohesion but was less structured and coordinated than in other developmental state cases (Ó Riain and O’Donnell 2000). Before examining these claims in any depth, we must first consider the timing of the developmental state. When, precisely, did the state in Ireland become developmental in nature? State-societal relations have traditionally been considered to range from clientelist to outright corrupt (Collins and O’Shea 2001). Indeed many explanations of Irish development failures prior to the onset of the Celtic Tiger focus on state clientelism, ineptitude and poor policy choices (e.g. Kennedy et al. 1988; Garvin 2004). Others (Jacobsen 1994) contend that the Irish state lacked the capacity to achieve its desired goals of economic development. How did such a state transform itself into a Flexible Development State or Developmental Network State in such a short time? There are two short answers, but neither is particularly satisfying. One is that the economic crisis of the 1980s was so deep that it required not only new thinking but new relationships. Hence, the social partnership model was put into place that helped minimize clientelism between the state and favored social actors. Yet the inevitability of such a change can be called into question. Certainly there are many cases of economic crisis elsewhere that have not led to such arrangements. Moreover, clientelism and corruption continue to plague both major political parties in Ireland (Murphy 2003). The second argument relates to changes within the state apparatus itself. Ò Riain and O’Connell (2000, 315-7), for instance, argue that while the IDA has been around since the 1950s, it changed radically after the 1970s, improving organizational capacity and gaining autonomy from the broader state apparatus. Barry (2006) also argues that the IDA served as not only a recruiter of foreign capital, but also a conduit for foreign business to the Irish state. Hence it was able to successfully lobby for the installment of new telecommunications infrastructure as well as shape

State, Society and Tourism Development

63

Irish educational policy, both in order to better serve foreign firms. Within the state apparatus, however, the IDA appears to have been the exception to the rule for at least some time. Breznitz (2007), for instance, argues that the domestic software industry grew mainly in spite of—rather than because of—Enterprise Ireland, the government agency charged with promoting domestic businesses. Moreover, as the foreign manufacturing and financial services sector took off in the 1990s, other sectors in Ireland, including agriculture and domestic industry, suffered (O’Hearn 2001). Therefore to suggest the existence of a Flexible Development State appears to be too strong. Politically, Ireland possesses a parliamentary government system, with two dominant parties, Fianna Fáil and Fine Gael. Each is fairly non-ideological, has a varied social base, and tends to follow center-right policies. Political identification in Ireland is very much based upon family and historical ties and to a lesser extent region. Within the state structure, Ireland possesses a weak Department–strong Agency tradition. With the exception of powerful departments such as Finance and Foreign Affairs, ministries themselves often change responsibilities and power over time. In a small country with a small state, Irish policy-making circles are intimate and fairly informal (Adshead 2008). The Irish state inherited a welldeveloped state apparatus with the foundation of the Free State and has long possessed a Weberian-styled bureaucracy, marked by functional differentiation, meritocracy, internal recruiting and training (Breznitz 2007, 188; Connolly and O’Halpin 2001). The Department of Finance, which dominated economic policy for years, was staffed by economic conservatives who long argued against state intervention in the economy (O’Hearn 1990; 1998). Finance did, and continues to serve as a gate keeper for policy in that even though Departments are organized functionally, budgets and major policy initiatives must go through Finance and each year “budget day” is therefore significant for all policy makers. Meanwhile top civil servants in ministries and agencies come up through civil service ranks. Top civil servants in Departments are Secretary Generals, and they are joined by Assistant Secretaries and Principal Officers as key bureaucrats (Collins and Cradden 2001, 55). Ó Riain (2004, 145-6) examines the Irish bureaucracy in some depth, using the Evans and Rausch (1999) 14-point scale regarding Weberian characteristics, finding the Irish bureaucratic apparatus to compare favorably to those of other Developmental States such as Taiwan and Singapore and just below that of South Korea. Finally, it is also important to note the power of consultancy and government blue ribbon panel reports as key policy-making tools both for the economy as a whole and for sectors. 20th century Irish economic history is rife with reports (Culliton Report, Whitaker Report, Telesis Report, etc.) that served as key moments of change in Irish economic models. These also signify the power of the bureaucracy—rather than elected governments—in playing the leading role in formulating development strategy in Ireland. The very act of calling for consultants to make a study and recommendations became significant political acts in and of

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Brand New Ireland?

itself. As the discussion below shows, the use of consultants, studies and blue ribbon panels would also become important in the tourism sector. State capacity and autonomy, as noted in Chapter 2, are ultimately components of state power, in this case the power to pursue and achieve its economic goals. Power, however, is always relational. We need, therefore, to consider the state in relation to potentially powerful civil society actors. Especially relevant for our discussion is the business class, both generally and with respect to tourism. O’Hearn (1990; 2001) convincingly argues that both state and societal actors need to be disaggregated. He shows that the historic shift from ISA to exportoriented industrialization in the 1940s and 1950s, for example, witnessed splits within the Irish state as well as among business groups. Business had traditionally been organized into small, regionally based chambers of commerce, and only later organized into national organizations. Irish manufacturers took a strongly protectionist position and were backed by some departments and agencies, but Department of Finance officials won the day as Ireland pursued industrialization by invitation after 1958 (O’Hearn 1990; Jacobsen 1994; Adshead 2008). Later the business class became divided along domestic and foreign lines, with the IDA acting as something of a surrogate peak association for foreign capital (Ó Riain 2004), while indigenous business spoke mainly through the Irish Business and Employers Confederation (IBEC). IBEC was formed in 1992 and was a product of a merger of two other peak associations (Collins and Cradden 2001). The classic story told among late developers has been that of a far-sighted and strong state either prodding an underdeveloped business sector with carrots and/or sticks, or acting on its own as a surrogate capitalist class through direct entrepreneurship. Although the Irish state has practiced some of each with stateowned companies in airlines, sugar, ferries, telecommunications and a few other areas, state ownership has largely been confined to precisely those areas where public firms have tended to predominate throughout the world. Instead, the role of surrogate capitalist has since the 1950s increasingly been filled by multinationals, at first in pharmaceuticals and traditional industry, and later in the high-tech and tradable services sector. Their entrance created a division of labor of sorts, with multinationals dominating these areas (with the arguable exception of software) and indigenous firms in control of traditional areas of the economy. The ability of the state to rely on foreign capital increased its standing with respect to domestic business, as did the huge influx of EU structural funds (Adshead 2008).

The State and Business in Irish Tourism Although one might make generalizations regarding state-societal relations in generally, sectoral analysis offers a more detailed picture because it pinpoints policy networks and specialized players. Tourism is no exception. Prior to the tourism push in the late 1980s the dynamic at work in Ireland is perhaps best termed “weak state, weak society.” Bureaucratically, tourism was almost solely

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in the hands of Bord Fáilte, technically a state-sponsored body which itself had become something of a distant fiefdom. The agency, with its origins in the 1952 and 1955 Tourist Traffic Acts, was charged with marketing promotion, product development, regulation and grading of facilities and personnel training. From the standpoint of the private sector, it was viewed as all powerful, yet within the larger state apparatus, Bord Fáilte remained far from central policy-making circles. In addition, the Department of Finance never held a favorable attitude toward public spending on tourism, and was frequently at the forefront of those who argued against funding increase requests from the board. This also meant, however, that despite modest funding, the board was essentially left to its own devices in making and implementing tourism policy in Ireland through the 1980s (Deegan 2005). This predominance of Bord Fáilte was made easier by the dispersed and weak organization among societal actors working in tourism. Most were small businesses that were geographically dispersed and organized by function. Hence, for example, the accommodation sector alone had a hotels organization (which competed with a hotels and restaurant association), two Irish homes (Bed and Breakfast) associations, and guesthouse association. All of these were separate from other areas of tourism such as restaurant associations, travel agents and transport groups (themselves organized by mode of transport). With the exception of transport, which involved state-owned companies in airlines, ferries, railroads and buses, business ownership was predominantly small in scale and usually family owned. As Chapter 3 summarizes, state funding for tourism was extremely modest prior to the tourism push in post-1986. The shift from ISI to export-driven growth, embodied in the First Programme for Economic Expansion from 1959-1964, devoted less than one percent of its expenditure to tourism (Deegan 2005). Bord Fáilte was very innovative, however, especially in its marketing and in creating new tourism products and events such as An Tóstal (Ireland at home festival) a new spring festival created by Bord Fáilte in early 1950s, and later a National Tidy Towns competition initiated in 1958 by Bord Fáilte and run annually by the board until 1994 when it was turned over to the Department of the Environment (Wright and Linehan 2004; Zuelow 2005). The tourist board used its funding, as well as its regulatory power, to upgrade accommodation over the years, but this was not always welcomed. Because the private sector remained unorganized, Bord Fáilte tended to dictate to business. Bord Fáilte did the industry job as well as its own. It set standards, graded hotels, gave grants. It was very much accommodation focused, very much driven by the board and all the policies developed through the state boards, and there really wasn’t a lot of industry interaction because it wasn’t an organised industry (Former ITIC chair, quoted in O’Brien 2007, 138).

Businesses, especially hoteliers and owners of guesthouses, often resented standards created by the Bord, however, seeing them as requiring costly renovations and

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upgrades. Agency personnel in turn complained that most hoteliers had never left the country and therefore had no idea of relevant international standards (Corr 1986, 135-6). Bord Fáilte was also increasingly viewed as aloof and staid. Its longtime head, Timothy O’Driscoll, had earlier served in the foreign service (including ambassador to the Netherlands), fostered a culture of diplomatic formality combined with what many in the business viewed as an air of superiority. “Bord Fáilte not only told the industry what to do. It told Government what to do. There’s an old story that the head of Bord Fáilte [O’Driscoll] once summoned a Minister to a meeting, not the other way around” (author interview, private sector official, November 2007). Although relations between the private sector and Bord Fáilte were at times frosty and generally deteriorating, with one observer (Corr 1986) calling it a “love–hate” relationship, this isn’t to argue there was no cooperation between the public and private sector. The actors shared an interest in attracting more visitors, raising earnings, and growing the profile of the sector. There was also crossover in personnel, with hoteliers serving on the board of Bord Fáilte and former tourist board members moving to private sector organizations. This included Kevin Barry, a top aide to O’Driscoll at Bord Fáilte, as well as Jim Flannery, a former hotelier who moved from a position at the Bord to become chief executive at the IHF, a position he held for 10 years (Corr 1986). Meanwhile private sector organizations began to change in the 1980s. The Irish Hotel Federation (IHF) was the most powerful tourism-related interest group in Ireland, and had been for some time. The founding of the IHF dates back to the 1930s and the group has traditionally been much better funded than other tourism peak associations. For much of its history, however, the organization looked inward and confined itself mainly to tax issues and the like. “They had a lot of money and they were pretty sophisticate and lobbied very effectively,” said one private sector observer. But he also describes them as “protectionist” and as “an employers union” that had little interest in the problems or issues of other tourism organizations and enterprises (author interview, December 2007). Another official who worked for Bord Fáilte as well as the IHF agreed: They were in fact a trade protection body. They weren’t really active in growing the cake. They were much more active in fighting over the slices of the cake. So they were very concerned with anything which affected them in terms of their business as a trade protection body (quoted in O’Brien 2007, 139).

In the 1980s the IHF hired its first full-time administrator, however, and organizationally the body began to move away from a protectionist, inward orientation. A broader peak association, a National Tourism Council, also existed in the 1980s, but it had been set up by Bord Fáilte, was under funded, and internally divided. Perhaps most important, the IHF had refused membership, preferring to lobby on its own. “The IHF was, and still is, the most powerful organization.

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It wouldn’t join. There was a big feeling that it was getting nowhere” (author interview, private sector official, November 2007). The Council attempted to lobby government, but in many cases individual members defected or sought side deals with favored politicians. As a result, the peak organization was not held in much esteem by either Bord Fáilte or the broader government. It was really a very weak organization. It was a perch in what would become IBEC, you know, the employers association. They did representative work for a number of sectors. It was very fragmented because more than anything it was a little talking shop. And the hotel association didn’t join. It wasn’t a member. And the members it did have were represented by third level managers. They couldn’t really speak for their enterprises (author interview, private sector official, November 2007).

Another person active in private sector activities agreed: Tourism from the industry perspective was not organized. Tourism had different components to it. There was a tourism council which was really very unstructured…it was really the tour operators criticizing the hotels and the hotels criticizing airline fares…it never became a cohesive group…it lacked a constitution, and it lacked leadership and you see in the absence of that what you got was personalities taking over (quoted in O’Brien 2007, 167).

Another private sector official who became active in ITIC concurred, arguing that prior to the late 1980s tourism actors lacked organization or unanimity. He retold a story repeated to me several times of private sector officials attempting to lobby the Minister of Finance. “There were eight or ten associations or actors and they would go in one after the other asking for different things or reporting different things. Finally he said, we’re not seeing you anymore” (author interview, private sector official, December 2007). Another former private sector official told a similar story. “We had something like 14 different organizations going in and lobbying government and saying don’t listen to the other guy. Ultimately, it didn’t do them any good” (author interview, former private sector official, December 2007). Changes within the IHF, along with the formation of ITIC would change this. ITIC emerged out of the National Tourism Council, with then president Eileen O’Mara Walsh beginning the planning process in the early and mid-1980s (author interview November 2007), and ultimately hiring its first administrator in 1990. Industry organization was now marked by the first time by two important changes. First, the new peak association was represented by all of the primary players, including the IHF, which brought its history, influence and deep pockets into the organization. Also joining were the so called semi-state bodies, or state-owned enterprises operating in the tourism sector, notably the national airline Aer Lingus, the state-owned sea ferry company Irish Ferries, and CIE, which operated a national

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bus service and the railroad. (A nationalized hotel chain passed from CIE to Aer Lingus). Planning for ITIC was also supported by Bord Fáilte (O’Brien 2007). Second, ITIC and the IHF began using more sophisticated economic analysis in lobbying government, most often through hiring outside economic consultants. There was a time where the view of lobbying was that you knew someone’s son-in-law who was in government and they talked to you and that is how you got to speak to the minister. They would listen to you and give you a cup of tea, but once you left, nothing would happen. It was clear we needed hard economic evidence in order to get support (author interview, private sector official, December 2007).

An initial example of using consultants was the commissioning of the 1987 SKG report, Tourism Working For Ireland: A Plan for Growth by the IHF. The Tourism Policy Committee of the hotels’ federation also worked closely with ITIC officials, and each shared the view that 1) tourism had been neglected and could benefit from new initiatives and 2) that the only way to convince Government of this was to rely on hard economic data. Moreover, the private sector plan was done independent of and not written for Bord Fáilte. Instead it went straight to Government and the politicians, in the midst of economic difficulty and pending national elections. The report was especially attractive to Fianna Fáil and its leader Charlie Haughey. In truth, Haughey was a risk taker. He accepted our position and used it in their campaign, saying if you elect us we’ll promote tourism and create jobs. IHF got to him and he adopted it. Then when he got into power he wanted to put the program into action (author interview, private sector official, December 2007).

The onset of the tourism push, combined with the new organizational strength of the private sector changed the political equation, and by the early 1990s, Bord Fáilte was facing a very different policy-making environment. Within government, the Haughey government had embraced tourism as a jobs creator and the Department of the Taoiseach now began playing a more prominent role. Tourism at the ministerial level was also changing. In the late 1980s it had been paired with Transport and in 1991 Tourism and Transport also took on Communications. More importantly, the Department took on a more aggressive policy stance when Charlie McCreevy became minister in 1993. McCreevy had been an internal opponent of Haughey but was ambitious and assumed cabinet positions when Haughey left office and was replaced by Fianna Fáil politician Albert Reynolds in 1992. Fianna Fáil lost power in 1994 but when it regained it three years later McCreevy would become the powerful Finance Minister under Taoiseach Bertie Ahern and later became a European Commissioner. According to many former public and private sector officials, those in the Department, including Ministers, had in the past deferred to Bord Fáilte over tourism policy, but this would not continue under McCreevy.

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“Bord Fáilte people would go into the Minister and effectively give orders. Charlie would have nothing of that” (interview, public sector official, December 2007). Another former private sector official with close ties to government agreed. “McCreevy hated Bord Fáilte. He wanted to eliminate the tourist board” (author interview, private sector official, December 2007). Another long-time government official argued the biggest change to tourism came not with the dual reports of 1987 but with McCreevy’s arrival as Minister. “What really raised the game was in 1992 when a new cabinet minister was appointed, Charlie McCreevy. I don’t know what you know about him but he was a politician who had really strong views about things and pursued them very hard” (author interview, public sector official, January 2008). To some degree the conflict was over style, but Bord Fáilte had increasingly come under fire from many fronts, especially now that tourism growth was seen as a pillar in national economic recovery. In addition to the Department of Tourism and Transport, the powerful Department of the Taoiseach had by now taken a keen interest in the industry. The Department itself was powerful simply because it was the office directly connected to the Prime Minister, but in addition through administrative reform it now took on many responsibilities from the Department of Economic and Social Planning in the 1980s and as a result had gained significant bureaucratic power, often rivaling that of Finance (Collins and Cradden 2001, 62). The idea was to have an economic and planning unit that had much more clout and could dictate more to other ministers and departments (interview, former public sector official, January 2008). The senior civil servant of the Department, the Secretary General, holds particular power, by working closely with the Taoiseach, overseeing the Social Partnership that emerged in 1987 and continues today, and by serving as chair of the National Economic and Social Council (NESC), a key policy advisory body that brings together key economic interest groups. The Department of the Taoiseach set up a Tourism Task Force in 1992 and initially staffed it overwhelmingly with people working in the private sector (Deegan and Dineen 1997). The task force issued a report later that year that called for maximizing revenues from existing tourists (rather than focusing on just growing the number of arrivals) and also calling for a new Tourism Council of Ireland, a public–private body that would take the lead in writing national tourism plans (Ibid.). Finally, it called for an overhaul of the Bord Fáilte board, giving the private sector-nominated representatives more influence. Although representation on the board was delayed, soon after a National Tourism Council, a public–private advisory board, was named. That same year Padraig o’hUigin, Secretary General of the Department of the Taoiseach for many years, and the chief author of the 1987 Programme for National Recovery, was named chairman of Bord Fáilte by McCreevy. This signaled not only a broader interest on behalf of Government in tourism, but also an effort toward reducing some of the policy-making power from Bord Fáilte. Not incidentally, it also brought forward powerful political and bureaucratic actors into the tourism policy-making arena.

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In addition to government Departments, the private sector was by the early 1990s beginning to flex its muscles. As the above discussion notes, the tourism sector had become more cohesive, and it had powerful connections in government for the first time, both of which emboldened it in challenging Bord Fáilte. ITIC and the IHF became more adept in lobbying, both in its targeting and substance. By the early 1990s both organizations lobbied at multiple points in government, rather than simply to the tourist board or Department of Tourism and Transport. “We would go to the Department of Tourism, mainly as a courtesy,” said one private sector official, but at the same time, the organizations would lobby in the Departments of the Taoiseach and Finance, and on at least one occasion, directly to Brussels over EU structural funding (author interview, December 2007). In addition, the use of consultant reports became more and more important, and both the IHF and ITIC increasingly went to their members for extra funding for the often expensive studies. The tourism industry now kept a higher profile. One thing they discovered as how to lobby. We recognized these ministers were very smart. They also had highly educated and very professional civil service officials. If you didn’t go in there with your economic case they’ll be nice to you and give you a nice cup of tea, but in the end you won’t get anything (author interview, private sector official, December 2007).

Another private sector official confirmed this sentiment, stating, “…all our arguments had to be economic based. We started hiring consultants and they put together very sophisticated reports with economic analysis” (author interview, December 2008). Although the consultant reports were to represent “cold hard facts” as opposed to culling favors from friends and connections, the consultant reports themselves were hardly apolitical. One private sector representative active in peak associations suggested that by and large, organizations formed their conclusions and then hired the appropriate consultants to back them up with the relevant facts (author interview, October 2007). Another argued that the choice of consultants itself was a political act. Consultants were chosen for their economic expertise but also their political connections. “We were very careful in the consultants we looked at. We hired some of the same groups that were being hired elsewhere in government and had lots of respect” (author interview, December 2007). By the early 1990s the private sector wanted to have a more prominent position in shaping tourism policy, and made that clear to allies in government. “We learned that to be effective we’d influence policy by making macro-statements. I always said that policy for tourism must be industry driven, not government driven. But to do that we adopted initiatives that put policy on the table” (author interview, former private sector official, December 2007). Industry officials also wanted more of a voice when it came to spending. They complained that the Bord Fáilte budget lacked transparency and growing administrative costs remained hidden under marketing. The complaints grew louder after poor performance in 1992, especially

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from the U.S. market, on the heels of the Gulf War and a domestic currency crisis. One industry official suggested this marked a low point in relations between the private sector and the board. There was quite a lot of tension between industry and the agencies. The feeling was it had done some nice things in marketing but it was seen as very political and very autocratic. There was no transparency at all. We often felt like we couldn’t get any answers (author interview, private sector official, November 2007).

Another former industry official active in lobbying government argued that in retrospect, Bord Fáilte was also a convenient target. The problem is that when things don’t go well it’s never your fault. On the other hand, the problem wasn’t what Bord Fáilte was doing. It was more that industry didn’t know. They were getting a great deal of money and we didn’t know how it was spent. It wasn’t something untoward that was going on (author interview, December 2007).

The culmination of this process came when the Minister, McCreevy, called for an external consultant evaluation of Bord Fáilte and tourism policy. The subsequent study, conducted by the London offices of consultants Arthur D. Little, was largely critical of the agency, calling for it to curtail many of its activities while instead concentrating on overseas marketing. The report recommended cutting its Dublin staff by close to one-third while leaving domestic tourism development to regional tourism organizations (A.D. Little 1995; Wright and Linehan 2004). “A.D. Little almost killed us,” summarized one former Bord Fáilte official (author interview, October 2007). Even today, principals disagree on the motivation behind A.D. Little report. For some, it was a clear attempt by McCreevy to knock down the agency and assert power. “McCreevy knew he couldn’t get rid of Bord Fáilte,” said one former private sector official, “so he used the consultants instead.” Another government official argued, That was a review that tried to evaluate what Bord Fáilte were doing and what they could do better. But there was also a political agenda. There was a feeling that Bord Fáilte got too big for their boots. The essence of ADL was that tourism moves at different stages and therefore needs different things from lead agencies. And with where the stage was in Ireland at the time, that stage was marketing. Bord Fáilte should get out of certain other things. The hidden agenda was an effort to strengthen the industry and the department vis-à-vis Bord Fáilte (author interview, January, 2008).

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Others disagree, arguing that a reassessment of the agency remit was logical now that tourism was taking on a greater role in the economy. It was in part a general attitude that Bord Fáilte was a little overly distant, but it was also making sure that public service was efficient and not too costly. Similar things were done at other agencies around the same time. (e.g. IDA and Enterprise Ireland). It might have been an attitude—The people in Bord Fáilte, I found, were very self centered. On the other hand they had reason to be in that they had been successful. The reality was that tourism had begun to take off and the people who were benefiting were becoming more confident and if you’d like, more aggressive (author interview, former government official, January 2008).

The private sector peak associations were quite happy with the report and subsequent changes. From this point on, especially with the establishment of the National Tourism Council, the private sector effectively had a voice in policymaking. Yet the declining power of the tourist board also left questions as to exactly who would take on the leading policy-making role in tourism. The National Tourism Council, according to Deegan and Dineen, played a very minor role in the planning and writing the second Operational Plan for Tourism (1994-1999). The Department of Tourism and Transport, later Tourism and Trade, did take on growing responsibilities even though it was, and still is in its current form (Art, Sport and Tourism) quite small, with fewer than 20 people in the Department devoted to tourism. In addition to the overseas marketing role of Bord Fáilte, a new marketing mechanism, the Overseas Tourism Marketing Initiative (OTMI), a joint public–private body, was formed in 1993 to jump start overseas business. The initiative was spurred on by supply and demand factors, notably the new availability of European funds for such purposes combined with the poor performance of the North American market following the Gulf War. The public and private sector contributed matching funding and received twice their contribution from the EU. But more important, it solidified the place of the private sector at the table. Industry worked hard to get marketing money, saying it would put up 1 million [Irish pounds] and get 2 from EU. But for government the payback on seed money was three-to-one. We went to McCreevy and said it [the industry] would put up one million for Ireland as a destination and we could get it doubled. But if you put up a million you can get three, so we can get six overall. But what that did was also give us cash in hand. The other angle was that industry were in charge. It led to greater transparency. It shifted the whole power structure (author interview, private sector official, November 2007).

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Institutional Changes and Irish Tourism The Arthur D. Little Report served to reorganize Bord Fáilte after 1994, but the agency still had a role in the OTMI and in the management of spending of the second, much larger tranche of European Structural Funds in the second operational plan. But this was a far cry from just a decade earlier when Bord Fáilte effectively dictated spending priorities and policy. Now EU funding went through two separate management boards devoted to product development and grants. Although Bord Fáilte had representation on the boards, it was now just one of many actors. This period saw the biggest changes in the tourism product as the government, in conjunction with the private sector, regional tourism organizations and local governments, built and upgraded monuments, castles and houses, visitor centers, interpretive centers, and city centers. Dublin, in particular, underwent a major facelift as EU funds helped build the tourism, restaurant and nightlife Temple Bar area immediately south of the River Liffey and later a major shopping area (O’Connell Street) just north of the river, the Collins Barracks (National Museum, decorative arts and history), the Millennium wing on the National Gallery, and the Royal Hospital Kilmainham (Irish Museum of Modern Art). The work helped make once sleepy Dublin a top tourism destination in Ireland (and in Europe). Dublin in particular saw big changes. In the 1990s it went from being a city where we were trying to figure out how to get people to go there or how to get people to stay three nights instead of two, to becoming THE city, and in some ways it has never looked back (interview, private sector official, November, 2007).

Specialty tourism was also identified as a major growth market, and a large proportion of product development moneys were devoted to equestrian centers, boating and waterways, angling, hiking trails, and especially golf courses (Horner 1994; TPRG 2003). There was this huge hype at every meeting about building more golf courses. And of course all of the guys in the room were golfers. You’d think one person would say, “hey what about some money for culture?” But golf was a big target (author interview, private sector official, November 2007).

The A.D. Little Report called for a new international marketing manager for Bord Fáilte along with at least 20 new university-trained marketing experts. The board began outsourcing several non-core activities and hired new marketing personnel (Deegan and Dineen 1997). It also began closer cooperation with the Northern Ireland Tourist Board (NITB) after a new round of European funding for the OTMI required that the money be spent on marketing the island of Ireland as a single destination. The respective tourism agencies had long cooperated with each other out of self interest, even when the larger government relations had become colder

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(Zuelow 2006). Even during the height of the troubles, Bord Fáilte, the NITB and the British Travel Association worked hand in hand. “We’d meet regularly and share information” (author interview, former public sector official, October 2007). They also jointly funded (or cooperated) in things like long-haul market studies, knowing that those markets would seldom send someone to just one of the three areas. The new marketing initiative marked a more public level of cooperation as each government sought confidence building measures in the ongoing peace process. The two tourist boards also collaborated in the first effort of branding Ireland, announcing plans for Tourism Brand Ireland (TBI) in 1995 and rolled out the first brand in November 1996, “People, Place and Pace.” Three years later North–South negotiators again looked to tourism when negotiating what would become the 1998 Good Friday or Belfast Accords, creating a framework for ending the troubles. Negotiators created a single island marketing body, subsequently named Tourism Ireland Ltd., created and funded by the respective governments. The jointly operated Tourism Ireland was later approved by North–South Ministerial Council in October 2000 and became operational in January 2002. It took on all the overseas marketing previously done by the respective tourism agencies. This especially affected Bord Fáilte, which after the 1995 A.D. Little Report had been mandated to be mainly an overseas marketing agency. Instead, with the creation of Tourism Ireland the board lost much of its marketing personnel to the new, well-funded joint company. Tourism Ireland began operations in January 2002 with roughly 150 employees. Headquartered in Dublin, and headed by Paul O’Toole, who had previously worked in marketing with the OTMI and Bord Fáilte, the company has brought together staff from Bord Fáilte and the NITB and has since opened offices in 18 countries. The rump Bord Fáilte was left floundering for some time, operating without a clear mandate at the same time that EU structural funds looked to be drying up after the 1994-1999 Operational Programme. By all accounts, these final institutional changes were driven by the peace process rather than the needs of the tourism industry. As one government official summarized, “only in Ireland could you move from two tourism agencies to three” (author interview, public sector official, January 2008). Another concurred: “It was a crazy decision. If you add up the total island there are about 5 million people and there are three tourism boards” (author interview, public sector official, December 2007). Moreover the two tourism markets are vastly different, with holiday travelers accounting for only 17 percent of the Northern market while making up fully half of the Southern market (Tourism Ireland 2006). Republic of Ireland negotiators were apparently ready to scrap Bord Fáilte altogether for a single, all-island tourism agency, but somewhat ironically, Northern government officials, unwilling to go so far, helped save the board. The precursor to Bord Fáilte, in fact, had been dominated by IRA men who were alleged to have stored weapons in their desks (Zuelow 2005). Unionist politician Ian Paisley reportedly told one Republic tourism official at the Good Friday negotiations, “You’d never have thought Bord Fáilte would have

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been saved by the Unionists” (author interview, public sector official, December 2007). The rump agency would later be merged with CERT, the state tourism training and education body, and reincarnated as the National Tourism Development Authority, or Fáilte Ireland, in 2003. CERT had been created in 1963 and was responsible for training personnel for the sector. The new remit of Fáilte Ireland included such training, along with domestic marketing, data collection and providing information on the state of the industry, planning, product development and stimulation of private investment. The new tourism authority, however, was much less powerful than its predecessor and also lost the sexier aspect of overseas marketing. Having lost much of its staff to Tourism Ireland, morale was down, and some uncertainty continues to exist regarding the future of the organization. Fáilte Ireland also had a stronger private sector presence on its board, and less power vis-à-vis the Department (now Art, Sport and Tourism). Accompanying these changes was the appointment of a blue ribbon task force, called the Tourism Policy Review Group (TPRG) by the then Minister for Art, Sport and Tourism, John O’Donohue in 2002. The appointment of the group marked something of a departure. Rather than relying on outside consultants to review the sector and make policy recommendations, the minister appointed a public–private sector panel that included tourism sector officials as well as businesspeople from outside sectors. The TPRG was headed by John Travers, who had recently retired as head of FORFAS. This was significant in that FORFAS was a national economic development policy advisory board created in 1994 that, among other things, loosely oversaw the activities of IDA and Enterprise Ireland and also worked on broader science and technology policy. Travers had also worked in the Taoiseach’s office earlier in his career, was heavily involved in the writing of the 1992 Culliton Report on national industrial policy and was therefore very much involved in national economic policy-making. He also worked in the Department of Enterprise, Trade and Employment and was a very active player in Irish economic planning. The formation of the Review Group came at something of a crossroads for Irish tourism. On one hand, by early 2002 tourism and tourism policy had come quite far and industry performance since 1987 was impressive. On the other, however, questions were emerging regarding the trajectory of Irish tourism as well as its place in the larger economy and society. How important was tourism to the Irish economy in 2002, and in which specific ways? How was tourism changing now that Ireland’s economy and society had changed so much and Ireland was now a high cost destination? In addition, growth in tourism arrivals and revenues had been leveling off and declined outright in 2001. An industry-funded consultant report written a couple of years earlier suggested the Irish tourism sector was facing significant hurdles in the 21st century (ITIC 1998). Finally, institutional changes such as the creation of Tourism Ireland and questions regarding Bord Fáilte raised further questions as to where tourism was heading.

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Brand New Ireland? I think more than anything it was a pragmatic decision. I supposed it coincided with the start of a new Secretary General and a new minister in the department. It was also felt that tourism hadn’t had a fundamental review in a long time. When it was decided to do the review, we wanted everyone from the group that deals with tourism. We wanted people from the department and from the agencies. Obviously we wanted the industry part. Then we said it would be good to have business people. You know tourism, like any industry, can be a bit incestuous. It would be good to get some business people from other areas (author interview, government official, January 2008).

The TPRG ultimately produced a comprehensive review of tourism in Ireland, the first since the NESC report of 1980 (Deegan 2005), and laid out a broad set of policies meant to guide the industry over the next 10 years. The document, titled New Horizons for Irish Tourism: An Agenda for Action, was extremely detailed, calling on some 70 specific recommendations in order to reach the goal of doubling tourism revenues to Ireland by 2012 while increasing overseas visitors from 6 million to 10 million. On one hand, the fact that the panel was chaired by Travers signified the heightened profile of tourism as a sector within the Irish economy. Tourism policy was no longer just the concern of the industry and tourism government agencies. On the other, however, it also showed that within the tourism policy community there was a continued sense of sectoral inferiority behind the ICT industries and financial services. Part of the problem, according to one tourism official, is in measuring tourism. Much of the economic importance of the sector is buried in statistical categories such as transport, retail and restaurants and pubs. We’ve tried working very closely with the CSO [government Central Statistics Office] on this. Following from the statistics is the economist fraternity in Ireland, which have never given tourism its due. The attitude of the economists and in ESRI [The Economic and Social Research Institute, a quasi-government think tank that heavily influences economic policy making], which is very influential, over the years, has always looked down at tourism. We’ve had very high level discussions with them, but they’ve always had the position that tourism doesn’t require public money (author interview, public sector official, January 2008).

In addition, tourism officials, both public and private, have long felt snubbed by the central policy-making players, especially those in Finance. “The industry also had the view that it would be good to have outside people as well as industry people. They had the view that if you had heavy hitters in the group, then larger government would have to pay attention” (author interview, public sector official, November 2007). Another public sector official argued similarly: Travers fit the bill because of what FORFAS was doing and what industrial policy had done, you know with the inward investment. You know, industrial

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policy is the big thing here in Ireland. He was available, having just retired and we knew that he wouldn’t oversee the kind of review and document that would just be set aside. He would oversee something that would be looked at. (author interview, January 2008).

The report was a product of almost a year of study, several meetings and written input from principles involved in tourism, but the final report was written primarily by Travers and Paul Bates, a top civil servant in the Department of Art, Sport and Tourism. The New Horizons document was also innovative in that in addition to policy recommendations it specified those responsible for reaching them and also put forth an implementation timetable. The approach was useful because so much of tourism cuts across sectors as well as different levels and departments of government. An implementation committee, also headed by Travers, has issued subsequent reports evaluating the strategy and recommendations. The final report, issued in 2006, reported “good” progress on 63 of 76 recommendations (82 percent) made in New Horizons, but noted lagging progress in areas such as competitiveness, product development and tax burden. The final significant institutional change came in 2006 when Fáilte Ireland merged with five of the six existing Regional Tourism Authorities. The RTAs had been established in the 1960s in order to enhance local decision making and promote regions but they suffered from a lack of sufficient funding, strategic overlap, and marketing that frequently worked at cross purposes. Several competed with each other in overseas marketing campaigns. One government official involved in tourism summarized the RTAs as, “independent, no detached is a better word. They were off doing their own thing. They’re now back in the fold and are putting out some good plans” (author interview, January 2008). Another argued they had become “very clublike, never moving personnel and wanting to move into marketing and promotion rather than product development and standards” (author interview, former government official, October 2007). Following a recommendation from the New Horizons document, outside consultants were hired to do a review of the RTAs in 2005 and their report called for greater coordination between the RTAs and Fáilte Ireland.

Conclusion: Institutions and the Developmental State in Irish Tourism During the time that tourism has grown rapidly in Ireland (1987 to 2008), institutions have been altered significantly and state–society relations have also been transformed. This chapter has shown that the prototypical state-society synergy that is often said to accompany economic dynamism was not present here. Instead, at the time tourism began to grow significantly in Ireland, the private sector was just beginning to come together to speak with a unified voice. Meanwhile tourism policy was dominated by Bord Fáilte, in large part because tourism was not at the forefront of a national economic strategy. While the board

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enjoyed a certain degree of institutional autonomy, this was due to its existence in something of an economic policy-making backwater. Finally, growing mistrust existed between state tourism officials and leading private sector actors. The twenty years since have witnessed many changes in organizations and institutions, and yet the policy-making community involved in making tourism policy has, if anything, become less unified and continues to be marked by some conflict. The two most significant changes have been the growing power and voice of private sector organizations involved in the industry and the decline in power of Bord Fáilte/Fáilte Ireland. The industry has become very effective at lobbying, and not just with Art, Sport and Tourism and the agencies. It has representation on all the significant policy-making bodies, including the social partners. Private tourism representatives have cultivated allies in key departments beyond tourism, including Finance and the Department of the Taoiseach and their lobbying techniques are increasingly sophisticated. Through ITIC and the IHF in particular, the organizations have become more unified and spoken with a clearer voice. “The other important thing was industry raising its own game,” summarized one longtime public sector official. “They were becoming more resourced, better organized and putting pressure on key political people” (author interview, January 2008). In contrast, Bord Fáilte went from essentially being Irish tourism to a position today where it struggles for influence. Although Bord Fáilte/Fáilte Ireland had representation on the Tourism Policy Review Group, the private sector played a larger role. One industry observers summarized it as “a strong industry panel. It was based on an earlier report from industry” (author interview, private sector official, November 2007). Today Fáilte Ireland focuses on implementation of tourism policy while the policies themselves come from the Department, blue ribbon panels such as the TPRG, and are themselves influenced by private sector input. Most actors involved in the sector term the public–private relationship as a partnership. Meanwhile the North–South body, Tourism Ireland, has a high profile abroad, is generally seen as the most successful of the North–South bodies, giving policy makers in the North and South a particularly important stake in the future of the body. “What you are seeing is a huge structural revolution with all the state tourism actors” said one long time public sector tourism official (author interview, November 2007). Many observers, both industry and academic, see this transition this as a natural evolution. Breznitz (2007) argues that Developmental State literature envisions a process where the state first nudges on the private sector in new and promising economic activities, aids the newly evolving industry as it competes, and finally withdraws once the industry matures. A long-time Irish government official involved in tourism witnessed a similar process: “When the industry gets to a certain stage this is natural,” he suggests. “It’s going to get its act together as the industry gets going. You’re going to see that kind of power shift” (author interview, December 2007). Yet in the Irish case the reorganizations have not necessarily led to a synergistic, smooth running tourism policy community. The transition itself was conflictual,

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with industry and other government actors moving to cut the power of Bord Fáilte in the 1980s and early 1990s. It was also driven by features outside of tourism itself, such as the North–South peace process, which led to the creation of Tourism Ireland, Ltd. Almost all players agree that the relationship between the private sector and public sector has improved markedly over the past 15 years. Private sector officials contend this is the result of industry officials finally having a greater say in the future of the sector. “There was a lot of distrust there for awhile but I’d say its more of a partnership now,” said one private sector official long involved in policy (author interview, November, 2007). Yet one public sector official active in policy is at least somewhat skeptical of private organizations. “Look, there are not a whole lot of strategic guys and there is not a lot of strategic thinking in the industry [private sector]. They look at day to day. They can’t look five years down the road” (author interview, January 2008). Internal conflicts also continue to simmer. The overwhelming majority of tourism players, both private and public, continue to argue that their industry is overlooked by powerful economic ministries such as Finance. “They don’t know the first thing about tourism over there,” said one long-time private sector official. Another public sector official complained that civil servants in Finance didn’t understand tourism and were biased against putting forth public moneys toward the sector. Finally, the new twin tourism agencies, Fáilte Ireland and Tourism Ireland, are meant to work through a division of labor and yet there are considerable overlaps in marketing, internet-based marketing, and statistics and information gathering. Moreover, there is little coordination between the two bodies. One Fáilte Ireland official shook his head when asked about cooperation between the two bodies, saying, “We don’t really talk much with them, which is surprising. You know they have done a lot of research on markets and we told them that a lot of what they are doing is useful to us and could they share their findings with us. Well, you know we’re still waiting” (author interview, public sector official, January 2008). In terms of state capacity and embeddedness there have been many changes. Although the institutional arrangement of two tourism agencies is awkward, the agencies are seen as highly professionalized and possessing considerable expertise. Both agencies, as well as the Department, are also much more embedded with the private sector than 20 years ago. The other question with respect to state capacity has to do with policy-making capacity through what Chapter 2 describes as ministerial or departmental clout. While Bord Fáilte/Fáilte Ireland has seen its fortunes falter institutionally, there has been no single organization that has successfully taken its place. Tourism at the Department level was once mixed with Transport, then Industry, but now is mixed with Art and Sport, with its minister jokingly referred to as “The Minister for Fun.” The civil service staff devoted to tourism within the Department is extremely small, and most policy initiatives taken in tourism require the cooperation of other departments and ministers. Cabinet level politicians see the tourism portfolio as a far-flung outpost.

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Brand New Ireland? Let’s face it. The way policy is made in Ireland is at the ministerial level. Let’s look at tourism. It is a small department and not a particularly attractive portfolio, so you tend to get people who are over the hill or who are up and coming players. They have difficulty being heard over the din (author interview, public sector official, January 2008).

Tourism actors have worked hard to attempt to get around this limitation, but unlike the IDA, they have not been able to rely on quasi-independent status combined with public relations coups of landing high profile TNCs into Ireland. Instead the chosen path has been reliance on a professional cadre of tourism consultants who know the Irish industry well and make the economic case for raising its profile, along with the newer strategy of naming high profile public– private panels to provide studies which lay out strategic plans for the industry over five and ten-year periods. Finally, both private and public sector actors have worked hard to build relationships with powerful politicians in Ireland such as the Charlie Haughey’s, Charlie McGreevy’s and Bertie Ahern’s. In this sense the public and private struggle to raise the profile and performance of Irish tourism has been as much political as it has been bureaucratic and technical.

Chapter 5

Selling Ireland It is ironic that a country which established its national identity largely through recourse to historical and mythical narratives has now, with equal fervour, adopted a policy of commodifying those narratives for the purposes of developing its second largest industry, tourism. (Barton 2000, 413).

The previous two chapters have documented the place of tourism within the Irish economic miracle. They show that rather than serving as merely a following sector, tourism was central in the turnaround of Ireland’s economic fortunes. Moreover, they demonstrate that a series of political developments helped raise the profile of the industry within the broader national political economy, leading to the creation of a tourism push by national policy makers. This chapter endeavors to show that tourism has been central not only to national development, traditionally defined, but also to state efforts at reformulating national identity through the process of nation branding. The tourism marketing of Ireland has become increasingly sophisticated as the international travel market has become more mature and segmented. Branding has served a dual role of promoting Ireland to international tourists, and also presenting a version of Irishness at home. The chapter pursues three primary arguments. First, the case of Irish tourism demonstrates that national development and place branding, rather than being separate issues, have become increasingly interwoven. As the discussion in Chapter 2 summarizes, today nations and localities compete for such things as global investment and international tourists. In addition they seek broader influence and power in international diplomacy. As a result, governments are always engaged in working to foster their reputations abroad, and in doing so are increasingly relying on modern marketing and public relations methods. In addition, national development itself increases the reputation of a country, especially when the dominant narrative of that development fits within predominant global norms. While the Irish “brand” continues to be a product of many aspects of culture and society, in Ireland, tourism has gradually taken on the primary branding mechanism for the country. Second, nation branding through tourism in Ireland can be read as an official exercise in writing the nation, and is read not only by prospective foreign tourists, but also by a domestic audience. The Celtic Tiger has transformed Ireland economically, socially and politically, creating new questions as to what it means to be Irish. In marketing Ireland as a tourism destination, officials have taken great care in constructing a very specific narrative of Ireland. Third, the content of the Irish brand continues to emphasize the Ireland of old rather than that of a modern, cosmopolitan society. To be sure, part of the message is for Ireland to be

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all things to all people, but more dominant traditional themes of Ireland as outside of modernity, a mystical and magical place that fosters personal transformation, simultaneously speak to the nation as one more consumer good at the same time that they offer a quaint, throwback picture of the Irish nation to its own citizens during a period of rapid social change.

Selling Tourism; Writing the Nation Nationalism and national identity are situated in a specific political, social and historical context and embodied in narratives. This is most evident in the narratives of the nation and their relationship to history. As Cronin argues, “The mythology will present an image of the nation that, while not existing, will be a common currency for the majority of society, and may often be formalized through civic commemoration. The basic aim of the mythical or imagined nationalism was to motivate the whole of society around the idea of the nation” (1999, 27). As Chapter 2 argues, the state has a particular interest in constructing narratives of national identity as they contribute to legitimation. These narratives are most commonly found in public education materials, national ceremonies, public museums and monuments, and heritage construction, and together they constitute identity markers. They are also, however, to be found in official tourism marketing materials. Cronin (2003) contends that tourism marketing materials hold dual functions: A rhetorical function that attempts to draw potential tourists but also a representative function that presents the destination, in this case the nation. Zuelow (2005; 2007) similarly argues tourism promotion is most often done at the national levels by public agencies and is therefore very much a discussion about the nation: “There is not always consensus about the best image to present to the tourist gaze, and thus tourism quite naturally prompts discussion about the nature of national identity. Who are we as a people, what are the defining moments in our history, and where are we going” (Zuelow 2007, 159)? This is certainly the case in Irish tourism during the 20th and early 21st centuries. Promoting tourism to foreigners was controversial during the early years of the Irish state, leading up through the 1950s (Zuelow 2005; 2006; Furlong 2004). For some this was a product of continued distrust and enmity toward the British, Ireland’s recent colonial ruler and now predominant tourism-sending market. For others it was the idea of spending public moneys on leisure facilities for the well off while a large proportion of Irish citizens remained poor. Finally, many in government remained skeptical over tourism’s role in economic growth. As a result, political debates within Ireland focused on whether to promote tourism to foreigners in any significant way. By the 1950s this debate was largely over, and in that decade the new tourism promotion board, Bord Fáilte, began producing various forms of marketing materials, most of which emphasized Ireland as being unspoiled by modern times. Among the materials were a series of travelogue films, distributed mainly in the

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British and North American markets, primarily through Aer Lingus and major tour operators in each country. For the British (and later the broader European market), the primary message was one of empty spaces and activities such as fishing and walking. The North American market, however, specifically targeted Irish-Americans and the idea of returning home with such titles as The Irish in Me (1959) and Honeymoon in Ireland (1963) (Rains 2003). The clear message was that the diaspora could reconnect with the nation through a brief return to the homeland of their parents or grandparents. Belonging became possible through blood and tourism. Dominant tourism marketing images from the 1950s through 1980s also emphasized Ireland as outside of the modern world. O’Connor, writing of early representations of Ireland in tourism literature in the 1950s through the early 1990s, emphasizes the traditional presentation of “Irish” icons such as leprechauns, shillelaghs and shamrocks as representative of “premodern society” (1993, 70). Such imagery is dominant in both tourism marketing literature and colonial narratives. In each, Ireland was presented as an empty, rural, pre-industrial landscape populated by curious, clever (but not too clever) people left relatively untouched by modern capitalism. The challenge for tourism marketers, however, was to promote Ireland as primitive, but not too primitive, as they also needed to reassure potential tourists that they could travel in comfort. Therefore showcasing the nation became a balancing act of lauding progress under the new Irish state while reassuring tourists that Ireland remained a timeless place. Witness one travel section excerpt from 1951: During the past 30 years the country has made rapid strides in the political, economic and social spheres. But in Ireland, as we have always suggested, you can live in two worlds, for progress has not robbed the Irish of their fundamental belief that tomorrow is another day, that time is a bottomless well, that the hustler is always too late (or too early) for the only appointment that matters— the rendezvous with contentment and peace of mind (The Continental Daily Mail (1951), cited in Furlong 2004, 164).

Fifteen years later, the Bord Fáilte promotional film Ireland Invites You sent an almost identical message, beginning by describing Ireland as “a haven of undisturbed peace in a restless world…an ageless, timeless place where old beliefs and customs live on beside the spreading tide of human progress’ (cited in Rains 2003, 207). Tourism marketers emphasized rural Ireland, especially the West, including Counties Kerry, Clare and Galway, with their pastoral settings. In addition to scenic beauty, these areas also tended to be poorer and less populated. Johnson (1999, 191-2) argues that there has been continuity in tourism promotion. The countryside in particular served not to emphasize the past but instead to create “empty time” where past, present and future are undifferentiated. The bulk of tourism marketing was done by Bord Fáilte, which set up overseas marketing

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offices in several countries, along with the Irish national air carrier Aer Lingus. As is the case today, most tourism marketing literature emphasizes the visual, and Ireland’s has always emphasized the countryside. The quintessential visuals were the pastoral farmlands, mountains and lakes, along with country folk in the donkey cart along with the red haired girl. The former symbolized simple yet attractive backwardness, the latter innocence. Bord Fáilte marketing featured photos or drawings of the donkey cart in the 1950s as well as the 1970s, suggesting that nothing had changed in Ireland during that time (Fanning 2006, 246). O’Connor summarizes this portrayal of “[s]imple people who live their lives in traditional ways far from the hurly burly of the city are sought out as an essential part of the tourist experience” (1993, 72) as the norm for post-colonial societies, but unique for a European country. Yet this was essential to the message offered up for tourists: Ireland was in Europe, but not part of Europe. After the Troubles began tourism officials faced new challenges. One was the precipitous decline in British tourists to the Republic of Ireland (as well as renewed antipathy toward the ones that did come). British visitors to Ireland fell from 1.1 million in 1969 to less than 800,000 three years later and many of those were Irish emigrants returning home for a visit. The burning of the British embassy in Dublin in 1971 contributed to the growing sentiment that Ireland was not safe. The U.S. market, Ireland’s second largest, had grown almost fourfold between 1960 and 1970 but now stagnated. Overall, total overseas arrivals fell by more than two percent annually between 1970 and 1975 (Deegan and Dineen 1997, 50). Tourism officials responded through promotions and incentives, and also by moving into new markets, especially those of mainland Europe. Visual marketing over the next two decades also witnessed what Negra (2001) refers to the disappearance of the young Irish male (often associated with the troubles) in favor of either empty countryside or old men and children. With the beginning of the tourism push in the late 1980s and early 1990s, state funding for marketing was on the increase, but the primary message remained largely the same. Ireland remained locked in time, unspoiled by modernity. Government-sponsored advertisements in the early 1990s still described the country in pre-industrial terms: “In Ireland, we often find ourselves quite behind the times. And in no particular hurry to catch up” (Traveller magazine, cited in O’Connor 1993, 70). A corresponding video advertising campaign included the same tag line and also contained the voiceover, “It’s still a land of castles, and thatched roofed cottages. A land of music and easy laughter” (Bord Fáilte n.d.-a). The content of such marketing continued to appeal to Ireland’s leading markets. For the British, it conjured up earlier colonial constructions of the Irish in Victorian travel literature and other colonial writings as “beasts” that have not advanced past pastoral living (O’Connor 1993, 70). This is consistent with Kiberd’s (1995, 30) understanding of the construction of the Irish nation by the English as NotEnglish. “If John Bull was industrious and reliable, Paddy was held to be indolent and contrary; if the former was mature and rational, the latter must be unstable and emotional; if the English were adult and manly, the Irish must be childish and

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feminine.” For tourists the Irish had to become less threatening, but they continued to remain outside of modern life. Under the campaign Ireland remained an empty as well as timeless place. Visuals highlighted the historical or the natural, and the few people seen in the adverts seemed to come from a time long past. For the U.S. market, traditionally dominated by Irish Americans interested in their ancestral homeland, such a construction of poor people living a simple pastoral life held the double appeal of embodying McCannell’s notion of authenticity while at the same time vindicating their ancestors’ decisions to emigrate for a better material life. Such imagery in marketing appeals not only to major sending markets, but also reflects a much earlier version of Irish nationalism. Republicanism had turned imperialism on its head by reacting against all things British. If the British represented advanced civilization and urban industrialized capitalism, nationalism under the early Irish state centered on the less developed West of Ireland, dominated by Gaelic language and simple rural life. English (2006, 347) contends early independent Irish nationalism involved celebration if Irish beauty in the landscape—“a romantic, rural, Arcadian view of Ireland being sustained by the new state.” Similarly McManus (2005) places the heart of the early Irish nation in the rural West, the least affected area of colonial rule. As Prime Minister Eamon de Valera envisioned in his famous 1943 St. Patrick’s Day radio address to the nation: The Ireland that we dreamed of would be the home of a people who valued material wealth only as a basis for right living, of a people who, satisfied with frugal comfort, devoted their leisure to the things of the spirit—a land whose countryside would be bright with cozy homesteads, whose fields and villages would be joyous with the sounds of industry, with the romping of sturdy children, the contest of athletic youths and the laughter of comely maidens, whose firesides would be forums for the wisdom of serene old age.

This version of Irish nationalism as rural, catholic, family-oriented, self sufficient and frugal, which White (1997) refers to as the “Gaelic myth” had, of course, already become obsolete by the 1950s. By then Prime Minister Sean Lemass liberalized the economy, and Irish economic policy encouraged industrialization and welcomed foreign investment. The government opened the world’s first free trade zone in Shannon in 1959. Demographically people were moving off the farms to the larger towns and cities, if not leaving the country altogether. By the 1960s Ireland signed a free trade agreement with the U.K. and joined the Common Market in 1973. Rather than pursuing autarchy in the name of bucolic nationalism, Irish economic policy embraced the modern. To be sure, the power of the church and other conservative institutions reinforced traditional values, but demographically and economically, Ireland was already undergoing transformation. Yet tourism marketing materials, even in the 1990s, rarely reflected this fact. In 1993 Bord Fáilte hired the U.S. advertising firm Angotti, Thomas, Hedge Inc. to produce a new television advertising campaign. The board had halted

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television advertising in the U.S. during the 1980s, but with the tourism push and the availability of EU money, it was ready to return with a new campaign. As Negra (2001) points out, the new approach continued to portray the country as empty, rural and timeless. Only one of 18 still photos used in two 30 second spots showed an urban landscape while conjuring up “Ireland as a kind of “gentlemens’ paradise” populated by simple country folk and a small aristocracy” (Negra 2001, 90). The adverts, containing the slogan, “Ireland: The Ancient Birthplace of Good Times,” rekindled the colonial past and invited tourists to play the role of aristocrat. Middle class tourists could (temporarily) live in a castle or the big house, served by Irish subjects. Because of concern that tourists avoided Ireland due to excessive poverty, the Irish were presented either as a contentedly poor and simple people or a cultured aristocracy spending time fox hunting or around castles. Tourists, of course, could join in the latter role. The working classes, hardly industrious, were nonetheless happy, with frolicking maids in the castle and smiling sitting country folk: “In these representations, even when the working class is at work, they are playing” (Negra 2001, 91). A longer 10-minute video produced by Bord Fáilte three years earlier for the U.S. market used the same slogan and promoted similar themes. A narrator with an American accent described Ireland as “facing the Atlantic” rather than Europe. The countryside, which draws considerably more time and attention than cities (especially those other than Dublin), is said to be operating at a “different pace” while showing horse drawn carriages and a seemingly empty Ring of Kerry. Meanwhile the Irish people are described as an “extroverted and inventive race,” and tourists are encouraged to “join them for a chat or a sing song in a pub.” Images of the Irish themselves are again confined to children and smiling old men. A corresponding short advert destined for the British television market carried the tag line “Ireland: Where all the time in the world isn’t enough” and showed a tourist couple on bikes welcomed by tourist folks but also by an Irish old timer riding a horse-drawn cart. By the early and mid-1990s, criticism of Bord Fáilte within Ireland was growing and now started to include marketing. Although global firms such as Intel and Microsoft were setting up shop in the country, tourism promotional literature continued to emphasize the pre-modern Ireland. As one industry executive summarized, the marketing of the country was not keeping pace with modern, changing Ireland. “The image portrayed to the potential tourist must run far beyond and above the traditional typecasting of a quaint old place inhabited by whiskeydrinking leprechauns and beguiling fairies” (quoted in Wright and Lenihan 2004, 19). Similarly, Dáil (lower house of the legislature) member Dan Boyle criticized advert campaigns as promoting a “twee” image of the country, arguing that “Ireland can be accused of being dishonest in its destination marketing” (Ibid.). One result of the A.D. Little report was to give the private sector more of a voice in tourism marketing. The Overseas Tourism Marketing Initiative (OTMI), originally set up in 1993 and made operational in 1995, was initially a voluntary group of marketing professionals that worked primarily in the U.S. market (Deegan

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and Dineen 1997; author interview, private sector official, November 2007). It became a joint public–private initiative with boards for each of four major markets, Britain, the U.S., Germany and France, with representatives from Bord Fáilte, the NITB, the Department, tourism industry and the transport sector. Receiving threefifths of its funding from the EU, the OTMI budget reached IR£6.5 million in 1996. Meanwhile Bord Fáilte (1993) undertook its own comprehensive marketing study and five year plan, examining prospects in various sending markets, new markets, as well as its own product and image. Among the findings was a continued focus among tourists and potential tourists on landscape and people. For many, Ireland was still seen as a rural landscape. Yet place here remained tied to a suspension of time, where the land was unspoiled by the advance of capitalism and the built environment was dominated by thatched cottages and castles. Meanwhile, Ireland’s English-speaking population appealed especially to the British, American and Canadian markets. According to the study, The one unique competitive advantage Ireland holds over its main competition, i.e. Scotland and England, is the “people” factor; that is not just friendliness on a higher scale than other countries; rather it is an attitude to visitors that combines friendliness, charm, wit and curiosity in such a mixture that it is, in itself, a very significant product benefit (Bord Fáilte 1993, 18).

What the study ignored, of course, is that the attitudes and desires held by potential visitors are already significantly shaped by previous marketing images. In many cases their knowledge of a country is informed almost wholly by tourism marketing literature. For others, tourism marketing messages confirmed the narratives found in popular culture, especially that of film (Barton 2000; Gallagher 1989). Marketing thereby serves as a cultural broker (Cohen 1985) between tourist and destination by making familiar a strange and different country by appealing to familiar narratives.

Branding Ireland It was at this time that plans began to investigate branding strategies for promoting tourism to the island of Ireland. The first mention of branding came in the 1993 Bord Fáilte marketing plan, but there was some skepticism as to how quickly it would create results. Branding gained currency, however, within the National Tourism Council and later the OTMI. After the A.D. Little report brought new blood into Bord Fáilte, the effort to move to a brand strategy moved more quickly. The exercise began with the assumption that Ireland as a tourist destination already constitutes a global brand and therefore requires management. As one public sector official later put it,

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Brand New Ireland? In the context of a destination a brand is really about reputation. Every destination, when you think about it, has a reputation, good or bad, or some combination, whether they brand it or not. In the world of countries, we are all perceived in certain ways (author interview, December 2007).

The challenge was to recognize how Ireland was already imagined by potential tourists, and to capitalize upon or “tweak” that understanding. As a result, Bord Fáilte carried out marketing surveys among primary tourism sending countries, finding that Europeans’ view of Ireland as a “saved country and culture undisturbed by European history—a mythical island—a real and authentic destination that could offer escapism and freedom” (Bord Fáilte, cited in Fanning 2006, 253). This confirmed the perception that Ireland was somehow outside Europe and the confines of modernity. The same marketing study found that the English, in particular, viewed Ireland as “a return to innocence, spiritual enrichment derived from the unspoilt places and people” (Ibid., p. 254). Rather than making an effort to counteract this perception, the initial Tourism Brand Ireland campaign, titled “Ireland: An Emotional Experience” reinforced Ireland as an untouched, unreal destination. “Is there magic in the air?” asked one advert. Linking Ireland’s mystical reputation to the time honored notion of travel as transformative, the new advertising campaign accompanying the launch of the brand promised tourists personal transformation. Television adverts, with the tag line “Ireland: Live a Different Life,” featured stylized slow motion photography of coastlines, rural scenes and villages and was accompanied by more modern music from the Irish pop group, The Cranberries (Bord Fáilte n.d.-b). Horses without riders ran along pristine beaches, villagers in another scene engaged in what appeared to be spontaneous music playing and street dancing in front of a thatched cottage, and in a third set of scenes an entire village appeared to close down the streets in order to run amateur dog races, where competitors were ordinary pets and farm dogs. Tourists, though rare, were welcomed by natives into each scene. A dog strolling into a pub following the village dog races suggests that ordinary social rules do not apply in Ireland. Potential tourists were asked “where have you been all your life,” “isn’t it time you surprised yourself,” and “will you feel like royalty when you sleep in a castle?” The adverts even turned one of Ireland’s tourism negatives into a positive, asking “is Irish rain good for your skin?” (Ibid.). The dominant message for tourists was that travel was individually transformative, offering those who Cronin (2003, 191) calls “temporary refugees from modernity” a place where they could rediscover their true selves. Ireland could offer these restorative qualities precisely because it existed outside modern life. In essence the advert campaign portrayed the country as one big spa where tourists could come to “work on me” through exposure to a combination of natural beauty, a simpler lifestyle and, of course, good fun. The irony, of course, is that Ireland was, by the mid-1990s, fast becoming the very modern society that tourists needed to escape from for their own personal well being.

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This branding effort was the first by the Irish state since the Industrial Development Agency’s (IDA) successful “Young European” campaign in the 1970s and 1980s. The IDA, charged by the government to promote Ireland as a foreign investment destination, sought to portray the Irish in the campaign as young, highly educated, modern English speakers who would be ideal employees for global firms moving into the European market (Fanning 2006). The central message here was that Ireland was solidly part of Europe, with a modern and ever-improving infrastructure. With the lead in branding Ireland moving from the IDA to tourism officials, however, this signified a change in both message and target audience. The tourism branding campaign presented Irish much differently, with most Irish older village dwellers, farmers, herders or fishers, and work was clearly secondary to good craic. City scenes are rare and most focus on pubs or restaurants. The portrayal clearly capitalizes on Bord Fáilte research (1995, cited in McGovern 2003, 96) that found “while other destinations may boast friendly people, all visitors to Ireland have highlighted the ability to mix and interact with the Irish as being absolutely unique.” The main tourist attraction in Ireland, in other words, is the Irish themselves. But not just any Irish; the traditional, rural and small village Irish who wave to tourists from a field, welcome them into their B&B home or share pints in a pub had become the main product. Although then Tourism Minister Enda Kenny stated in 1997 that “We are anxious that the branding of Ireland will be done in as coordinated a fashion as possible because those people involved in business, tourism and diplomatic circles can influence the way our country is perceived abroad” (Dáil Debates 1997) tourism branding suggested Ireland as a very different place than that of the IDA as well as an Ireland in the midst of the Celtic Tiger phenomenon. The 1998 Good Friday Accords changed the institutional structure of tourism marketing by creating the all-island body Tourism Ireland, Ltd. in 2000, but the original branding of Ireland had also been an all-island effort. It had been funded in part by EU monies that stipulated an all-island approach to tourism promotion. But Tourism Ireland, Ltd. created a new institutional basis for North–South cooperation in tourism. Officials there quickly found a changing marketing environment. When Ireland introduced its initial brand it had been one of the first to do so, but by 1999 and 2000 many European governments or tourism agencies had started their own branding campaigns. The creation of Tourism Ireland overlapped with a review of the Irish brand (although the new organization only took the lead in international marketing in late 2001), and led to the rollout of the second tourism brand, or TBI2: “Ireland: People, Place and Pace.” This effort was the product of a new batch of market research in major sending markets and sought to distinguish Ireland as a tourism destination by emphasizing friendly welcoming people, unspoiled landscapes, and a slower pace of life. The irony of promoting Ireland’s traditional people and slower pace of life was made clearer by the country’s rise on the UN’s Human Development Index. By 2000, Ireland was near the top of the list. Demographic change over the previous decade was remarkable. Nearly half of Irish women were now in the labor market

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and nearly two-thirds of the overall labor force worked in the service sector. The number percentage of college graduates in the workforce grew from 11 percent in 1981 to 35 percent by 1999 (O’Sullivan 2006). Of more than 1.7 million people in the labor force, only 120,000 worked in agriculture, forestry and fishing. More than 225,000 people were unemployed in 1986, but only 65,000 were in jobless 2001 (CSO 2007). Meanwhile 1.1 million people worked in the service industry. O’Hearn (2001, 189) reports that 400,000 additional jobs were created between 1994-1999 alone, with nearly 300,000 of those in services. Cities and suburbs were bustling in a booming housing market. Car culture grew rapidly, with the number of private vehicles in Ireland nearly doubling between 1990 and 2000 (CSO 2007), contributing to busy roadways and some of the worst traffic jams in Europe. The marketing image of Ireland, in short, was moving further and further from the reality that tourists would experience. In addition, tourism markets to Ireland were changing rapidly. The British and U.S. markets were largely stagnating. The lucrative American market, in particular, was becoming more challenging as the reliance on Irish Americans (most often the children of immigrants) was showing wear. While more than 30 million Americans claim Irish ancestry, those closest to immigrant relatives were aging, and for many, Ireland was a once off trip to see the ancestral homestead and cemetery. Americans stayed longer and spent more, making the market segment especially important. A worrying trend was relatively flat growth, combined with shorter stays. Meanwhile the British market, still Ireland’s most important, was growing, but primarily among short-stay city-bound travelers. Decreasing transport costs, especially along the lucrative London–Dublin route, led to more city breaks on weekends and Dublin was increasingly drawing stag and hen parties, along with other short-stay and low-spend visitors. In contrast to Britain and the U.S., the biggest growth markets were being found elsewhere in Europe. A considerable segment of those markets, however, mirrored the British city break, short-stay profile. The growing challenge for tourism marketers was to draw especially those tourists who would stay longer and visit multiple regions within Ireland, but TBI2’s theme was increasingly incongruous with the Ireland that tourists were actually experiencing. Making the challenge even more difficult was the double blow of foot and mouth disease along with September 11 in 2001. The immediate result was a decrease in arrivals from the U.S. from 958,000 in 2000 to 759,000 in 2002, a drop of more than 20 percent. British arrivals fell by nine percent between 2000 and 2001 before recovering the following year. Overall, overseas arrivals were down by seven percent for the year. Certainly the events of 2001 were unexpected and not likely to be repeated, but deeper seated uncertainty over major markets had been felt by both public and private officials in the late 1990s. The immediate response to the 2001 crisis was the funding of a supplemental marketing campaign in four major spending markets late in that year and early 2002, but the injection of new money was modest (less than €1 million). Industry interests complained that funding for 2002—now concentrated in Tourism Ireland—was in fact closer

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to the budget for 2000 (ITIC 2002). A similar report from the IHF called for an additional €20 million in spending for tourism (IHF 2002). Money spent on marketing, however, was separate from the issues of branding and the content of advertising. Tourism Ireland, up and running by late 2001 and ready for the 2002 season, conducted a marketing review and quietly altered the “People, Place and Pace” brand by removing “Pace” and leaving it with “People and Place.” In part this reflected Irish reality and also responded to the growing attraction of cities to tourists, especially bustling Dublin. The campaign later evolved into “People, Place and Culture,” reflecting the results of consumer attitude studies. The revised brand coincided with a €50 million advertising account with McCann Erickson that used the slogan “Ireland: The Island of Memories.” In 2005 J. Walter Thompson and Mindshare took over the account, rolling out a “Discover Your Very Own Ireland” campaign that first appeared in 2006. The adverts portrayed individual tourists as “discovering” features of Ireland, including villages, castles, food, festivals, much as explorers and invaders did earlier. Tourism Ireland promotional materials, often given to travel professionals and journalists, include the brochure “Understanding Our Brand,” which elaborates on the brand strategy as well as the content of the message the agency is promoting. It states that the brand is crucial because, “Our brand is our reputation—an idea that resides in the hearts and minds of our various audiences.” It summarizes the message it tries to convey relating to each of the three aspects of the brand: 1. People: The people of Ireland are recognized for being friendly, charming and witty. They are attentive but relaxed and welcoming.

2. Culture: Culture on the island of Ireland reflects the character of its people and the beauty of its landscape and historic sites.

3. Although it is celebrated for its forty shades of green, the island of Ireland is much more than that. A rich tapestry of breathtaking landscapes and seascapes steeped in history creates a varied experience for the visitor, all within easy reach. (Tourism Ireland, n.d., 6)

Accompanying the materials is an eight minute unnarrated DVD showing the attractions of Ireland (Tourism Ireland 2006). The video ran on a loop on a plasma screen in the Tourism Ireland main offices in Dublin in 2007. Again, relatively empty landscapes dominate, although young, almost exclusively white tourists enjoying a range of activities are featured. Most are enjoying the outdoors through hiking, biking, horse riding, fishing and golf. Irish people are portrayed as mainly of the land, or as craftspeople. To be sure, the video, produced in 2006, tries to highlight many attractions on the Island, including Gaelic sports, festivals, B&Bs and castles. Yet the images are highly stylized. One shot has young tourists standing on a bridge overlooking a river while wild horses (those wild horses again!) pass by behind them. Dublin is absent for the first 5½ minutes of the film and when we do finally see the city the mind-numbing automobile traffic is nowhere to be found. Non-white faces are rare (and confined only to an occasional tourist or

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two). The young Irish man, whom Negra (2001) notes is absent in earlier tourism advertising, has still gone missing except for in shots of sporting events.

Tourism Branding and Writing the Nation Why is it that much of the dominant imagery of Ireland’s tourism marketing has changed so little over the past half century? To be sure, the donkey cart and the red haired girl are no longer utilized, but many of the other archetypal images such as the empty countryside, the unspoiled coastlines, the friendly, old-fashioned country folk, and pub life remain. This is especially peculiar given how much Ireland has changed, and how fast it has done so. Tourism officials argue they are simply responding to consumer demand, and indeed there is something to this argument. In the last three years Tourism Ireland has undertaken top to bottom market surveys of its largest markets. It found that “warm and witty people” were of first order importance in the British and French markets in particular, and also important in the U.S. market, while unspoiled landscape and beautiful scenery were central appeals to the U.S., German and French markets (Tourism Ireland data reported in Leverett 2007). And yet travel patterns also show that a much larger percentage of travelers to Ireland are taking city breaks, and staying for much shorter periods of time. The German market is indicative. In the year 2000, 67 percent of tourists spent at least nine nights in Ireland, while the proportion spending fewer than five nights was just 12 percent. In 2006, however, 33 percent of visitors spent fewer than five nights while the proportion spending at least nine fell to 40 percent. The shorter stays meant less time for multiple destination visits and resulted in more visits to Dublin and other cities. Other major markets showed similar trends. The continuity in tourism imagery is also peculiar given how much markets have changed in recent years. The British and U.S. market remain the most important to Ireland by far, but their combined share of overall tourism arrivals has been steadily dropping (combined from 71 percent of overseas visitors in 2000 to 64 percent in 2006). The U.S. market continues to rely heavily on first time guests, and has seen the “roots tourism” segment of Irish American decline. Meanwhile the biggest growth areas have been in Eastern Europe and the “rest of the world” category. For many prospective travelers from those areas, Ireland is relatively unfamiliar. Reinforcing an Arcadian Ireland of times past not only risks leading to unrealistic visitor expectations, it also creates an unsustainable model for long term tourism. Branding Ireland as a rural, pre-modern society populated by a welcoming, authentic people, however, serves several purposes. It continues to appeal to urban tourists who seek relatively unspoiled countryside. It also harkens up themes of discovery, invasion and colonialism in a manner complementary to tourism. Negra (2001) cites advertising done for Bord Fáilte in 1993 that included a 30second television spot titled “Invaders.” In that spot tourists are simply the latest

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in a long line of invaders, from Normans and Saxons to Vikings. The welcoming of tourists as foreign visitors intermingles with earlier invaders. Similarly, the most recent Tourism Ireland campaign features individuals, couples and families who are “discovering” aspects of Ireland as if it were for the first time. Tourists remain invader/discoverers. One print advert presents a young tourists couple chatting with native fishers on the shore. A plaque states “This Hidden Bay was discovered by Steve and Claire. They found the locals just as colourful as the houses.” Again the adverts strike a continuity between historical invader/discover and tourist, suggesting “that to consume Ireland is to take part in a grand legacy” (Negra 2001, 91). The newer campaign, however, goes further by modernizing the commodification on the premise of mass customization (Pine 1999). By inviting tourists to discover “their very own Ireland” the advert campaigns present Ireland as servant while placing upon visitors the ultimate in consumer autonomy and power: Absolute choice. The country branding of Ireland is therefore consistent with what a number of observers note about modern consumer culture: Consumption and choice are not only aestheticized, they also become central in modern identity formation. Tourism in this sense is part of the modern cultural economy, where individuals construct their identity through their choice of consumptive practices (Featherstone 1987; Britton 1991). In addition to functional and intrinsic value, these consumer preferences signal taste and seek status (Ateljevic and Doorne 2003). The fact that tourism officials actively participate in these practices through modern marketing hardly makes Ireland unique but what is interesting here is the particular construction of Ireland they provide. While other countries (Spain, South Africa, Poland for instance) have used branding strategies in order to reposition themselves as modern and cosmopolitan places, Ireland continues to pursue the opposite strategy in its tourism branding. This echoes themes more commonly found in the Global South, where time is advertised as passing more slowly and coded (or not so coded) messages of colonialism are used as marketing tools. In this sense tourism officials are exploiting a niche: The ability to escape Europe without leaving it. This serves a market among visitors looking to escape from modernity, however that escape might be constructed. In touring Ireland visitors are told they can traverse the old and new worlds. They can spend time in Dublin or Cork, each a former European Capital of Culture, enjoying modern nightlife and cosmopolitan cuisine, but marketing messages tell them they also have access to the other, timeless Ireland. For professionals from advanced capitalist nations Ireland promises access to the old, the real, the authentic, where visitors may escape from the dehumanization of modern work to rediscover their true selves. Bord Fáilte sponsored adverts ask questions such as “Where have you been all you life?” and encourage visitors to “Live a Different Life” (Bord Fáilte n.d.-b). Through the tourism brand and accompanying marketing campaign tourism officials continue to write Ireland as the antithesis of modernity, and both visuals and language rely heavily on the mystical and the magical. Ads in the 1990s explicitly ask, “Is there magic in the air?” Irishness itself continues to be constructed as

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outside of the modern. McManus (2005, 238) points out that the Irish who are featured in tourist promotional literature people are portrayed as “fun-loving, talking, laughing, playing music and, above all, drinking.” By inviting visitors to participate in the activities and behaviors of local residents—for instance learning how to pour a pint of Guinness, hiking the Bens, joining a music session in a pub—Irishness itself becomes an “available ethnicity” (Negra 2001). Much like the B&B experience emphasized in the 1960s and 1970s, visitors are invited into the intimacies of traditional Irish life. For North Americans and Europeans, especially, this message holds particular appeal as a means of constructing and alternative identity, however temporary, through tourist consumption.

Nation Branding and Reasserting the Nation The discussion above on writing the nation through tourism branding is mainly confined to the content of tourism branding and marketing in Ireland and how it tends to be consumed abroad. There is, of course, another important audience for tourism branding, and that is the Irish themselves. Not only are domestic tourists an ever growing segment of Irish tourism consumers; they are also the target of Irish branding by the state. In this manner, even for a domestic audience tourism branding serves a dual purpose. One is to motivate the Irish to spend their holidays at home, an increasingly important economic goal as the Irish tourism balance (tourism exports minus tourism imports) has shifted from positive to negative in recent years. Yet tourism branding also serves an educational and mobilizing purpose. One of the claims made in Chapter 2 is the need to examine the impact of globalization on national identity empirically. Although many have claimed that globalization weakens national identity (Ohmae 1995; Strange 1996), this argument ignores many factors that may serve to reframe and reformulate ties to the nation. Whether successful or not, it is imperative that the state instill a sense of loyalty and belonging among its citizenry. More important than the question of whether national identity is diluted by globalization and rapid social change is how the idea of the nation is reconstituted and reframed. Here both form and content are important. Globalization challenges individual allegiances and identity in often subtle ways, not least of which is the spreading and legitimizing of consumer culture and consumer identity as a competitor to other identities. Nation branding amounts to state actors utilizing the very same tools of consumer culture— marketing science—in order to narrate the nation to its own citizens. Internal branding, like other forms of national identity construction, involves “a process of assigning unique identification [to the nation] by consciously highlighting certain meanings and myths while ignoring others” (Aronczyk 2007, 109). In an age where more and more aspects of life join the market, nation branding adds countries to those things commodified.

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Decoding what it means to be Irish in 2008 constitutes a challenging task, and students of Irish nationalism and national identity disagree as to where dominant notions of Irishness are heading. Certainly Ireland is a very different country than it was 20 years ago. Not only has the economy been transformed, so too have so many elements of traditional Irish identity such as work, the church, family life, neighborhood and civic life, and politically, with the Good Friday Accords, the insistence that the Republic of Ireland constitutes all 32 counties of the island. Sexual scandals among the clergy have reduced the power and place of the Catholic Church in Ireland over the past decade. Family has also changed as divorce, birth control and abortion have become widely practiced. Average family size has declined significantly, and the position of women has also been significantly altered as they came to make up 42 percent of the workforce in 2006 (CSO 2007). In addition, in migration has vastly changed the makeup of Irish society in recent years. Historically a migrant sending country, Ireland has, as a result, traditionally been an ethnically homogenous society. The country went from being a net outmigration to net in-migration country after 1998, however, and estimates are that by 2007 as many as 17 percent of people living in Ireland were born outside of the country. With many of the traditional markers of Irish identity changing so much and so quickly, distinguishing what it means to be Irish in the early 21st century is difficult to determine. What is clear is that Irish national identity is in flux. English (2006) contends that almost all the traditional markers of historical Republican nationalism—the Irish language, the Church, the romanticized empty countryside— have disappeared with the exception of the political party Fianna Fáil. The traditional Republican party has remade itself as a non-class, non-regional, non-ideological party that retains voter allegiance based on nostalgic nationalist rhetoric. Aside from the traditional identity markers of Irish nationalism, two developments challenge the very notion of who is the nation: The Peace Accords and immigration. Kornprobst (2005), writing on Irish nationalism in the wake of all-island peace accords, suggests that the earlier version of nationalism has been replaced by two conceptions of nationalism—one Republican, insular, catholic and Hibernian; the other outward-looking, cosmopolitan, inclusive, Euro-oriented. He notes that all major political parties in the South are pro-EU and generally favor the prevailing outward-looking economic model. And yet in June 2008 Irish voters rejected the proposed Lisbon Treaty that would modernize and strengthen EU institutions on the heels of recent expansion. Ruane and Todd (2003) also address changing Irish nationalism after the Belfast accords, questioning whether the agreement constitutes a change in Irish conceptions of nationalism or simply a change in tactics. Aside from complicating the territorial aspect of the nation, the agreement delinks coincidence between state and nation by creating hybrid political authorities (e.g. the North–South Council) taking on greater power. They introduce public opinion data that shows great divisions, especially in Northern Ireland, and particularly among Catholics, regarding national identity. Yet in many ways this is precisely the point: What and who is Irish is in flux. Those examining this

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question from the standpoint of peace and reconciliation seem to suggest at least the possibility that Irishness has moved beyond territory, beyond anti-Britishness, and beyond religion. The Belfast accords suggest that more than anything, being Irish involves consent and choice. Those examining changing national identity in the wake of the recent wave of immigration into Ireland tend to come to very different conclusions. As the Celtic Tiger progressed and Ireland neared full employment, the country became an increasingly popular destination for migrants. In addition to many in the Irish diaspora returning, Ireland began attracting migrants from poorer regions, especially Eastern Europe, China and Nigeria. Not surprisingly, migration became increasingly politicized in the late 1990s and beyond, complete with charges that migrants were pursuing widespread “maternity tourism” in order to give birth to children that would automatically qualify for Irish citizenship, and nativist charges that “Irishness” was being diluted by the influx of foreigners. The issue culminated in a June 2004 referendum to change the Irish constitution so that children born in Ireland to parents who are non-nationals would no longer automatically be granted citizenship. The referendum itself held high drama, with very active media and political campaigns. All three major parties supported the amendment, and the ballot question easily passed with nearly 80 percent of voters approving it. For many, the ballot initiative marked a watershed in the conception of Irish national identity. Belonging to the nation was no longer tied to the land (being born on the island), but instead originated in blood. Most arguments in favor of the initiative contended Irish were Irish based on blood ties (despite the fact that the island had long been a destination of foreign invaders, settlers and colonists). White (2007) takes up this issue by arguing that previously, national identity was rooted in a sense of culture and place: This place-based nationalism could incorporate the obvious differences and cultural hybridity in Ireland through representing a material heritage and landscape that were uniquely Irish. Thus Ireland could be described by Charles Haughey as a “melting pot” of “Celts, Danes, Normans, Scots, Hugenots, Palatines and others” (Graham 1994, quoted in White 2007, 8).

The waves of outsiders invading Ireland became “Gaelicized” by place and culture and therefore became and embodied Irishness. The new, anti-immigrant movement, however, has pursued a racialized conception of Irishness. Far from being post-sovereign, post-national or a matter of choice, this version of Irish citizenship and national identity is exclusive and relies on blood and ethnie. For purposes here the question is not over which version of modern national identity is correct. While seemingly contradictory, these two versions of what it is to be Irish exemplify national identity formation everywhere: Identity contains multiple narratives, written by many different authors and are frequently cross cutting and contradictory.

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The state is, of course, among the most important authors of national narratives. Even within the state apparatus, however, different political coalitions, bureaucracies and constituencies conceive of the nation in differing manners. Yet the state’s need for mobilizing and legitimizing narratives is all the more crucial during periods of rapid social change when peoples’ “mental maps” (Migdal 2004) of the nation are in flux. In Celtic Tiger Ireland, therefore, state officials are confronted with how to write the modern country to their own people. The “Young Europeans” campaign of the IDA in the 1980s no longer holds the appeal it did when the country was aspiring to European living standards. Constructing a timeless, ethnically pure and bucolic Ireland in the face of modern, post-industrial, urban, secular, immigrant, and consumerist society serves as an important internal brand for citizens, distinguishing them from the British, Americans, and Europeans in general. Although Irish popular author David McWilliams may claim the members of the younger generation in Ireland are “almost like Americans” (as he explained to Matt Lauer on the Today Show when Lauer arrived in Ireland as part of “Where in the World is Matt Lauer?” Week in 2007), internal branding reminds the Irish they are not. Just as earlier marketing to tourists also spoke to a large Irish diaspora community—linking them to an idealized land and people—modern branding does the same to upwardly mobile white collar workers living in the suburbs of Dublin, Cork and Galway. They are not simply anonymous wealthy suburbanites who could reside anywhere in the world. Instead, according to state branding messages, they retain their historic, if largely fictionalized identity. This is consistent with White’s (1997) analysis of changing political identity under rapid socioeconomic change: As Ireland has experienced a rapid economic and social transformation, the population has continued to cling to “the ideals of the Gaelic myth” (120): The fact that the Irish have not viewed their desire to remain authentic to an idealized Gaelic past as being in contradiction to their desire or the benefits of modern industrial society explains the persistence of a traditional nationalistic political culture in light of the massive socioeconomic change that has come to Ireland…the fact that these reference have held power in defining the political debate in Ireland demonstrates their ability to survive in the age of computers, car phones and worldwide communication networks (White 1997, 120).

White is correct, as far as he goes, but identifying the sources of this lingering national identity is required. Tourism marketing and branding supplies at least part of the answer. Tourism marketing fits into Billig’s category of banal nationalism, and as he shows, every day narratives are increasingly important to the formation of identities and allegiances. As more and more of modern life become commodified, tourism branding becomes increasingly effective on constructing national narratives. In addition, as O’Connor (1993) argues, tourism production and marketing serves as a mirror among destination communities. If national identities are constantly being written and rewritten, government tourism agencies have continued to write

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Ireland as mystical and magical, and the Irish as simple, clever and friendly folk. When asked if Tourism Ireland was trying to have it both ways with its new brand, selling both the old and the new Ireland simultaneously, one government official replied, “that is actually what we are trying to bottle…We’ve got to acknowledge how Ireland has changed—that it is modern and developed but we’ve got this extra dimension that Ireland is a magical place” (author interview, December 2007).

Chapter 6

Patterns of Development in Irish Tourism

This chapter documents developmental outcomes of the Irish tourism push through providing a detailed summary of industrial trajectories in the accommodation and airline sectors. Although previous chapters discuss aggregate performance of Irish tourism and locate the sector within the larger Irish economy, this discussion tells only a small part of the story. A more complete analysis requires a closer look at activities within the tourism sector to show how their size, composition, and international linkages have evolved during the two-decade period in question. Chapter 2 summarizes the global commodity chains (GCC) approach, arguing that it provides a more in-depth understanding of development patterns at the industry level. The model links local industrial development to global networks of supply, production and distribution in order to highlight the distribution of material benefits along the chain. As stated earlier, tourism is not a single industry but instead is made up of several overlapping activities. I choose to analyze accommodation and transport because they tend to make up the greatest proportion of expenditure by tourists. These sectors are also the most organized and internationally linked among the activities that make up tourism. Table 6.1 shows the breakdown of spending by international tourists to Ireland in 2006, excluding transportation to and from the island. Ireland is different than most countries in that because of the large percentage of visiting friends and relatives (VFR) tourists (33 percent of all arrivals in 2006), combined with the pub culture, food and drink as a proportion of overall expenditure rivals that of expenditure on accommodation (Fáilte Ireland 2007a). The argument pursued in this chapter is that Ireland has been successful in industrial upgrading within both subindustries, but more so in air transport than in accommodation. The governance structure of the two commodity chains varies considerably, but in each case Irish firms have moved into more lucrative areas along the chain during the past two decades. While this is perhaps a predictable outcome in the accommodation sector, where it largely reflects a maturing of the Irish tourism market, Ireland’s success in transport is more surprising. Each reflects a mixture of government policy, firm strategy and the characteristics of the   International transportation expenditure by tourists is technically outside of tourism statistics, as compiled by the UN World Tourism Organization and are classified under transportation. From a consumer standpoint, however, they are central to international tourism and frequently make up the greatest expenditure. Ireland, as is the case with many countries, adds transportation on national carriers to gross tourism receipts, thereby providing statistics both with and without transport costs figured in.

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Table 6.1

Breakdown of Tourist Spending in Ireland, 2006 (excluding transportation)

Category

Spending (percent)

Bed and Board

32

Other Food and Drink

33

Sightseeing/Entertainment

5

Internal Transport

10

Shopping

15

Miscellaneous

5

Source: Fáilte Ireland (2007a).

subindustries themselves. Finally, although Ireland’s accommodation sector has succeeded in industrial upgrading, this success may in fact be counterproductive with respect to the model of tourism promoted by the Irish state.

The Accommodation Sector Accommodation lies at the heart of tourism. Cooper (1998) among others argues that globally accommodation constitutes by far the greatest share of overall tourism expenditure. The WTO classifies tourists not by purpose of travel but instead length of stay. International tourists are identified as those travelers who cross international borders and stay for more than one night and less than a year. They therefore need a place to stay during that period. Although the range of accommodation varies widely, most tourists rent accommodation by the night, week or month. Sharpley (2004) makes three initial observations regarding the accommodation sector that are important taking off points. First, it is made up of many different subsectors, including hotels and motels, all-inclusive resorts, bed and breakfasts (B&Bs), hostels, camping, self-catering apartments and homes, private renters and home exchange. Second, the accommodation sector is part of the international hospitality industry. It therefore possesses international linkages such as ownership, marketing, licensing and supply chains. Finally, accommodation, like other areas in tourism, involves not simply the provision of a product, but also of an experience. Tourist consumption is largely about meeting expectations. As I argue in Chapter 2, understanding the local development trajectory of any industry requires paying attention to the global organization of the industry, the corresponding local organization, along with the role of state policy. At the global level, the commodity chains framework calls for first uncovering the

Patterns of Development in Irish Tourism

Table 6.2

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World’s Largest Hotel Chains 2007

Rank

Company

Rooms

Properties

1

IHG (InterContinental)

585,094

3949

2

Wyndham Hotel Group

550,576

6544

3

Marriott International

537,249

2999

4

Hilton Hotels, Corp.

502,116

3000

5

Accor

461,698

3871

6

Choice Hotels International

452,027

5570

7

Best Western International

308,636

4035

8

Starwood

274,535

897

9

Carlson Hotels Worldwide

146,600

969

10

Global Hyatt Corp.

135,001

721

Source: Hotels (2008)

organizational logic, or governance structure of the industry in question. Gereffi (1999) argues that firms are key actors in a commodity chain, and that the leading firms within the chain tend to influence the governance structure that follows. Within the accommodation sector, the dominant and most organized area is that of hotels. Although many hotels remain independent, since the 1950s and beyond the global trend has been the emergence of hotel chains. Regionally, however, great variation exists, with one estimate of 70 percent of hotel rooms in the United States affiliated with corporate chains, but only 15 percent of European hotels belonging to chains (Sharpley 2004). Chains are attractive because they provide economies of scale, synergies in management, marketing and advertising and technology. By the mid-1980s at least 3,000 different chains existed in the United States, Canada and Europe and the biggest 200 of the chains accounted for 20 percent of the rooms (Sinclair, et al. 2003). By the year 2000, four companies had hotels in at least 80 different countries while 15 chains had hotels in at least 20 countries (Shaw 2004, 44). Many chains have historically been parts of larger global conglomerates and at times linked with other areas of tourism, including joint ownership with airlines or tour operators, although in the past two decades most airlines have divested themselves of hotels. Table 6.2 summarizes the largest global hotel chains in 2008. As I have argued elsewhere (Clancy 1998), a key feature of the international hotel commodity chain is the manner in which leading firms have entered markets. Much like other buyer-driven models, hotel chains increasingly enter markets through non-ownership of actual hotels. Instead they pursue various contractual

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agreements such as franchising, management contracts and leasing agreements with the owners of properties. Because the product itself is experiential, chains are able to attract customers through advertising and reputation. The latter aids consumers in containing risk, a factor especially important when traveling abroad. Chains concentrate on marketing and design while much of the actual accommodation “production” is done by others. Through control of computer reservation systems and more recently proprietary web sites, chains are able to capture a disproportional share of room night reservations. Estimates on the percentage of hotel rooms that are now booked online go as high as 50 percent, with projections moving ever higher. Together, chains inhabit the most lucrative links of the accommodation commodity chain in that the fees from reservations and contractual terms constitute a major center of surplus. Meanwhile, global hotel chains act much like big buyers in BDCs through determining specifications of properties, setting standards, remodeling and redecorating, and the terms of management contracts and leases. Hotel owners are much like captive suppliers that provide rooms and other physical structures to chains. Typical terms of management contracts between and operator and owner are for 10-25 years, and include a two to three percent commission on net turnover, one to two and a half percent sales and marketing fees in addition to an initial flat fee, along with an incentive fee of anywhere from five to ten percent of gross operating profit after reaching a certain level of turnover (author interviews, private sector officials, August 2008). As an alternative to the commission on net turnover, some contracts stipulate an annual flat fee. For those hotel owners that hire one firm to operate a hotel but franchise with a global brand, there is an additional royalty fee of as much as four percent of room turnover. As one long-time actor in the international and Irish hotel sector put it, “It is essentially risk free for operators. Many companies are getting themselves a percentage and they don’t have to put anything in. They may provide a general manager and a couple of others, but other than that they don’t even employ anyone” (author interview, private sector official, August 2008). This isn’t to suggest that the owners cannot prosper in such circumstances. Yet the capital requirements for hotels are high and it is the owners who are saddled with high fixed costs. The Irish hotel sector has been differentiated from that of most other European countries during most of the latter half of the 20th century in that it was dominated by many small holders, including family-owned, domestically-based chains. During the 1950 to 1980 period where international standards were being set and chains were expanding in much of the rest of the world, the Irish industry was under-capitalized, insular and inward looking. The peak association representing hoteliers, the Irish Hotels Federation, was deeply conservative and tended to be dominated by a few family-headed companies. Most often these firms owned and operated one property, although a small number expanded, but seldom to more than one or two additional properties. For their part, international firms hesitated to move into the Irish market for several reasons. One was the small size of the national market and the fact that

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Dublin held little appeal for either business or pleasure travelers prior to the Celtic Tiger years. Secondary cities Cork and Galway were considered excessively small as well. Many global chains followed business travelers to foreign capitals and business centers, but Ireland’s “backwards” status and stop-go economic cycles also made city-center business hotels less appealing for international chains. An additional factor was the importance of the size of the VFR market as well as the existing B&B sector, especially for holiday travelers. Due to the size of the Irish diaspora, the VFR market to Ireland made up roughly half of the bednights spent by international tourists as late as 1985 (IHF 1987, 95), making the paid accommodation industry even smaller than it appeared to be. To the extent that the Irish themselves were the tourist attraction, B&Bs were the optimal accommodation product, allowing tourists into “the back room” of Ireland (MacCannell 1976). They were also economical, combining bed and board. Because they employed mainly household members and utilized the houses they lived in, B&Bs were also more able to respond to changes in demand than hotels. The B&Bs were kind of unique in the Irish tourism product in lots of ways. In the bad old days with high unemployment the woman of the house would make use of an extra bedroom or two, make tea and scones in the afternoon, or the man would come and serve a whiskey, and people would stay and talk with them about their old distant relatives. In the morning the woman of the house would cook up breakfast and then drive them to the cemetery where they could see the gravestones. (Author interview, private sector official, October 2007)

The Irish B&B sector began primarily in rural areas, especially the farm sector, and served as a means for supplemental income, but standards were quite modest. As tourism grew, B&Bs spread to the cities and towns, and many previous owners upgraded with features such as en suite bathrooms. Many built new dedicated B&Bs with as many as seven rented rooms, the maximum allowed by the tourist board. By the early 1970s the president of the IHF, whose members were hurt by high inflation and a poor business climate, complained to the government about the B&B sector, arguing the latter avoided taxes, were unregistered and had to meet no minimum standards. “By siphoning off…customers they enjoy the most lucrative element of hotel business and -as opposed to job creation—they constitute a major threat to present levels of hotel employment’ (Corr 1986, 132). The state, through Bord Fáilte, had actually promoted growth in the hotel sector earlier, mainly through direct grants, tax incentives and access to subsidized loans as far back as the 1950s, leading to a growth in the number of overall rooms in hotels and guesthouses from 16,000 in 1957 to 26,000 in 1968 (Deegan and Dineen 1997, 33). Yet much of the growth was the product of expansions of existing facilities. During the first 16 years of the loan scheme only 52 loans were approved through the program (Corr 1986). The board also targeted particular areas in the country during the 1960s, including older seaside resorts and areas in the West. The Tourist Traffic Act of 1970 aimed to increase accommodation

104

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even more, although much of the money targeted the building of holiday cottages rather than hotels and guesthouses. Nevertheless, the number of hotel rooms grew by 5,000 during the period of 1968 to 1972, with more than 90 percent of them benefiting from government support (Deegan and Dineen 1997, 41). The overall downturn in tourism during the 1970s, however, hurt the accommodation sector and the total number of rooms declined by 10 percent during the decade. From 1972 to 1985 the overall number of hotels in Ireland fell from 806 to 643 and the number of grade A rooms was nearly halved during that period (Ibid., 162). Irish hotel growth was uneven during this period, but the participation of foreign hotel firms was even spottier. The state on several occasions attempted to draw large international chains into the country, and especially Dublin, but was mainly unsuccessful. Meanwhile the IHF had no interest in international competition. The well known Irish hotelier P.V. Doyle, who once served as president of the IHF, reportedly always told colleagues at international chains, “oh, the hotel market in Ireland is terrible” (author interview, former public sector official, October 2007). The one notable success Bord Fáilte had in attracting global hotel chains came in 1960 when InterContinental Hotels, then owned by Pan Am World Airways, announced an agreement with Bord Fáilte to build three hotels with Irish investors in Dublin, Cork and Limerick. The Bord had been looking for international chains for years and helped to secure the entrance of InterContinental through grants. By the 1970s, however, InterContinental sold its interests in Irish hotels to local investors and withdrew from the Irish market. Aside from InterContinental, the one global chain with Irish ties at the time was Omni Hotels. The company was purchased by Irish national airline Aer Lingus in 1973, expanded and restructured, and then sold by again the carrier in 1987. Tellingly, the national carrier did not open any Omni hotels in Ireland during this period. The tourism push that began in the late 1980s led to renewed interest in the accommodation sector. During this period the B&B sector rivaled that of hotels, and the vast majority of hotels and guesthouses remained independent and family owned. The most notable exceptions at the time were a state-owned chain (Great Southern Hotels) and two emerging private domestic chains: Jurys and Doyle Hotels. The latter two were dominated by family interests and each were prominent voices in IHF governance as well. Jurys had begun in Dublin on St. Stephen’s Green in the 1800s and only expanded to four properties in the 1960s. The company began to grow significantly, however, when it purchased the three former InterContinental Properties in 1972 while selling off its other properties to help finance the deal. P.V. Doyle grew his chain from the ground up, specializing in suburban and neighborhood hotels especially in Dublin. Doyle began by opening the Montrose hotel in South Dublin in 1964, but quickly added several new midrange properties around greater Dublin. The company’s quick rise culminated in 1972 with the building of Ireland’s largest hotel, the Burlington in Ballsbridge, a leafy Dublin neighborhood (Jurys n.d.). The hotel was built less than a mile from the Dublin InterContinental, and like that hotel, was oriented toward business and conference tourism.

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Despite the renewed push for tourism beginning in the late 1980s, little official attention was initially devoted to accommodation in general and even less to hotels. Key documents such as Fianna Fáil’s (n.d.) commitment to tourism in economic recovery and the IHF’s (1987) call to double the number of tourists to Ireland both focused on factors such as access transport, overall costs and product (activity) upgrades. The latter report mentioned accommodation, but argued that the goal of doubling the number of tourists in five years could be achieved with modest growth in targeted areas of hotels. For most hoteliers and other accommodation professionals, the key issues were taxation and access to finance. The Fianna Fáil document promised that tourism would be included in business expansion tax schemes. For its part, the IHF mainly worked to reduce VAT taxes on accommodation, food and drink. Bord Fáilte’s initial document outlining plans for doubling tourism in Ireland (1989), noted the need for improvement in accommodation, but much of the discussion was confined to tax incentives as well as improvements in targeted areas of the country. The overall inattention was also due to the lack of interest in hotels as a business proposition. The annual hotel survey conducted by consultants for the IHF generally reported profit rates that were comparatively quite low. Meanwhile, the 1980s and early 1990s saw many B&B owners expanding their premises or building new dedicated B&B facilities. In addition, self-catering cottages and homes were also growing. Despite this, investment in hotels grew after 1987. This is attributable to two factors: First was the expansion of the Business Expansion Scheme (BES) in 1987, a set of investment tax incentives to include tourism facilities (HWC 1990). Deegan and Dineen (1987, 239) show that the tourism investment made up just five percent of the total BES in 1987-1988 but quickly grew to more than 40 percent in 1990/1991 and 1991/1992. They argue much of the investment went into accommodation. The second was the overall tourism push and the official targeting of doubling the number of tourists to the country within five years. This signaled the private sector that tourism would now be taken seriously by government officials and was therefore a likely growth industry. This fact is evidenced by the growth in new tourism projects submitted to Bord Fáilte for approval during this period. In 1987/1988 only 20 projects were submitted and nine approved, while in 1989/1990 some 150 projects were submitted and 111 approved (HBC 1990, 48). Of 152 approved projects during the 1987 to 1990 period, 82 were for expanding or building new hotels. The boom in hotel investment in 1989 led to early concern about oversupply, but growth in hotel accommodation continued throughout the 1990s and past the year 2000. Table 6.3 below shows that while the number of hotels grew by more than 50 between 1986 and 1996, that growth was accompanied by a 31 percent increase in the number of rooms available. Moreover, growth accelerated even more in the following decade. Between 1995 and 2006 the number of rooms effectively doubled, from just over 26,000 to more than 52,000. Two additional, and related, trends merit note during the overall two-decade period: The growing predominance of hotels at the expense of other forms of accommodation, and the

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Table 6.3

Approved Accommodation in Ireland, 1995-2006

Category

As of 31 Dec.

1995

1999

2003

2006

Premises

713

847

846

872

Rooms

26,350

39,656

43,178

52,318

Premises

344

488

461

419

Rooms

3,616

5,207

5,226

4,780

Premises

3,921

3,904

3,278

2,850

Rooms

16,131

17,828

13,794

11,844

Premises

133

132

116

105

Pitches

8,079

8,405

6,875

6,132

Premises

188

207

175

132

Beds

9,304

11,027

10,034

8,347

Units

2,008

2,527

2,817

4,263

Hotels

Guest Houses

Irish Homes

Caravan & Camping

Hostels

Registered Self-Catering

Source: Fáilte Ireland.

en masse entrance of global hotel chains. While the number of hotel rooms more than doubled during the last decade, for example, the number of rooms in hostels, guest houses and bed and breakfasts has declined. The B&B sector has been particularly hard hit by this growth in hotels. Bed and Breakfasts have in many ways been at the heart of the Irish tourism experience. As late as the period from 1992 to 1996, roughly 17 percent of all tourist bednights were spent in B&Bs or Guesthouses, while the figure for hotels was just 12 percent. This led one consultant to summarize, “the guesthouse/B&B sector remains a dominant force in the paid accommodation sector’ (HBC 1997, 16). The B&B sector had continued to expand during the 1980s and 1990s as well. Many owners gained access to capital through EU rural development programs, especially LEADER programs that flooded the rural sector, especially between

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107

1991 and 1995, and used it to expand or build new facilities (interview, private sector official, December 2007). Since then, however, the B&B sector has been in steady decline. Because official registration is optional, the exact number of providers in the B&B sector remains uncertain, but a study commissioned by Fáilte Ireland (BDO Simpson Xavier et al. 2005) estimated that between 2000 and 2005, some 1700 B&Bs either closed or ceased to operate as registered operations. The number of approved Irish homes in 2006 was 2850, down from almost 4000 in 1995, representing almost a 30 percent drop. The B&B sector has faced pressure from two directions. One was growing competition and higher costs, while the other was an aging ownership profile. The Fáilte Ireland study shows that Bed and Breakfast tariffs grew by roughly 20 percent between 2001 and 2004, while the price of three-star hotels, the main competitor to B&Bs, actually declined by more than seven percent (BDO Simpson Xavier et al. 2005, 1). While most B&Bs continue to charge by the person, hotels typically rent by the room, resulting in increased price competition. In addition to being squeezed by competition from hotels and guesthouses, a growing number of B&B owners were aging and retiring. Many of the B&Bs were opened in the 1970s and 1980s as a supplemental source of family income during difficult economic times. The study shows that some 34 percent of survey respondents reported having been in business for more than 20 years, and an additional 28 percent for between 16 and 20 years (Ibid., 4). With many operators projected to retire in upcoming years, the tendency was for the business to close rather than being sold or passed on. The second major trend in accommodation has been the solidification of homegrown hotel chains along with the entrance of international chains into the Irish hotel market in a massive way. As the discussion above shows, prior to the tourist boom hotel chains were all but absent in Ireland. InterContinental had come and gone. The state-owned Great Southern Hotels chain, a small domestic chain that peaked with six properties, was passed from one state-owned company to another, including the national airline Aer Lingus at one point. The Jurys and Doyle chains were young and small, although each expanded rapidly during the 1990s. Jurys had gone public in the late 1980s and experienced significant expansion during the 1990s, including introducing its own Jurys Inn brand in 1993 and moving into the foreign market by opening hotels in Scotland, England, Northern Ireland and Wales. By the time Jurys bought the Doyle chain in 1999 for €238 million the latter was the largest privately held chain in Ireland, and it, too, had expanded abroad, having opened hotels in London and Washington, D.C. The new Jurys Doyle Hotel Group comprised twenty hotels and nine Jurys Inns with over 5,200 bedrooms (Jurys n.d.). Additional small domestic hotel groups also experienced modest expansion but this was overshadowed by the entrance of global chains after the late 1990s. Prior to that point Ireland was almost unique among countries with significant tourism arrivals in that global chains were all but absent from the market. With the massive growth in tourism, along with the larger boom associated with the Celtic

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Brand New Ireland?

Tiger, however, the chains began arriving en masse. They did so mainly through non-equity means, establishing relationships with newly formed hotel operating companies and property developers aiming to take advantage of the emerging real estate boom that took place in the late 1990s and early 2000s. This process was aided greatly by tax incentives, namely accelerated capital allowances. The program allowed investors to claim 15 percent of the capital cost of a hotel each year for the first six years, and the remaining 10 percent the seventh year, against tax liability. For property developers who had made millions (and later billions) during the boom, the shelter was especially attractive. “The tax allowances were a major part of our expansion,” said Frankie Whelehan, who helped form and headed the Choice hotel group in Ireland (Kehoe 2005). The Cork-based group, which included multi-millionaire developer Paddy Kelly and businessman Peter Redden, bought the Choice hotels franchise for Ireland and came to operate more than 20 hotels in the country by 2005 under the Clarion, Quality and Comfort Inns brands: We took an international hotel brand and put it into an Irish context. That had not been done before, certainly not with three new brands. But the ground was very fertile for us at that particular time. We had a good mix of hoteliers and developers and it made a lot of sense to go into business together. The tax allowances were becoming more understood and developers were looking to build hotels. But they needed the expertise to manage them (Kehoe 2005).

Choice was the first foreign chain to enter Ireland, but many others followed. Most operate through a division of labor: An international franchise, often with multiple brands, teaming with an Irish operating company that works with individual or group property owners. As Table 6.4 shows, by 2007 the Irish hotel industry was dominated by chains. By then chains accounted for more than 18,000 rooms in Ireland. While this total represents roughly one-third of the total stock of hotel rooms in the country, almost all the chains operate in the three, four or five star categories, the most common international tourist-class categories. In a nation that possessed virtually no chains 20 years ago, by 2008 roughly 26-28 percent of tourist class hotels in Ireland are tied to chains (author interview, private sector official, August 2008). In recent years the Irish hotel sector has experienced consolidation through a series of high profile buyouts and sales. In 2005 a group, including members of the Doyle family, led a €1.6 billion private equity buyout of Jurys Doyle hotels. Within two years the group, JDH Acquisitions, broke up its holdings, selling the Jurys Inn chain to Irish investment group Quinlan Private for €1.165 billion and unloading several Dublin properties, including its flagship Ballsbridge property, to property developers. In 2007 TVC Holdings, led a consortium of investors including Pat McCann (ex chief executive of Jurys Doyle) who bought 11 Quality and Comfort hotels from the Choice group. Choice Hotels, Ireland held onto the four-star Clarion properties along with two hotels, one each under the Comfort

Patterns of Development in Irish Tourism

Table 6.4

109

Top Hotel Groups, Ireland, 2007

Rank

Hotel Group

1

Brand(s)

Hotels

Rooms

2006 Rank

Choice Hotels Ireland Clarion

10

2142

1

2

Rezidor Hotel Group

Radisson SAS/ Park Inn

15

1994

5

3

Dalata Ltd

Quality/Comfort

11

1553

—

4

Best Western

Best Western

15

1499

3

5

Bewleys Hotels

Bewleys

4

1417

4

6

PREM Group

Days Inn/Days

12

1232

7

7

Lynch Hotels

—

9

1194

8

8

JurysDoyle

Jurys

4

1119

2

9

Jurys Inns

Jurys Inn

6

1088

—

10

The Mansfield Group

Citywest

3

970

12

11

White Hotels Ireland

White

9

920

6

12

Hilton Hotels Corp.

Hilton/Conrad

6

903

20

13

Marriott

Marriott/Ritz Carlton/ 6 Courtyard

868

—

14

Irish Court Hotels

—

10

866

9

15

Gleneagle Group

—

5

782

18

125

18,547

—

Totals Source: Hotel and Catering Review (2007)

and Quality brands. The new owners of both Jurys Inns and Quality/Comfort Inns, operated by Dalata, Ltd., planned aggressive expansion programs, although most of that expansion was aimed outside of the Irish market, primarily in Britain and elsewhere in Europe. By 2008 Jurys Inn had 25 properties throughout Ireland and Britain. The latter group rebranded most of its Quality/Comfort holdings as Maldon hotels as part of a major expansion in Britain, because the Quality and Comfort franchises were already spoken for in those markets. Meanwhile, the Whelehan/Kelly group (Choice Hotels, Ireland) continues to operate 10 Clarion hotels in Ireland and has been looking to expand outside of the country as well.

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Brand New Ireland?

The overall result has not only been tremendous growth of the hotel industry in Ireland over the past two decades; the sector has also become consolidated and differentiated through the emergence of international and domestic brands, and a division of labor between hotel owners, manager/operators and franchisers. Many of the newer entrants into the industry have extremely deep pockets, either as property developers or through ties to banks and investment houses, and as a result, have much grander ambitions than those held by traditional family-oriented hoteliers. Many of the older, smaller hotel owners have been pushed aside or have moved into niche markets. “The traditional players are coming under huge pressure,” said Whelehan of Choice Hotels Ireland. “The hotel model is changing. It is all about the number of rooms you have now. Fortunately, a lot of smaller, family-owned hotels have been able to sell off their hotels as property assets. That allows them to leave with a bit of dignity and a few bob in their pockets” (quoted in Kehoe 2007). This is not to argue that Irish hoteliers have been decimated. Many have found niche markets or continue to operate one or two properties, but the most successful are found in rural areas and small towns, where they have extensive local knowledge and in some cases their in-town locations are frequently tied to the lucrative pub business. One example of the former strategy is White Hotels, which began in 1979 and now has 11 properties (including one in Wales) that are tied to its own coach tour business. These traditional hotel companies face growing pressure from chains both due to price advantages as well as chains’ dominant presence on the Internet through proprietary and secondary worldwide computer reservation systems. By way of summary, the Irish accommodation has been fundamentally transformed over the past 20 years, with the hotel industry, and particularly the branded international chain hotels gaining prominence in recent years. Two decades ago there were virtually no hotel chains in Ireland and even 10 years ago international chains were all but absent from the market. The most prominent domestic name in Ireland, Jurys hotels, had only three properties and 700 rooms in 1989. By 2006 it controlled 35 properties and 8,000 rooms, almost one-sixth of all the hotels rooms in the country (Daly 2007). Today international chains are among the biggest players in the Irish hotel market. By 2007 some 15 international companies operated at least 25 different global brands in Ireland, and almost onethird of all the hotel rooms rated three-star and above in Dublin were associated with international brands (Collins 2007). Most commonly international chains have entered the market in partnership with newer, very well-funded Irish property management companies and in many cases property developers. “We would not be in existence were it not for the tax breaks,” said Jim Murphy, who manages the Irish-owned Prem Hotel Group, a hotel operating company which holds the master franchise for the Days hotel chain for Ireland. “It is as simple as that. The catalyst for our growth and success was the investment made by property developers into the hotel industry. There is no way we would have been able to do it without them” (Kehoe 2005). The boom in hotels has also led to the blossoming

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111

and growth of Irish-owned hotel management companies. Home-grown operators such as Prem, Dalata, Hotel Partners, and Choice Hotels Ireland are all newer companies, and many are now multinationals in their own right, developing and operating hotels in Britain, Europe and in some cases the U.S. and Canada. Meanwhile, the clear losers in this process of maturation of the accommodation sector are small hoteliers, guesthouse owners, B&B owners and operators and even some self catering operations. “Five-star operators are going after four-star customers, four-star after three-star customers and three-star are eating into the traditional business of guesthouses and B&B operators. Many of those people are leaving the business” (author interview, August 2008, private sector official).

The Airline Sector Transport is the lifeblood of international tourism, and for an island nation such as Ireland is particularly problematic. As mentioned above, transport statistics are frequently cited outside of tourism revenues, even though from a consumer standpoint, transport tends to make up the first or second highest component of a tourist trip. Over the past half century, global transport has become increasingly dominated by air transport, especially that on scheduled air carriers. Airline size is measured in different ways, from passengers carried, revenues, revenue passenger kilometers, to passenger kilometers. Table 6.5 shows the world’s largest passenger air carriers, as determined by passenger kilometers flown. They show that six of the top ten are based in the United States and nine of ten are U.S. or European carriers. Airlines are unique international firms in that although many operate globally, they are highly regulated and are nationally based. This stems from the origin of most air carriers as nationalized public companies, along with a global regulation regime that has its origin in the Chicago Convention of 1944. Among the most important norms arising from that convention was that of regulating international scheduled air service through bilateral air service agreements (ASAs) and cabotage rules. Bilaterals refer to country-to-country negotiations over air services between any two nations. Most bilaterals have been highly restrictive historically, dictating carriers, routes, frequencies, and in many cases stipulating that revenues be equally distributed among participating carriers. Today tens of thousands of such ASAs govern international air travel. Cabotage refers to the right to operate air service within two points in a domestic market by a foreign-owned carrier. The Chicago convention effectively prohibited such service by allowing governments to restrict or ban the practice. As a result, with a few exceptions the global air market has really been two markets: One heavily regulated international market for country-to-country travel, and multiple separate domestic markets served only by respective domestic carriers. As a consequence, the profile of the international airline industry has been marked by national champion carriers in most countries (with the notable exception of the United States) and up until the 1980s and 1990s, the majority of those have

Brand New Ireland?

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Table 6.5

World’s Largest Airlines, 2007 (Passenger Kilometers Flown)

Rank

Airline

Millions

1

American Airlines

222,761

2

United Airlines

191,933

3

Delta Air Lines

166,209

4

Continental Airlines

130,965

5

Air France

128,914

6

Lufthansa

122,091

7

Northwest Airlines

117,357

8

Southwest Airlines

116,385

9

British Airways

113,275

10

Singapore Airlines Ltd

90,901

Source: IATA (2007).

been wholly or partially state owned. Since then, at least four important changes have taken place in the global industry: First, many governments have sold off their flag carriers to private investors as part of larger government liberalization and privatization. Between 1985 and 2002 at least 130 governments announced plans to fully or partially privatize state-owned carriers (Hanlon 2007, 15). Second has been the partial liberalization of international markets. This has taken place through alternative mechanisms, namely the renegotiation of bilateral air service agreements on more market-friendly terms or less commonly through multilateral liberal ASAs. The most notable of these are the so-called “Open Skies” agreements, which allow for open air access between signatory countries where carriers are effectively free to create any routes of their choosing, subject to airport and air traffic slot availability. Although the vast majority of these agreements are bilateral in nature, a U.S.-EU Open Skies agreement was finally signed in 2007 after years of negotiation and went into effect in March 2008. Another earlier significant move toward Open Skies came with the steady liberalization of commercial air transport within the EU area over the past two decades, culminating in 1997 with the creation of a Single European Aviation Market. With that any EU carrier could serve any route anywhere within the EU. The third significant global change has been the emergence of airline alliances in recent years. In many ways these alliances have been in response to the highly regulated global markets as well as national laws that strictly curtail foreign ownership and limit cross investment. Today four global alliances dominate

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the industry, with carriers cooperating with each other through frequent flier programs, code-sharing, marketing, and other means (Wheatcroft 1998; Dennis 2005; Hanlon 2007). Finally, the airline industry has in recent years been radically altered through rise of low-cost carriers (LCCs) in many different markets in the world (including Europe, and Ireland in particular). Operating through a lean business model, the carriers have put increased pressure on the so-called legacy or flag carriers. Most LCCs operate only domestically, but in the case of Europe, EU liberalization allows them to serve both across and within multiple markets. In sum, by lying outside of the GATT/WTO framework, the global airline industry has traditionally been highly regulated, segmented nationally, and has been dominated by nationally-owned flag carriers. The GCC governance structure of the industry reflected these features for many years, forming a classic producerdriven chain where large producers (airlines) occupied the more lucrative rungs of the chain, often internalizing additional rungs and occupying a powerful position as a buyer of inputs. Yet as Doganis (2001, 4) points out, the paradox of the global airline business is that while the industry has been characterized by at least 50 years of rapid growth, profit margins continue to be extremely thin, frequently as low as two percent of revenues during even the best years. Profits tend to flow in a highly cyclical manner, and the industry is characterized by very high capital and fixed costs. The industry also suffers from the relative inability to distinguish the product (air travel) combined with often brutal price competition between providers on specific routes. In fact, airlines are the poorest performer in the air transport commodity chain, with related businesses such as airports, air catering, airline manufacturing and leasing, and global distribution systems all much more profitable (Spinetta 2000, reported in Doganis 2001, 6). In the past, air carriers have compensated for the lack of profitability in providing air services through various strategies, including vertical integration into other transportation or tourism services (owning computer reservation or global distribution systems (GDS), catering services, hotel chains, and tour operators), or by securing outright subsidies from governments. This latter strategy has become increasingly difficult in recent years. As governments have privatized national airlines, they have also become more reluctant to provide subsidies to airlines for both philosophical and practical reasons. Government subsidies have also come under fire during bilateral and multilateral airline negotiations. In addition, most air carriers have shed off their most lucrative subsidiaries in recent years, primarily as a means to raise capital and satisfy shareholders. As a result, the organization of the airline commodity chain has become more fluid in recent years.

Air Transport in Ireland Ireland has been in a special situation in terms of air services for much of its history. As an island, transport has always been viewed as a bottleneck to Irish

114

Brand New Ireland?

tourism. Indeed, the cost of transport to Ireland was cited as a major obstacle to the industry by both the private and public sector prior to the tourism push beginning in 1987. In addition, the relative small size of Ireland, both geographically and in terms of population, means that it has traditionally had virtually no domestic air market. Ireland has traditionally possessed three primary airports, at Dublin, Cork, and Shannon in the west of the country, although in recent years airports in Knock (northwest) and Kerry (west) have increased routes and passengers. Ireland lays at one of the most western points in Europe, and especially during the mid-century, most planes on Europe–North America routes stopped for refueling at Shannon. By the 1960s advances in technology made the stop obsolete, but the U.S.–Irish bilateral (as well as the Canadian–Irish bilateral) stipulated that U.S. carriers could land only at Shannon (two to three hours by car from Dublin), a requirement that has slowly been eroded and only ended in 2008. The story of the trajectory of the scheduled aviation industry in Ireland is really the divergent story of two dominant Irish carriers: Aer Lingus and Ryanair, and together they reflect larger changes in the global and European aviation markets over the past 20 years. Prior to the tourism push, air service to Ireland was highly regulated. Ireland possessed one national carrier, Aer Lingus, which shared most routes with foreign carriers as per restrictive bilaterals. In the mid-1980s nearly half of international tourist arrivals to Ireland came by sea, in part due to the high cost of air transport (IHF 1987, 80). Both major airlines (Aer Lingus) and sea ferries (B&I Lines) were state-owned enterprises and had been for some time. The Irish government had also liquidated another state-owned ferry company in 1984. Meanwhile the primary markets to Ireland were quite constrained by restrictive bilateral air accords, especially those of Ireland’s two largest tourism and air markets, Great Britain and the United States. Both ASAs restricted carriers, routes, frequency, capacity and fares, and stipulated profit sharing between respective carriers. Increasingly transportation costs were viewed by government officials as excessively high, especially those between Ireland and Great Britain and Continental Europe. This environment began to change, however, when the governments of Ireland and Great Britain reached an agreement to somewhat liberalize the London–Dublin route in 1986, and Irish government authorities granted a license for a young domestic private carrier, Ryanair, to begin serving the route in addition to Aer Lingus and British Airways (Nevin 1995). The British under Margaret Thatcher had been at the forefront of pushing for more liberal aviation routes within Europe. Meanwhile, officials in both countries grew increasingly frustrated at extremely high fares between the two countries. Between 1980 and 1985 fares between Dublin and London had increased by 70 percent, and passenger traffic was flat (Barrett 1997, 67). The new carrier, Ryanair had emerged from Irish airline leasing company Guinness Peat Aviation (GPA), which ironically, had previously been partially owned by Aer Lingus and headed by former Aer Lingus executive Tony Ryan. Ryan started the airline in 1985 with plans to serve London from the small Irish airport in Waterford. Prior to this point Aer Lingus had effectively enjoyed

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a monopoly in international scheduled air transport, with guaranteed income as a result of traditional bilaterals. The state-owned company was very much the pride of the Irish government, flying with a shamrock on its tail in both long and short haul markets. The carrier also actively pursued vertical integration and at various points owned hotels and resorts, airplane leasing companies, charters, travel agencies, airline maintenance companies, and a computer reservation services company, among others. Barrett (2006) argues that Aer Lingus has had as many as 40 non-airline businesses, nominally in order to counteract the airline business cycle. Ryanair had first been granted a route from the regional town of Waterford to London Gatwick in 1985 but then gained an Irish government license to service Dublin–London through the nearby town of Luton in May 1986 (Barrett 1999). This marked the beginning of the Irish two-airline policy, a huge political turnaround. Prior to this point the government had protected state-owned Aer Lingus through its ASAs, especially given that the carrier’s primary competition was the much larger British Airways in the Irish–British market along with several big American carriers on Irish-U.S. routes. Previously the ASAs called for essentially equal access, government approval of fares and a pooling of revenues between carriers. The Irish government had also regularly subsidized Aer Lingus during downturns in the business cycle, something it would continue to do for the next 15 years. Overall the relationship between Aer Lingus and the government was cozy, and the Department of Transport, which oversaw air transport policy, was frequently referred to as “the downtown office of Aer Lingus.” The immediate result of the liberalization of the Dublin–London route was a sharp decrease in fares and considerable growth in demand. In the space of four months, passenger capacity grew by 20 percent (IHF 1987, 89). Fares fell by 57 percent the first day of deregulation and continued to fall thereafter (Barrett 2007, 122). Within two years passenger numbers between the city pairs nearly doubled, becoming the fastest growing city-pair route in Europe over the next decade. The route subsequently became the single busiest two-city pair in Europe with 3.7 million passengers by 1997 (Gill 1998), and one of the busiest routes in the world (Barrett 1997, 69). The liberalization on the Dublin–London route also led to lower fares on sea ferries as growing numbers of travelers switched from ferries to air service. Finally, the increased capacity and lower costs aided in the tourism push. The liberalization of the Dublin–London route took place within a changing regional and global regulatory environment for aviation. Although both European and transatlantic routes had been highly restricted since 1944, moves towards liberalization within the EU as a whole, along with particular member states, were going forward. In addition, the United States had embarked on its own domestic deregulation in 1978 and was now beginning to push for more liberal terms in its bilateral agreements. In Europe, Britain renegotiated ASAs with the Netherlands, Belgium, West Germany, Luxembourg and Italy during the mid-1980s and was a leading voice for Community wide liberalization of air transport (Button 2001).

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The 1957 Treaty of Rome had called for a Common Transport Policy along market lines, but for 30 years aviation had been outside that policy. During the mid-1980s, however, a series of initiatives led to the introduction of the first of three “packages” in 1987 that would liberalize EU air transport completely over the next decade (Ibid.). The First Package took effect at the beginning of 1988, and later that year the Irish government also revised its bilateral with Britain to increase access on a number of routes through expanding the number of carriers and frequencies. It would also renegotiate its bilateral with the United States several times in the 1990s. When Fianna Fáil returned to power leading a minority government in 1987 under Charlie Haughey, officials recognized that transport was crucial to its efforts to attempt to double tourism in five years. Civil servants in Transport but also the Department of the Taoiseach pressured Aer Lingus to reduce fares. They also contacted foreign carriers, however, including BA, KLM and Air France with the same message (author interview, former public sector actor, January 2008). The solidification of the government’s new two airline policy came in 1989. Ryanair had grown rapidly since 1986 and had begun service to Manchester and Birmingham in Britain, as well as Paris and Amsterdam. It was, however, hemorrhaging money as Aer Lingus responded to the competition by adding capacity and cutting fares. Among the routes where this took place was the new service between Dublin and London’s third airport, Stansted. The airport had been an air force base housing U.S. planes and personnel during the cold war but had since been converted into a commercial airport meant to reduce pressure on Heathrow and Gatwick. Ryanair officials sought relief from officials at the Department of Transport in Dublin, arguing that Aer Lingus was practicing predatory pricing in order to bankrupt the fledgling carrier. The Fianna Fáil Minister at the time, Seamus Brennan, was sympathetic, and sought protection for the carrier. “In short they told me if Ryanair got a clear run at Stansted for two or three years it would survive,” said Brennan later. “If I allowed the Aer Lingus attack on them to continue at Stansted they said Ryanair would be crucified and would go out of business” (quoted in Creation 2004, 45). Ultimately, this two-carrier policy took the form of effectively dividing London airports between the two carriers, with Aer Lingus holding access to Heathrow and Gatwick, and Ryanair holding the rights to Luton and Stansted. In addition, the Department of Transport divided other routes among the two carriers, with service to Paris and Manchester going to Aer Lingus, while those to Liverpool and Munich went to Ryanair for a period of three years. Barrett (1990) estimates that the Irish–U.K. reforms alone led to a savings in fare levels in 1989 of IR£24.9 million for the 994,000 passengers already using the route and IR£16.2 million for the additional 1.3 million passengers generated post liberalization. More important, the political decision solidified the Irish two carrier policy. The more open Irish–U.K. regulatory framework was soon buttressed by liberalization of the U.S.-Irish bilateral, and most important, broad and deep liberalization of the EU air market. The latter move to create an open aviation market began in earnest in the late 1980s following several decisions

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in the European Court of Justice finding that the Treaty of Rome and Common Transport Policy did in fact apply to aviation. The decisions raised questions over state supports for national carriers as well as the ability of individual states to control fares and market access. The “third package” in particular, opened the European aviation market by allowing any carrier to fly between member states without restriction beginning in 1993 as well as cabotage rights within those states with few restrictions (Button and Johnson 1998). By 1997 all restrictions were phased out within the Union, including those on foreign ownership of airlines. Simultaneous to these changes, virtually all EU nations were also affected by the slow but steady liberalization of transatlantic air transport. The United States had begun a policy of pursuing Open Skies bilaterals as part of a divide and conquer strategy toward EU nations following deregulation in the U.S. market after 1978. The new accords lifted all flight and capacity restrictions between the parties, and in most cases provided for antitrust immunity in the U.S. as carriers allied through code sharing, marketing agreements, and sometimes cross investment. The fact that aviation agreements remained almost exclusively bilateral at the time, combined with continental Europe’s geography, gave U.S. negotiators a strategic advantage in such negotiations. The U.S. and the Netherlands reached the first bilateral transatlantic Open Skies agreement in 1992. The Dutch gained open access to the entire U.S. market in return for U.S. access to the Dutch market. As a result, Amsterdam became a central hub in transatlantic service and in effect gave U.S. carriers access to Western Europe through that hub. Partners KLM and Northwest channeled passengers through Northwest’s hub and spoke route system in the U.S. and KLM’s routes throughout Europe. The vastly expanded U.S.– Amsterdam gateway reduced capacity elsewhere in Europe, and created incentives for other EU countries to renegotiate their own bilaterals with the U.S. Although the accord affected Ireland less than other European countries, it did experience some secondary effects, among them pressure from the U.S. to liberalize its own bilateral agreement. In part, however, this pressure predated the 1992 Dutch–American liberalization as U.S. carriers began demanding greater access to Dublin. Two decades prior, U.S. officials threatened to halt Aer Lingus access to New York unless U.S. carriers could fly to Dublin. At the time the governing bilateral only granted access to Shannon. The impasse was solved by creating the so-called Shannon stopover, where U.S. carriers to Ireland could fly to Dublin if they first stopped at Shannon. A 1990 amendment to the ASA allowed for fares to be liberalized somewhat and also granted an additional U.S. carrier access to Dublin (through Shannon) in return for Irish access to Los Angeles. Three years later negotiators allowed for U.S. carriers to gain direct access to Dublin from New York, avoiding the Shannon stopover for the first time. This aided in growth in traffic by 40 percent on the Dublin–New York route in 1994 (Airline Business 1995). The result of the liberalization of scheduled air services to and from Ireland has been a boom in traffic to the country. As Table 6.6 shows, the total number of air arrivals and departures to Ireland grew eightfold between 1985 and 2006,

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Table 6.6

Ireland Air and Sea Passenger Statistics, 1985-2006

Year

Air Arrivals and Departures (000s)

Sea Arrivals and Departures (000s)

1985

3264

3155

1993

7099

3837

1997

12.094

4553

2001

17,030

4160

2005

23,571

3269

2006

25,623

3005

Source: CSO (2007)

while the number of arrivals by sea ferry has been flat during that period. Dublin airport, once a sleepy rural strip north of the capital, has become the 13th busiest airport in Europe, with 20 million passengers passing through the facility in 2006 (DAA 2007; EU 2007). Ireland’s experience mirrors that of other European countries, especially during the 1990s when liberalization led to a growth in routes, capacity, and passengers flown, while fares declined significantly (Button 2001). Unique to Ireland, however, has been the growing importance—even dominance—of a non-flag carrier. Button (2001, 263), citing a study by the U.K. Civil Aviation Authority, reports that in 1998 the traditional national flag airline still accounted for more than 70 percent of traffic in every EU country except Ireland. By that year Ryanair controlled over 60 percent of the Irish market. The rise of Ryanair produced huge changes in the Irish (and European) aviation market and for that reason a more in depth investigation of both Ryanair and Aer Lingus is warranted. By the early 1990s Ryanair had made significant inroads into the Irish market, especially service linking the country to Britain, but the carrier was losing alarming amounts of money. Buoyed in part by the Department of Transport decision to divide routes between Ryanair and chief competitor Aer Lingus, Ryanair officials also decided the company needed to reformulate its business model. After company officials studied U.S. low-cost carrier Southwest Airlines, Ryanair reconstituted itself as a low cost carrier in 1991, shedding routes, planes, services and personnel, and concentrating on a core market. Since then the carrier, under the irascible leadership of Michael O’Leary, has been wildly successful, reducing costs through a series of strategies. These include: 1. Reducing fleet costs. This was first done through leasing strategies but later pursued through standardizing the company’s fleet. Today Ryanair flies only Boeing 737-800s, reducing flight training and maintenance

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2.

3.

4.

5.

6.

119

time requirements and costs. Ryanair planes are also in service for a longer period each day than most legacy carriers, increasing productivity and reducing the size of its fleet. Utilizing secondary airports. Starting with London Stansted the carrier has pursued air services at alternative city airports throughout Europe, where it frequently has become the dominant carrier. As a result it has been able to negotiate markedly reduced airport fees, one of the highest variable costs for air carriers, especially in the short-haul market. Many of these fees are done on a per passenger basis, and in many cases the fees Ryanair has been able to negotiate approach zero. Many of these airports, like Stansted, were formerly air force bases that had been closed or converted at the end of the Cold War. Most are a considerable distance away from the cities they are purported to serve but hold the advantage of being small, thereby suffering fewer delays and fostering quick turnaround time between landing and takeoff. Steamlined passenger services and overhead. Ryanair bills itself as a nofrills carrier, and its service reflects this. As part of its restructuring the carrier eliminated business class service and seat assignments. It does not provide air bridges to passengers and cut free meal and beverage service. Aside from reducing direct costs, these factors also foster quicker turnaround time for planes, fostering productivity. Reduced labor costs. Ryanair has much lower labor costs than bloated Aer Lingus, and has come to set the standard in the industry. It has done so through a number of strategies, many of them controversial, such as including offering low salaries, requiring employees to pay for their own training and uniforms, fighting union organization, recruiting employees from low wage countries and encouraging flexibility. The net result is that the carrier achieved one of the lowest wage bills in the industry by 1998, with one staff member for every 4800 passengers, compared to one for 819 for Aer Lingus, one for 600 for British Airways, and one for 969 for Lufthansa (Barrett 1999, 26). By 2008 the ratio at Ryanair was one for 9,679 (Ryanair 2008). Increasingly ancillary revenues. Ryanair offers extremetly low fares, frequently the lowest of any carrier on any given route, but makes up for this through ancillary revenues, including baggage charges, check-in charges, food, beverage and duty free sales on board planes, along with ground transportation, hotel and car rental vouchers. By the end of the fiscal year in March 2008, these ancillary revenues represented 18 percent of total revenues for the company (Ryanair 2008). Charging for such “extras’ is now becoming standard for many legacy carriers. Using market power to reduce supplier costs. As Ryanair has become larger and more powerful, it has used that power to reduce its costs through negotiating and renegotiating purchases of goods and services from suppliers. As a result it has achieved discounts on new airplane purchases,

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reduced airport charges, higher fees on car rentals and hotels it markets through its website and on-board voucher sales, reduced commissions paid to travel agencies and third party airline ticket sales. It also started its own call centre, supported with funding from Forbairt, the Irish government domestic firm counterpart to the IDA, complete with toll-free number. It unveiled its own website in 2000 as an effort to reduce third party fees and now books virtually 100 percent of ticket sales on its site. The company went public in 1997 and by 1999 Ryanair flew more than six million passengers and embarked on vastly expanding its European network. By this point only one in five of its passengers flew to or from Ireland, the remainder flying elsewhere in Europe (Creation 2004, 160). In 2003 it flew 15 million passengers, becoming the fourth largest carrier in Europe (Ibid., 222), and by the end of 2007 it served 49 million passengers, possessed one of the industry’s highest load factors, and had revenues of more than €2 billion and net profits of more than €480 million (Ryanair 2008). Its fleet of 163 aircraft and more than €2 billion cash on the books made it one of the largest and most profitable carriers in Europe and the company claims that year the carrier became the world’s largest carrier of international passengers (Ibid.). It recently announced options to purchase planes that would nearly double the size of its fleet by 2013, giving the carrier roughly the same sized fleet as British Airways (Milligan 2008). In contrast, Ireland’s other primary airline, Aer Lingus, has experienced uneven growth while facing competitive challenges from both Ryanair and other carriers. The flag carrier had been important not only in providing air services between Ireland and many other countries over the years; it also indirectly and directly was at the forefront of tourism marketing programs abroad. Many Bord Fáilte international marketing and promotional campaigns were done in conjunction with the national carrier. When the international tourism push began in 1987 the carrier was effectively the only game in town, but since then its power and importance has diminished, and its fortunes have followed that of many European national carriers. Debate continues today on the origin of Ireland’s “two airline” policy. Some credit then-Transportation minister Brennan, who came from Fianna Fáil’s more free market wing. Others look to the political leadership of Taoiseach Charlie Haughey, whose cabinet would have to approve such a move by Brennan. The final candidates are civil servants, who saw that increasing tourism meant that air access had to be vastly expanded and made more affordable. The Government White Paper on Tourism (Government of Ireland 1985) had noted that the number of tourists arriving by air from Britain had actually declined by some 50 percent between 1975 and 1983. One insider at the time argues that all three sets of actors played important roles and that the two airline policy would not have come about without the contribution of each:

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The general proposal came from the civil service. Then you have to lobby others in the civil service that this is a good thing. So you’ve got to convince the transport people that this won’t break Aer Lingus, to convince them that the yield may drop but that capacity will grow and they’ll be okay. They if you get everyone together there you have to persuade the minister. Then the minister has to go to cabinet and convince various people there. That would explain how everyone believes that when they changed their position they think they’ve changed the earth (interview, former public sector actor, January 2008).

Aer Lingus fought the policy, both through lobbying and in attempting to drive Ryanair out of markets through predatory pricing. Yet officials not only in Transport, but also the Department of the Taoiseach, were unsympathetic. The division of routes between the two carriers signaled a failure of both strategies and Aer Lingus suffered its first annual loss in revenues in a decade in 1992. By the end of that year, following recession and a decline of transatlantic traffic following the first Gulf War, the financial crisis was acute. Airline officials put together a restructuring plan in 1993 (the Cahill plan), which sold off many company noncore assets (including a hotel chain), reduced operating costs, cut staff by more than 1200, and provided a schedule for reducing debt in return for an injection of IR£175 million (Chari 2004). The plan, which was adopted by the government later that year, faced initial opposition from the EU as part of its efforts to clamp down on public subsidies of state airlines, but was ultimately approved. The carrier lost more than $300 million in 1993 and another $187 million the following year, it sixth year of red ink in succession, but restructuring, along with an upturn in the global airline business cycle, returned the company to profitability in 1995 (Barrett 1997). The company retooled for its long-haul operations, replacing aging and expensive 747s with new Airbus A330s. It also sold off its management services company and interest in Irish Helicopters (Airline Business 1995). Three years later the firm continued to trim its profile by selling its wholly-owned aircraft maintenance company TEAM to Danish company FLS Aerospace. The company engaged in a second major restructuring following another severe downturn after 2001. Hit by a combination of recession, a global decline in aviation demand following the September 11 attacks, and the foot and mouth scare, the company lost €50 million, but another government bailout was made next to impossible by new EU regulations limiting state aid. Somewhat ironically the company had started a television advertising campaign on September 10 of that year in preparation for an ultimately aborted stock market floatation aimed at raising €500 million. New CEO Willie Walsh put together a new restructuring plan, cutting routes and capacity, cutting up to one-third of its workforce, and eliminating planned raises (Tynan 2001). Within a year costs were trimmed by 30 percent and since then the airline has pursued a dual strategy: Serving as a traditional full-service carrier on long haul markets while simultaneously pursuing a low-cost carrier strategy on short-haul routes. Its strategy for the latter was accomplished by largely following the Ryanair model, reducing fares, services, and eliminating restrictions.

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Company fares between European destinations fell by 30 percent between 2001 and 2004 (Barrett 2006) while the carrier opened 36 new routes between 2002 and 2004 (Barrett 2007). The airline dropped all domestic service in Ireland with the exception of the Dublin–Shannon and Dublin–Cork routes. The company returned to profit in 2002 and continued to be profitable in subsequent years. As talks of privatization continued, senior management officials of Aer Lingus proposed a managed buyout of the company in 2004, a plan that did not sit well with government or the public. Partial or total privatization of the carrier had been discussed since at least the late 1990s, and has been the growing trend in Europe for at least a decade. The MBO was rejected by government and within a few months the officials, including Walsh, resigned. Soon after, the government took up privatization plans in earnest. By the end of 2005 new CEO Dermot Mannion announced that the company needed to raise €2 billion in order to buy new aircraft and routes. At this point restructuring was largely complete, with staff reduced to just under 3,500 and the carrier now serving eight million passengers The managed partial sell-off finally took place through an IPO in September, 2006 on the Dublin and London stock exchanges. The IPO raised more than €400 million and reduced the state’s holding in the carrier to 25 percent. Airline employees held onto 14 percent of the company but the single biggest investor quickly became rival Ryanair (Aer Lingus 2006). Late in 2006 the low cost carrier announced a takeover bid of Aer Lingus. Immediately rejected by the Aer Lingus board and also criticized by the Irish government, the bid was ultimately halted by EU officials as stifling competition. By 2008 Ryanair increased its equity stake in Aer Lingus to almost 30 percent and remained the single largest investor in the carrier. Ultimately, airlines have been both among the biggest beneficiaries, as well as primary drivers behind the tourism boom in Ireland over the past two decades. While several European countries have seen their national carrier go out of business or merge with other carriers, Ireland has gone from one to two major carriers. A third, Cityjet, began as an Irish LCC in 1994, was bought out by Air France, but continues to be managed from Ireland. A fourth, Aer Arann, went from a regional Irish carrier to become a small, upstart LCC of its own operating mainly in Ireland and the U.K. The liberalization of key air routes helped eliminate transportation bottlenecks to the island, but more important, the LCC model pioneered in Europe by Ryanair and later copied by Aer Lingus revolutionized short-stay leisure travel for many Europeans (Papatheodorou 2002). The boom in city-break leisure tourism by air has especially been a boon to Dublin and Cork, both of which have much wider connectivity to Britain and continental Europe than ever before. Ryanair went from being an Irish upstart to a major European airline player. By 2004 Ryanair flew to 125 European destinations (Creation 2004) and had the highest profit margins of any European carrier (Barrett 2007). Today it possesses one of the newest fleets in the world, one of the lowest cost structures in the industry, and company official expect that as the latest economic down cycle produces yet another airline shakeout the carrier will emerge stronger than ever.

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For its part, Aer Lingus remains more vulnerable to the ups and downs of the industry, but it has also expanded its European coverage, rationalized its workforce, and modernized its fleet. As a transatlantic carrier (unlike Ryanair), it is more likely to feel the effects of the multilateral EU–U.S. Open Skies treaty signed in 2007 and put into effect beginning in March 2008. The treaty allows for open access to routes throughout the network, but maintains limitations on cross investment. The treaty came on the heels of yet another amendment to the U.S.–Irish bilateral in 2005 that phased out and ultimately eliminated the Shannon stopover in 2008. In return Irish carriers (effectively Aer Lingus) gained access to three more U.S. gateway cities, Washington, D.C., San Francisco and Orlando. Aer Lingus also announced a strategic partnership with U.S. LCC JetBlue in 2007 in an effort to extend the U.S. network. The implications of the greater EU-U.S. Open Skies agreement for Ireland and Aer Lingus are less clear. What is clear is that Ireland has steadily liberalized airline services, unilaterally, bilaterally and multilaterally, beginning with the two airline policy and continuing through EUU.S. Open Skies. That [the two airline policy] was probably fundamental to undoing a tourism bottleneck. It helped begin the process of bringing down costs for travelers. The second big bottleneck has been the Shannon stop and Open Skies. I’ve always believed there has been suppressed demand in the U.S. market…The challenge now is on one hand we are an island nation and we need to maintain our air services access. I think we need to watch consolidation and also what happens with Heathrow and its slots, the possibility of Heathrow to the U.S. more instead of going through Ireland (author interview, public sector official, January 2008).

Yet in many ways the calculus for government ministers and tourism officials alike has changed from focusing on national carriers to focusing on passengers. In the new market environment “it is a shift from owning airlines and pushing them to airports and making them attractive to commercial traffic” (author interview, public sector official, January 2008). The success in Irish airlines has also spilled over into other areas of the aviation industry, most notably airports, airline maintenance, aircraft leasing, and airline finance. To be sure, much of this success is the simple product of Ireland’s comparatively low corporate taxes. Leasing and finance companies have either started up in Ireland or arrived for the same reason pharmaceutical TNCs located in the country: The 12.5 percent rate on corporate taxes. Two of Europe’s largest aircraft maintenance, repair and overhaul (MRO) companies, Shannon Aerospace and FLS Aerospace/SR Technics (the successor to Aer Lingus’ TEAM maintenance subsidiary), are located in Ireland, each having changed hands several times in recent years. The former, originally set up by GPA, is currently owned by German company Lufthansa Technik AG; the latter is owned by Swiss firm SR Technics, which itself was bought in 2006 by a consortium of companies

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from the United Arab Emirates. The two major MROs were joined by Air Atlanta Aero Engineering, another Shannon-based MRO once owned by Aer Lingus and bought by the Icelandic aircraft leading company from United Parcel Service in 2004. Independent MRO operations have grown vastly in recent years, driven by airline outsourcing, especially by LCCs. By 2005 the global MRO business was worth nearly $40 billion, with more than $11 billion going to Europe (FAEI 2005; Flint 2005). Many leading aircraft leasing specialists, including leading global firms Pembroke, RBS Aviation Capital, B&B Air, and GE Capital Aviation Services (GECAS, the successor to GPA), are also based in Ireland. Most are based at Shannon or in the International Financial Services Centre (IFSC) in Dublin, demonstrating the industry’s connection to the global financial services sector targeted by the IDA in the 1990s. Aircraft engine leasing companies also dot the landscape. A recent survey estimates 30 aviation leasing and finance companies located in Ireland, employing 1,000 and delivering €300 million per year in tax revenues (KPMG 2008; Gill 2007). One industry organization estimates that as of 2004 more than 15,000 people are employed in the broad aviation sector (Airline Business 2004). Of them, More than 7000 are employed by airlines, 4000 by MROs and 800 in aviation financial services (FAEI 2005).

Conclusion The accommodation and air transport sectors each look very different than they did in the mid-1980s prior to the tourism push, and in each sector Irish firms have been successful in industrial upgrading. While the change has been incremental in the accommodation sector, however, it has been much more transformative in air transport. The accommodation sector has been marked by vast expansion over the past two decades, as well as by a shift away from small, family-owned properties to a corporate, group property model. Part of the shift has been one away from bed and breakfasts and similar accommodation to dominance by hotel groups, often with ties to international brands and management. The share of overall bednights spent in hotels by overseas tourists grew to 24 percent in 2007, while just 11 percent were spent in B&Bs (Fáilte Ireland 2008). Just a decade earlier those figures were almost reversed, with 12 percent of bednights going to hotels and 19 percent to B&Bs. While a large share of overall bednights remains with friends and relatives as well as self accommodation, they too are losing share each year to hotels. The overall hospitality sector in Ireland has seen considerable upgrading in the past two decades both in terms of availability and quality. The more significant change, however, has been a shift in the hotel business in Ireland from being a single business to two or three, often with international linkages. As the discussion above shows, in the past Irish hotel operators were also owners of their properties, and the business tended to be run on a small scale, most commonly among family interests. With the tourism boom, as well as Ireland’s broader changing economic

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fortunes, property developers took advantage of tax incentives to build hotels, hired outside hotel management companies, and often affiliated their properties with international hotel brands. By 2008 more than a quarter of Irish hotels are branded, a percentage much lower than in the U.S., but higher than the European average (author interview, private sector official, August 2008). Although the sector has become more globalized with the arrival of top global chains such as Starwood, Hilton, Marriott, Choice and Carlson, Irish firms can also be found in all three segments of the hotel operation business: Ownership, hotel management, and branding. In all three segments—hotel property owners, management companies, and brands—Irish firms have not only found a place in the Irish market, but have become TNCs on their own, expanding into the U.K., European and even North American markets. The clear loser in this process has been the small operators in the hotels, guesthouse and B&B sector. Many are today seeking niches in the increasingly segmented market, but many more are closing businesses or selling off. While the accommodation sector has changed markedly over the past two decades, it pales in comparison to air transport. Two decades ago flying on an airplane was completely unaffordable for the vast majority of Irish citizens, and high prices severely limited the potential for inbound tourism growth. Due to existing bilateral ASAs, Ireland was served by one state-owned carrier along with a number of foreign carriers on a highly restrictive basis. Today Ireland is served by a multitude of full service and low-cost carriers, more than 30 million passengers passed through the country’s three main airports in 2007 and that year 89 airlines connected Dublin to more than 200 destinations (DAA 2007). Although Irish air transport has been considerably liberalized over this period, the two dominant carriers to Ireland remain Irish owned. In 2007 Ryanair became Dublin Airport’s biggest customer in terms of passenger arrivals and departures and together with Aer Lingus accounted for more than three-fourths of all passengers to the airport (Ibid.). Ryanair, which once charged Aer Lingus with predatory pricing practices, has successfully defended Irish routes from upstart LCCs such as EasyJet and MyTravelLite through aggressive pricing and adding flight frequencies. It also bought the LCC Buzz from KLM in 2003, has equity interest not only in Aer Lingus, but also in a Mexican LCC and has discussed opening a long-haul subsidiary. More significantly, Ryanair borrowed the low-cost model from Southwest, deepened it, and introduced it to Europe. The carrier has demonstrated that scheduled air service need not be the most glamorous but least profitable segment of the air transport commodity chain. In 2008, when most global and regional carriers have suffered what British Airways chairman Martin Broughton has called, “the worst crisis the aviation industry has even known” (Vermeulen 2008) due to global recession combined with a doubling of fuel prices in one year, Ryanair announced that it might simply break even for the year. Meanwhile for the longer term it has increased passengers by more than 15 percent a year, has recorded 10 years of steady profits, and possesses one of the highest operating margins in the

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industry. In 2007 it opened negotiations for the purchase of 70 more aircraft over the next five years. Most significant of all, Ryanair has used its weight to reorder market power within the air transport commodity chain. It has used aggressive negotiating techniques to reduce its own charges with airport operators, maintenance providers and aircraft suppliers, for example, reducing their profits to its own benefit. It has also acted aggressively toward travel agencies and third party booking agents, steering almost 100 percent of its ticket sales to its own website in 2008, just eight years after the web site went live. Most telling, it has replaced many of the services once performed by travel agents—combining air travel, accommodation and ground transportation—through its own network of ancillary sales for hotels and car rentals. These changes have not come without struggle. Ryanair’s announcement that it would cut commissions to travel agents in the 1990s led to lawsuits and a boycott by travel agencies, but the company was successful first by setting up its own call centers and later its web site. It also negotiated the purchase of new aircraft from Boeing, and then went back to Boeing after the global aviation downturn in 2001 and renegotiated its already signed deal. A more drawn out struggle has been with airports. Although Ryanair has successfully reduced its landing and passenger charges by utilizing secondary airports outside major destinations, it has been locked in a continuing decade-long battle with both the Dublin Airport Authority (DAA), the state-owned operator of Dublin airport, and BAA, the privatized operator of London–Stansted, over airport charges. It has sued both, engaged in public name calling, and appealed to the EU, but thus far has been unsuccessful. Ultimately, however, Ryanair has been able to redistribute both power and profits in the air transport commodity chain. Although other LCCs have been less successful, they have in many cases been able to mimic Ryanair’s strategy with moderate success. Over the past five years a plethora of LCCs have started throughout Europe. Dobruszkes (2006) identifies 28 European LCCs as of 2004 while others estimate the figure to be closer to 60. Investment house Morgan Stanley (2002) predicts the LCCs will become a major force in the intra-European market, projecting that the proportion of passengers using the carriers on intraEuropean routes to increase from 9 percent in 2002 to 28 percent in 2010. These figures may underestimate the importance of LCCs in national and regional routes. Doganis (2006, 162) estimates that in 2005 almost half of intra-European and domestic routes in Ireland and the U.K. were served by LCCs. In contrast full service carriers are either setting up their own LCC subsidiaries or, like Aer Lingus, following many of the strategies inherent to the LCC model. While market entrance and exit are quite common, low cost carriers appear to be in the market to stay.

Chapter 7

Conclusion: Brand New Ireland?

This book has been concerned with tourism and the nation, broadly considered. Among the claims made are that national development and national identity formation need to be considered in tandem, and that tourism tells us something about each. Two arguments follow in the case at hand: First, the Celtic Tiger experience in the Republic of Ireland needs to be reconsidered in a manner that takes tourism into greater account. Beginning in the late 1980s tourism began to play a growing role within government development plans. Over the next 10 years, the government, aided by EU structural funds, spent more than €4 billion upgrading the physical tourism product in the country (Deegan 2005). As a result, the sector contributed most directly to economic recovery through early job creation and increased export revenues. Although later overshadowed by hightech activities, tourism has remained a significant contributor to Irish economic dynamism. At the same time that Irish tourism has played this larger economic role, the sector itself has been fundamentally transformed. Prior to the tourism push, the activity was important to the broader economy, but was largely in the hands of small producers or the state. Growth was incremental at best, and Ireland’s main attraction to foreign tourists was its backwardness (compared to the rest of Europe) and its status as homeland to the Irish diaspora. Tourism marketing materials played up these features: Ireland seemingly escaped modernity and was portrayed as empty, rural and timeless, its inhabitants as simple and fun loving. By 2008, however, the tourism sector was greatly expanded and more segmented, on one hand, and more economically organized and centralized, on the other. Most of the state holdings in the tourism sector have been sold off (either partially or in their entirety), and, as Chapter 6 demonstrates, the accommodation and air transport sectors have been transformed by new models and new, often highly capitalized entrants. The second argument is that tourism and specifically tourism marketing tell us something about national identity formation. It begins with the premise that national identity is constantly being rewritten and is the product of multiple authors. Foremost among them is the state itself, as narratives of national identity are central to differentiation and legitimation. State actors write the nation in many ways—through educational curriculum and the marking of official holidays—but in an ever-increasing consumerist world, the science of marketing has come grown in importance. In the past 15 years branding—the projection of symbols, images, narratives and ideas—has been increasingly utilized by state actors through marketing professionals in order to evoke an emotive response among their target

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audience. Irish officials have been at the forefront of this growing practice of tourism nation branding. Finally, this target audience is not just potential tourists from abroad; it includes the Irish themselves: Through tourism marketing the state creates a particular image of identity that demarcates the Irish from other nations. The remainder of the chapter summarizes the findings of the study in more detail, relating them to the puzzle laid out in Chapter 1 as well as the analytical model spelled out in Chapter 2. Finally, the book closes with an assessment of tourism, development and national identity in Ireland today, including prospects and pressures on the industry, and on the model pursued by tourism officials.

State, Market, and Development Patterns: The Irish Case The book opens with the question of how we understand national development in an increasingly globalized world. Is national development still possible, or is economic dynamism within a nation simply the product of powerful global forces operating at a given place and time? In answering this question, I argue that studying the dynamics of national development remains fruitful. Because globalization is uneven temporally, geographically, and functionally, two claims follow: One is that state policy still matters. Global forces clearly create constraints and opportunities, but states have always faced external constraints and opportunities when pursuing development. Whether contemporary exogenous factors are more or less constraining is ultimately an empirical question. Second, uncovering the dynamics behind contemporary national development is best understood through industry studies. Here I am by no means alone in making this claim. Many contemporary (as well as not so contemporary) studies of economic dynamism focus on leading industries. On one hand they constitute the very economic dynamism we are interested in. On the other, if globalization and state policy are important determinants of developmental outcomes, both are best understood at the industry level. Each industry globalizes to its own logic, shaped by industry characteristics and local and global regulatory frameworks. As a result, the international airline industry has globalized in a manner very different from the international insurance industry. Paying close attention to these differences means a great deal for national development. Similarly, industry is important when examining state policy because state development strategies typically contain crucial industry-specific components. The Republic of Ireland is ideal for examining development in these terms for several reasons, including 1) it has established an enviable record of economic growth over the past two decades, the country’s economy is highly globalized in terms of trade and investment (O’Sullivan 2006), and 3) the state has actively promoted targeted industries as a central part of its development strategy. Indeed, many accounts of Irish national development focus upon these cutting-edge global industries of computer software and hardware, pharmaceuticals and medical devices, and financial services, arguing that Ireland’s ability to capture key niches

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in these globalized, high-end industries lies at the heart of national development. What is missing from these accounts, however, is the very real role that tourism has played in the emergence of the Celtic Tiger. A key task of this book, then, has been to show how tourism has shaped national development in Ireland over the past two decades. In addition, a close examination of the sector uncovers detailed development patterns in two subindustries, accommodation and air transport. Chapter 2 provides a model for understanding the determinants of those development outcomes. Each of these arguments deserves more attention. Statistics in chapters 1 and 3 show that tourism in Ireland has grown at least as fast as the economy as a whole in the past two decades, suggesting it is a leading, rather than following, sector. Tourism also grew faster in Ireland than in any other EU-15 country during that period. Moreover, this growth did not take place by accident or as the result of market forces alone. Instead a dual dynamic took place: Private sector groups active in the industry gained a new organizational unity and began to effectively lobby the state for policy changes and greater resources for the sector. Simultaneously, state actors began to identify tourism as a potential laborintensive growth sector. The result, bolstered by significant flows of EU structural funds, was a tourism push that was part of a short to medium-term economic recovery plan in the late 1980s and early 1990s, but one that through momentum and continued pressure by key actors, continued into the 21st century. In short, the Irish tourism sector is in 2008 five times the size it was in 1986, and this is no accident. Instead it is the product of two decades of conscious state policy, effective private sector lobbying, combined with enabling market forces. Claiming that tourism should occupy a similar status to the high-tech industries in accounting for Irish economic dynamism is likely to be at least somewhat controversial. The industries at the heart of the “new economy” are likely to have huge intellectual and economic spillover effects while tourism remains, in many ways, part of the old economy. One major finding of this study, however, is that tourism played a crucial role in job creation, especially during the period of early recovery. Well over 200,000 people were unemployed in Ireland 1985 prior to the Celtic Tiger years (Kirby 2002, 22) and the average unemployment rate between 1983 and 1987 was 16.4 percent (Hardiman 2003, 26). While activity in the high profile sectors such as computer software and hardware, pharmaceuticals and medical devices and financial services began to take off in the late 1980s and early 1990s, they contributed very little in the way of employment to an economy where the unemployment rate approaching 20 percent was of foremost concern to policy makers. The software industry, to take an example, employed fewer than 9,000 people in 1993 and just 12,000 in 1995 (Enterprise Ireland). The internationally traded financial services sector employed fewer than 5,000 people as late as 1998. Barry and Van Egeraat (2008) show that the computer hardware industry was more successful during the 1990s, creating up to 30,000 jobs by the year 2000. Many of those jobs, however, either existed prior to the onset of the Celtic Tiger or were created in the latter half of the decade (O’Hearn 2001). In addition, alarmingly

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some 10,000 of these jobs were lost in the years 2000 to 2004 as hardware producers moved their operations to lower-cost destinations. In fact, the beginning of Irish economic recovery was largely jobless. The unemployment rate in 1993 remained at 18.3 percent (Mac Sharry and White (2000, 157). As Chapter 3 demonstrates, tourism here was an outlier, having created some 25,000 to 30,000 new jobs from 1987-1992, representing more than half all the jobs created in this period. The sector continued to create employment opportunities in subsequent years, and job growth in the industry continued steadily during the height of the Celtic Tiger years. The obvious retort is that tourism jobs were (and are) marginal, with many being unskilled, low paid and seasonal. Meanwhile the high tech industries demand highly educated and highly skilled workers that command high salaries. While containing some truth, it is important to recognize that such opportunities are needed in a highly segmented employment market such as in Ireland. Despite claims regarding Ireland’s highly educated and skilled workforce, considerable variation in education levels and training continue to exist. More important, the changing nature and segmentation of each set of industries makes such a generalization something of an oversimplification. Tourism has become more technologically driven over the past two decades. Many of the management and back room operations of tourism enterprises require many of the same skills that some high-tech industries require. In addition, as several scholars of these high tech industries have shown, many of the employment opportunities in these areas have in fact been low-skilled and low paying. For instance, a considerable number of computer hardware and software positions in the 1990s were in fact low and unskilled positions in localization, support printing, or packaging. Many early call-centre positions were classified as high-tech jobs but the main qualification was the ability to speak English. O’Malley and O’Gorman (2001), focusing on the software sector, contend that many of the lower skilled jobs are found in foreign-owned firms, while the growing indigenous software sector in Ireland has produced higher-level employment. O’Sullivan (1995, 338, quoted in Kirby 2002, 53) concurs with this observation more broadly, arguing that, “even though the products produced by foreign companies in Ireland have been increasingly “high tech” the operations that Irish people perform for these companies continue to be predominantly low-skilled.” Similarly the international financial services sector has been plagued by very high rates of turnover, as many of the employment positions are for tedious backroom work with few prospects for advancement (White 2003). To the extent that foreign high-tech firms produce fewer good jobs than their locally-owned counterparts, the problem is that the Irish-owned sector has remained very small. Indigenous software firms employed only 11,000 people as late as 2005 (Enterprise Ireland), and for many analysts software represents the high-tech spillover “success” story. O’Malley and O’Gorman (2001), citing government statistics, suggest that by 1997 indigenous firms employed only 4900 people in the computer hardware, pharmaceuticals, and instrument engineering

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sectors combined. In a workforce approaching two million, these numbers are less than impressive. Meanwhile employment in tourism, while more difficult to pinpoint, may be underestimated. As Chapter 3 suggests, the Central Statistics Office in Ireland does not measure tourism employment directly and government and industry figures around 250,000 are widely discounted because they simply add up all the people employed in the largest activities that overlap with tourism. Yet most serious attempts are measuring tourism jobs estimate that directly and indirectly tourism accounts for roughly 140,000 to 150,000 jobs (for instance IHF 2003; TPRG 2003; NESC 2003). Deegan, et al. (2006) using the increasingly accepted Tourism Satellite Account (TSA) method, argue that together domestic and international tourism accounted for 198,000 direct and indirect jobs in 2005, just under 10 percent of total employment that year. In sum, to the extent that a central achievement of the Celtic Tiger has been job creation, tourism played a major role in this achievement. Beyond the question of employment are broader development patterns, specifically at the industry level. The discussion in Chapter 2 suggests that national development does not take place in a vacuum and is increasingly influenced by factors associated with globalization. Many of these factors, however, are industry specific. As a result, development patterns are best considered at that level. Within industries that are tied to global markets—such as tourism—development outcomes are best understood by examining local production within global production systems and how they change over time. Industrial upgrading into more lucrative activities within these production systems amounts to a central aspect of development under globalization. The model presented in that Chapter 2 begins with three sets of factors: The nature and governance of the global commodity chain, the organization and existing production nodes of domestic industry, and the role of the state. Developmental change consists of innovation and movement into other nodes of the commodity chain. This is most often the product of local innovation or changing strategies and activities on behalf of international firms. While these amount to responses to changing economic conditions, they are also often shaped by state policy. Ultimately it is this mix among the organization of global commodity chains, the ability (or lack thereof) of local industry to capture a niche within that chain, and state policy, which account for evolving development patterns within specific industries. Chapter 6 utilizes the model in order to document development patterns in two tourism subindustries in Ireland: Accommodation and airlines. The chapter shows significant change and upgrading in both activities over time, but demonstrates a very different dynamic at work in each. Within accommodation, Ireland has experienced marked growth, greater segmentation and overall upgrading. In the 1980s the sector was dominated by small, often family-owned firms and was made up primarily by bed and breakfast establishments, guesthouses, and small hotels. No one form of accommodation predominated. Hotel chains were rare and international hospitality firms (mainly hotel chains) were largely absent from the

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Irish market. Twenty years later the accommodation sector has been thoroughly transformed, with hotels and especially hotel chains coming to the forefront of the sector. This process was shaped, more than anything else, by the global governance structure of the hotel global commodity chain. Global production structures separate ownership, management, and franchising. Meanwhile the industry is largely market driven, avoiding significant international or domestic regulation. Today the Irish hotel industry has matured, and the industry resembles its global counterpart through the growth of chains, strategic partnerships, hotel management companies and master franchisees. Generally, moving into hotel management and franchising amount to industrial upgrading, as these links in the chain tend to be more lucrative and less risky than hotel ownership. Notably, several Irish firms have become significant players in these nodes of the production network. Moreover, in some cases Irish operators and brands have emerged on their own and have become multinationals in their own right. This process was driven mainly by market mechanisms. The Irish state, though encouraging hotel construction through tax breaks, otherwise influenced these patterns of development only indirectly. The clear losers in this process have been the small owners and B&B operators. Many have been squeezed by the entrance of 3-star properties that compete through economies of scale, along with advantages in technology and marketing. Although trying to reinvent themselves in niche markets, (Town and Country Homes 2007), many small B&B and guesthouse owners operate very near the margins of profitability and survival (Moynihan 2007). In contrast to the accommodation sector, developments in the airline sector in Ireland have been very much driven by national, regional and international regulatory frameworks as well as the capital intensive nature of the industry. Due to the small size of the country and subsequent lack of a significant domestic market, the airline industry in Ireland has always been an international one. Through the 1980s, however, the industry was marked by heavy regulation and a division of spoils between national carriers in respective markets. This hardly made Ireland unique, however, as Ireland’s commercial air transport market was the product of 1944 Chicago Convention, which established bilateral air service agreements as the regulatory framework through which international airlines would operate. As Chapter 6 demonstrates, this changed beginning in the late 1980s for a variety of reasons. Internationally, deregulation of the U.S. domestic market a decade earlier put into motion the beginnings of deregulation on international markets. Regionally, the EU was beginning to go through a similar process, one which would culminate in the late 1990s in a single European commercial air transport market. Finally, domestically, state actors sought to partially liberalize routes in an effort to reduce access transport costs as a means to further the tourism push. Under the old regime of restricted bilaterals, the developmental benefits associated with scheduled air transport between any two countries were commonly divided equally between the respective countries’ carriers. In most cases these were publically-owned, national carriers. Changes in these agreements created

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opportunities for new market entry. In traditional airline city markets, new entry is made difficult not only by initial capital outlays, but also by the tendency of existing firms to respond with increased capacity and reduce fares. At times this amounts to predatory pricing and in many cases new entrants do not last long. New entrant Ryanair faced exactly this environment when it began service between Ireland and the U.K. in the late 1980s. Aer Lingus in particular responded to the upstart carrier by increasing the number of flights on routes where Ryanair competed and also dropped fares dramatically. As a result, Ryanair saw its losses grow year after year between 1986 and 1989. Ultimately, two factors kept the new carrier from joining other upstart airlines in the ash heap: One was gaining exclusive rights on Dublin–London Stansted and Dublin–Luton routes from the Department of Transport. Later this “two airline’ policy was extended to other city pairs where Ryanair was the sole Irish carrier while other routes were reserved for Aer Lingus (Creation 2004; Barrett 1999). The other was Ryanair’s reincarnation as an LCC. The carrier was at the forefront of a new management and operating philosophy that has changed commercial air travel throughout Europe. Timing here was crucial. Ryanair prospered in part due to the worldwide glut of aircraft, especially following the first gulf war, along with the fact that Tony Ryan, who owned the carrier at the time, also headed Guinness Peat Aviation, one of the world’s largest aircraft leasing companies. Ryanair also benefitted from the ongoing liberalization of the European airline market throughout the 1990s as well as the new availability of secondary airports close to European destinations. Finally, the company also made use of call centers and later the Internet as a means of bypassing travel agents to reduce costs. Ryanair was certainly not alone in the LCC revolution, but it has consistently been at the forefront. The most significant result is that unlike in the past where the size of any city pair market was largely fixed and carriers competed primarily for market share, the entrance of Ryanair and other LCCs has most commonly resulted in huge gains in overall passenger capacity. By the early 21st century Ryanair had clearly moved from market upstart to the dominant player in markets it served. The carrier has relentlessly driven down fares while still commanding very high margins due to its abilities to drive down costs (Barrett 2004, 92). The carrier, along with other LCCs, has all but revolutionized the governance structure of the airline commodity chain. As Chapter 6 documents, traditionally commercial air carriers have tended to be among the least profitable segment in the overall air transport business, with airports, travel agencies, aircraft manufacturers and other support industries commanding a greater share of profits. Ryanair has utilized its market power to negotiate and renegotiate with suppliers, airports, manufacturers and others to reduce its own costs and subsequently improve its margins at the expense of others. Today Ryanair has reversed roles with others in the air transport commodity chain. In its infancy it fought against what it saw as unfair market practices such as predatory pricing and other oligopolistic or monopolistic behavior from others in the chain. Today Ryanair openly threatens to drive out new upstart carriers on routes it serves, threatens to leave routes where it views

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airport charges too high, and reopens completed negotiations with suppliers when market conditions favor such a strategy. Ultimately the success of the LCC model in Ireland has spread elsewhere in Europe and has also provided material benefits for other segments of the transport chain within Ireland. Chapter 6 points out that aircraft maintenance and aircraft leasing are two such sectors. In the end, the tourism push by state officials and development patterns in the hospitality and air transport sector has been mutually beneficial. The initial push to double tourism almost certainly directly led to initial liberalization of air transport routes, and the gradual widening of that liberalization has vastly reduced the cost of access transport, contributing to a cascading effect on tourist arrivals to Ireland. The growth and maturation of the hotel sector also began to take on a selfgenerating character over time: The building of new properties and the entrance of international chains attracted even more building and more entrants.

Tourism, Branding, and National Identity Aside from the materialist outcomes associated with the political economy of tourism development in Ireland, this book is also concerned with questions of national identity formation and in particular the origins of that identity. The claims made in the book are perhaps less far reaching than those made regarding development outcomes. Surveys of Irish citizens were not conducted in order to measure changing attitudes, for instance. Nevertheless, tourism and national identity are intimately related. National identity is best conceived of as an ongoing dialogue among many actors within (and outside of) state and societies. Examining tourism marketing and more specifically branding is a fruitful area for uncovering messages associated with how state actors conceive of national identity. Marketing materials present place, people, and history, or selections of each. They also contain an aspirational element: This is the nation we are or hope to become. These, of course, are the very raw materials of national identity formation. Branding affects conceptions of national identity both indirectly and directly. Indirectly, representations of the nation are promoted to potential tourists, who, upon traveling to a country, expect to encounter those representations. This expectation calls on tourism hosts to “perform” the nation as it is presented in marketing materials. But branding also operates directly. As Van Ham (2002) reminds us, much of branding is internally oriented, seeking to shape the attitudes and understandings of an internal audience. Finally, the distinction between external and internal is also increasingly blurred by the media utilized for tourism marketing. In the past the bulk of marketing was specifically targeted at geographical markets through print and television campaigns. Today the growth of advertising through the Internet along with the use of culture (music, movies, sports) to promote the brand reduces the ability to target the message geographically. If Cronin’s (2003) contention that tourism marketing materials play both a rhetorical and representative function is true, we can read those materials in order

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to uncover how the state represents the nation. The argument outlined in Chapter 5 suggests that the content of tourism marketing, culminating in Tourism Brand Ireland, has been marked by a great deal of continuity, emphasizing the old, simple, unspoiled Ireland. Marketing materials from the 1950s, while more stereotypical than those of today, contained a basic message that Ireland was lost in time. The country possessed a pastoral, bucolic landscape while urban life was absent. The message, while meant to draw tourists, also shared basic tenants of prevailing Irish national identity, differentiating the Irish from the English, and emphasizing romantic rural life. During the tourism push the message of marketing materials has changed remarkably little. To be sure, gone are the donkey and cart and little red haired girl, but remaining are messages that largely focus upon the rural landscape and simple yet happy hosts. Imagery continues to emphasize the countryside and small towns and villages. Time—or more accurately timelessness—has remained a major theme. Progress and tradition, rather than being at odds, are posited as coexistent. While possessing all the modern comforts for tourists, Ireland has been presented as otherwise having escaped modernity. The other key marketing tool consistently utilized by tourism officials over time has been the Irish themselves. Portrayed as uniformly friendly, charming, welcoming and witty, Irish people, together with place, offer travelers a respite from modernity along with a bit of good craic. Tourism Ireland has stepped up its marketing of the island in recent years, and now has offices in 21 countries. The agency has also been very aggressive in utilizing new media and new forms of marketing. Among recent innovations have been podcasts, Internet contests, and web-based video tours of various attractions. In 2007, TI advertised on “Second Life” an Internet virtual world where members adopt a character or avatar where they work, travel and play. Tourism Ireland has also increasingly engaged in indirect marketing through promoting the country to journalists, travel shows and magazines. The agency also worked closely with U.S. network NBC and the Today Show, culminating in an appearance during “Where in the World is Matt Lauer” week on the show on May 1 2007. The spot, where Today anchor Matt Lauer visits five different places across the world in the space of five days, brought the NBC crew to the iconic Cliffs of Moher, on the west coast of Ireland in Co. Clare. In a tourism version of product placement, many of the shots used in the broader coverage were taken directly from Tourism Ireland’s own promotional stock video noted above and broadcast to more than seven million households in the U.S. In various spots over the twohour show, NBC also ran stories on the “New Ireland,” the return of emigrants to the island, and, especially, tourism. Interestingly, the returning young migrants featured in the story, rather than computer engineers or research chemists, returned to the Dingle peninsula in Co. Kerry (in the heart of tourist country) to open a B&B. Meanwhile, Lauer, after his stop at the Cliffs, helicoptered over to Galway city (the third largest in the Republic) where NBC shot performances of traditional Irish music and Riverdance-like dance group Trad on the Prom. Rather than discussing Galway’s economic boom, Lauer focused on old hooker boats that

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traditionally transported goods up the river, including Guinness, and shopped for Aran Island sweaters. In short, the Ireland presented to Americans was the old mythical tourist Ireland. The next day Irish airline Aer Lingus reported setting a record in website hits. Branding goes beyond traditional tourism marketing in that it seeks to communicate on an emotional, if not subliminal level. While advertising slogans ask “is there magic in the air” or call for tourists to “discover your very own Ireland” the branding project is larger. As Aronczyk (2008, 42) argues, nation branding allows states to control the images they portray to the world. Branding aims to shape the very meaning of Ireland, not only to tourists, but also to citizens, and this project becomes all the more important during periods of rapid social change. In today’s world of media and marketing bombardment, branding plays a significant role in constructing Irish national identity. In short, it not only distinguishes Ireland from other comparable destinations for tourists; in a rapidly modernizing Ireland it performs the same role in differentiating the Irish from the rest of Europe or America for its citizens.

Prospects for the Future In 2009, the prevailing Irish tourism model is increasingly under pressure on a number of fronts. Although the industry has recorded a long record of sustained growth over the past 20 years, a series of pressures threaten the sector. One is the broader economy. During the fall of 2008 Ireland became the first EU country to officially enter into recession, having gone two straight quarters with negative growth. The country has certainly been affected by its continuing close economic ties to the U.S. and Britain, two countries that have suffered as a result of housing bubbles and subprime mortgage lending. To make matters worse, Ireland has clearly suffered from its own real estate bubble in recent years, the scale of which remains to be fully understood. During the 20 years of the tourism push the Irish economy also experienced downturns—most notably in 1992-3 after the first gulf war and a domestic currency crisis and again in 2001-2 after Ireland’s dot com bust combined with a foot and mouth disease outbreak and the aftermath of September 11—and yet those downturns were short-lived. Over the medium and long term both the economy and the tourism sector continued to perform quite well. The economic climate has put immediate pressure on major and minor tourism enterprises in Ireland. Both major national air carriers, Ryanair and Aer Lingus, have suffered financially after a spike in international fuel costs were followed by the recession. Aer Lingus has responded with a new round of cost cutting proposals, mainly focused on reducing labor costs. The accommodation sector and especially hotels, have also been hard hit. The economic downturn came at a particularly delicate time, as a number of new hotels have been built in recent years. By the end of 2008 one luxury six-star property closed just nine months after opening, and several additional properties have closed.

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There are certainly bright spots in Irish tourism. Officials have successfully pursued event tourism in recent years, and Ireland has successfully campaigned to land the Ryder Cup (2006), along with stops in major off-road car and yacht races. In addition, ground was finally broken in 2007 on a major Dublin convention center along the docklands. The project, which has been planned for at least two decades, will vastly aid officials in attracting large scale business tourism to the capital. In the current environment, however, there are several reasons for less optimism for the future of the Irish tourism sector. Economically, while the recession may come and go, the three most important existing tourism markets, the U.K., the U.S., and the domestic market, have been especially hard hit, and the lingering effects of the crisis could be felt for several years. Even prior to the economic crisis, the growing strength of the Euro with respect to the dollar began hurting the U.S. market, and a similar trend vis-à-vis the British pound has also made Ireland more expensive. In addition, over the past five years Ireland has recorded the highest inflation rate among EU-15 nations. Overall annual inflation in the EU between 2000 and 2006 averaged roughly two percent, while Ireland recorded a rate of 3.6 percent over that period (Eurostat 2008). Ireland’s rate grew to 4.8 percent in 2007 (CSO 2008). Together these have made Ireland an increasingly high-cost tourist destination compared to European rivals. Many officials note the growing gap between costs and the nature of the Irish tourism product, and their concerns are backed by a steady decline in visitor satisfaction in recent years. According to Fáilte Ireland surveys, 63 percent of overseas vacationers found the value for the money to be good or excellent in 2000, but that proportion fell to 45 percent in 2002. In 2007 only 16 percent rated it to be good value (TPRG 2003; Fáilte Ireland 2007c). The fastest growing segment of Irish tourism over the past several years has been the domestic market. In fact, as Irish residents have seen their income and wealth levels grow rapidly they have become prodigious consumers of tourism services both at home and abroad. One way to illustrate this is through the tourism balance, which measures the net inflow and outflow results of tourism spending. Traditionally Ireland has experienced a positive tourism balance, but this began to change in recent years as a result of growing prosperity at home. The year 2000 was the last year that Ireland earned more money from foreign tourists than Irish people spent abroad. Since then the country has opened up a €2 billion deficit as Irish spending abroad grew by more than 119 percent between 2000 and 2007 while inbound earnings grew by just under 49 percent over the period (author calculations derived from CSO figures). In addition to consumption abroad, Irish residents have become an indispensible part of the Irish tourism market, especially in recent years. The number of domestic trips grew from just over 5,400 in 2000 to nearly 8,000 in 2007. Spending, by conservative measures, grew from €849 million in 2002 to €1.55 billion in 2007 (Fáilte Ireland 2008). Aside from the aggregate growth, domestic tourism plays a crucial role in two areas of the overall tourism industry: Regional spread and the hotel sector. Regionally, a big concern for tourism officials and the industry has been the growing trend among international arrivals of concentrating on short city

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breaks and the eastern region of Ireland. In 2007, 49 percent of all international tourists to the island of Ireland (and 59 percent of those on holiday) went to Dublin (Tourism Ireland 2008) while other regions such as Shannon and the Southwest have seen their share steadily fall. Irish residents have softened the impact of this trend as they tend to travel more to the countryside and various regions of the country. In addition, Irish tourists have become indispensable to the booming hotel market, preferring that form of accommodation over B&Bs and other alternatives. Several hoteliers interviewed report their primary customers today are Irish, not international tourists. According to Fáilte Ireland figures, while international tourists spent 24 percent of bednights in hotels and in 11 percent in B&Bs in 2007, the corresponding figures for domestic tourists were 33 percent and 5 percent (Fáilte Ireland 2008). According to Fáilte Ireland (2007d, 3), outside of the Dublin, Shannon, and Southwest regions—the primary international destinations—domestic tourists account for 75-80 percent of all bednights. Domestic tourists are especially important for mid and lower grade hotels. While international tourists accounted for two-thirds of all bednights in five-star hotels domestic tourists generated two-thirds of all bednights in all other categories of hotels in 2006 (Ibid.). This growing dependence on the domestic market may be particularly dangerous in that as the second largest tourism market (after Britain), it is susceptible to great fluctuation as the economy sours. Moreover, the massive building boom in hotels especially, has been predicated on continued rapid growth of domestic tourism demand. As one government official put it prior to the 2008 economic downturn, “A lot of the hotels that are being built are catering to the domestic market, but it’s been growing at an unsustainable rate. It just can’t keep growing that fast” (author interview, January 2007). The crucial questions in the longer term are who will come to Ireland as a tourist and why? In other words, what is the main attraction of Ireland? Where the tourists will come from remains an open question. In 2007 Ireland’s most important foreign market, Britain, fell by one percent. This record represents a larger trend as between 2000 and 2005 all trips by the British to the island of Ireland grew by just one percent and promotable trips fell by two percent (Tourism Ireland 2006b). Simultaneously, the lucrative traditional American market—second and third generation Irish Americans—are aging, as are general populations in the important European markets of France, Germany and Italy. The U.S. market has been nearly flat between 2000 and 2007, growing by 1.7 percent cumulatively over that period (Fáilte Ireland 2005; 2008). Over the past couple years Tourism Ireland has performed in-depth studies of the most important overseas markets to Ireland, examining demographics, propensity to travel, preferred activities on vacation. They show that people come to Ireland for very different reasons. Visitor attitude surveys show that many Americans travel for ethnic and heritage reasons, while French and German markets emphasize landscape, open spaces and scenery much more. Market analysis suggests that while tourism officials will cater advertising and marketing

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to specific targeted audiences there and in newer growing markets, the common denominator is what Tourism Ireland officials refer to as “sightseers and culture seekers,” a generic classification that in reality focuses on more affluent, middleaged and older tourists with both time and money, and who will therefore spend more time and visit multiple locations on the island. This target audience is made up of the “ABC1” marketing demographic, which refers to upper class, managerial and professional, and junior middle classes. More specifically the market studies refer to targeting affluent couples whose children have left home. These suggest that maximizing visitor revenues, rather than visitor numbers, is becoming the priority for Tourism Ireland. If so, this strategy runs counter to the one being pursued according to the Tourism Policy Review Group (TPRG) through its 2003 New Horizons for Irish Tourism report, which is meant to serve as a blueprint for tourism in the Republic of Ireland for the coming decade. The Report set specific targets for the sector, as well as a series of recommendations throughout the government and private sector in order to achieve the targets. Its final progress report, issued in 2006, indicated that 82 percent of the 76 recommended actions have made “good progress” (TAPIG 2006). New Horizons set targets of doubling tourism revenues to €6 billion (in 2003 Euros) in the period of 2003 to 2012 while attracting 10 million overseas visitors to the Republic by that year. While the sector seems to be on target in the latter category—some 7.7 million overseas visitors came to Ireland in 2007—the revenue numbers are not following suit. As early as 2007 Dick Bourke, chairman of ITIC, stated publically in that the revenue targets for 2012 were all but unachievable (Corr 2007), a sentiment held by many in the sector. In part this is due to two trends: One is that the fastest growing markets to Ireland are the relatively small Eastern European markets, most of which are also the primary source of immigration into Ireland over the past decade. Many Eastern European tourists are likely not tourists at all, but migrants. Others are there to visit friends and family who have recently migrated to Ireland and they spend comparatively less money than holiday travelers. Second, the short-stay, city break segment of the market continues to growing rapidly, while the traditional 10-14 day, multiple-stay trip is becoming less common. The latter factor is not confined to Ireland, and is part of a larger worldwide trend as air fares become less expensive and leisure time becomes more segmented. Ultimately the result of these larger trends is that Irish tourism officials will need to attract tourists from new markets, something officials are already working on. Tourism Ireland officials have been focusing on New and Developing Markets in recent years, made up of non-traditional but rapidly growing outbound markets such as China, and India. This leads to the second overarching question: What will bring people to Ireland? The predominant themes of Irish tourism marketing— emphasizing the timeless unspoiled Irish landscape along with the friendly and welcoming Irish people—may hold less sway with tourists from these new markets but also among more traditional markets in the future. In large part this is due to the growing gap between the marketing promise and contemporary Ireland

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itself. Nowhere is this felt more by tourists than in who provides the traditional Irish welcome today. Increasingly it is provided by the “new Irish” or immigrants who work on the front end of the tourism industry. As one government official noted, estimates are that upwards of 40 percent of accommodation and restaurant workers in 2007 are immigrants (author interview, January 2008). In other words, tourist interaction with Irish “characters” is increasingly circumscribed in a tight and segmented labor market. This is unproblematic in and of itself, except for the fact that Ireland continues to be branded and marketed largely as the pre-Celtic Tiger country. To be sure, tourism officials in the public and private sector face a difficult problem: The Ireland they have long promoted to the world no longer exists. Development policy and patterns over the past 20 years the country have achieved amazing material success. To the extent that wealth creation has resulted in growing and bustling cities, modern infrastructure, a multicultural society, and a much faster paced life, today Ireland resembles Great Britain or the United States more and more. Yet in a world of ever-increasing marketing noise, the challenge is to distinguish Ireland from other affluent, post industrial societies. This challenge is likely to intensify, in re-creating a brand identity that both sells the destination to potential tourists while simultaneously distinguishing the nation to the Irish themselves.

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Author Interviews Ruth Andrews, Chief Executive Irish Tour Operators Association Paul Bates, Assistant Secretary for Tourism Department of Art, Sport and Tourism Richard Bourke, Former President IHF Chair, ITIC Kate Burns, Chair of the Board Irish Country Homes Association Malcolm Connolly Formerly head of Research and Development Fáilte Ireland Frank Corr, Former Managing Editor, Hotel and Catering Review Dublin Pat Cussen, Director Horwath, Bastow, Charlton Consultants, Dublin Colm Deignan, Chief Executive Hotel Partners, Ltd. Dublin Tom Haughey, Director of Industry Affairs Dublin Airport Authority Deputy Chairman, ITIC Margaret Hayes, former Secretary General Department of Art, Sport and Tourism Douglas Jordan, Registrar and Manager, Quality and Standards Fáilte Ireland Brendan Leahy Former Chief Executive, ITIC

155

156

Brand New Ireland?

Brian Mahar, Director of Research and Planning Fáilte Ireland Eamonn McKeon, Chief Executive ITIC John Murphy, Assistant Secretary, Aviation Department of Transport Padraig o’hUiggín Former Secretary General, Department of the Taoiseach; Former Chair, NESC Former Chair, Bord Fáilte Eileen O’Mara Walsh, Founder, former Chair ITIC Julie O’Neil, Secretary General Department of Transport Paul O’Toole, Chief Executive Tourism Ireland, Ltd. John Power, Chief Executive Irish Hotel Federation Sean Quinn, Chief Executive Fáilte Ireland Niall Reddy, former Chief Executive Bord Fáilte Francis Rochford, Principal Officer Tourism Marketing and Impact Assessment Unit Department of Art, Sport and Tourism Erik Speekenbrink Resort General Manager Ramada Hotel and Suites at Lough Allen John Travers Chair, TPRG Chair, TAPIG Former chair, FORFAS

Index

9/11  43, 58, 90 accommodation sector 100-11, 124-5 see also B&B sector; hotels Aer Lingus 67-8, 114-15, 116, 117, 12022, 122-3, 136 air service agreements (ASAs) 111, 114, 115 air transport 19, 111-13, 125-6, 132-4 alliances 112-13 employment 124 fares 115 governance structures 113 government subsidies 113 leasing companies 124 liberalization 54, 112, 114, 115-16, 115-17 low-cost carriers (LCCs) 113, 122 maintenance, repair and overhaul (MRO) companies 123-4 Open Skies agreements 112 privatization 112 profit margins 113 vertical integration 113 Arthur D. Little Report 71, 73, 86 ASAs (air service agreements) 111, 114, 115 B&B sector 103, 104, 106-7 BDC (buyer-driven commodity chains) 17 Bord Fáilte 71-5, 78 business class 65-6 dominance of 65-6 funding 53 global hotel chains 104 hoteliers 50-51 marketing 65, 87 marketing materials 82-7 marketing surveys 87, 88 splitting up of 58 tourism policy 47, 48, 68-9, 77

brand diffusion 29 brand identity 26-8 branding 12, 26-8 see also nation branding brands 11 British tourists 84, 90, 138 buyer-driven commodity chains (BDC) 17 cabotage 111 Celtic Tiger 34-42, 58 demographic explanations 40-41 European Union 41-2 globalization 37-40 high-tech industries 37-40 institutionalist/political explanations 35-7 state 61-4 tourism 60, 127 transnational corporations (TNCs) 37-40 CERT (Council for Education, Recruitment and Training) 75 Choice Hotel Group 108 CIE 67-8 civil society and state 64 class struggle 62 clientelism 62 commodity chains 16-18 airlines see air transport buyer-driven 17 hotels 101-2 producer driven 17 technology-driven 17-18 transnational corporations (TNCs) 17 computer industries 39 consumer culture 93 corruption 62 Council for Education, Recruitment and Training (CERT) 75

158

Brand New Ireland?

DBS (Development Bureaucratic State) 23 development see national development Development Bureaucratic State (DBS) 23 Developmental Network State (DNS) 23, 40, 62 Doyle Hotels 107 Doyle, P. V. 104 Dublin 73 European Union 9, 41-2 Fáilte Ireland 10, 44, 47, 58-9, 75, 77, 78, 79, 107, 124, 137, 138 Fianna Fáil 35-6, 51-2, 68 Fine Gael 35-6, 51 Fogra Fáilte 47 foot and mouth disease 43, 58, 90 Forfás 75 global commodity chains (GCCs) 16-17 governance structures 17, 19, 113, 133 global value chains (GVC) 16 globalization 2-5, 7-8, 15 Celtic Tiger 37-40 identity 5 nation branding 26 national development 19-23 national identity 24 nationalism 26 state 20-21, 23-4 welfare state 23 golf 73 Good Friday Accords 89 GVC (global value chains) 16 Haughey, Charles 35, 52, 68 hotels 101-8, 110-11, 125 chains 101-2, 107-8 commodity chains 101-2 management contracts 102 tax incentives 108 Human Development Index 1, 6, 33-4, 89-90 IBEC see Irish Business and Employers Confederation IDA see Industrial Development Authority

IFSC (International Financial Services Centre) 36 IHF (Irish Hotels Federation) 66-7, 70, 104 immigration 96, 139-40 Industrial Development Authority (IDA) 23, 36-7, 62-3, 64, 89 industrial transformation 20 industrial upgrading 17, 124, 131 industry studies 4, 9, 16, 18 Intel 37 InterContinental Hotels 104 International Financial Services Centre (IFSC) 36 International Studies Association 64 Ireland, Republic of accommodation sector 100-11, 131-2 see also B&B sector; hotels air service agreements (ASAs) 114, 115 air transport 113-24, 125-6, 132-4 arrivals and departures statistics 117-18 employment 124 fares 115 leasing companies 124 liberalization 114, 115, 116-17 low-cost carriers (LCCs) 122, 125 maintenance, repair and overhaul (MRO) companies 123-4 two carrier policy 116, 120-21 airports 114 American tourists 84-5, 90, 92, 138 B&B sector 103, 104, 106-7 British tourists 84, 90, 138 business class 64-72 Celtic Tiger 34-42, 58, 60, 127 citizenship 96 civil service 63 computer industries 39 corporate taxes 123 demography 8-9, 40-41, 85 developmental state 62 economic dynamism 31-4 economic stagnation 34 economy 5-10, 85 education 130 European Union 9, 41-2

Index exports 31 Finance, Department of 63, 65 First Programme for Economic Expansion 48 foreign investment 7, 36-9 globalization 7-8 government agencies 37, 63 government departments 37, 63 grants to industry 37-8 hotels 102-6, 110-11, 125 chains 107-8 consolidation 108-9 state sponsored growth 103-4 tax incentives 108 Human Development Index 1, 6, 33-4, 89-90 immigration 96, 139-40 Industrial Development Authority (IDA) 23, 36-7, 62-3, 64, 89 International Financial Services Centre (IFSC) 36 Irish tourists 137-8 living standards 33-4 low-skilled employment 130-31 nation branding 81-2, 87-92, 94-8, 134-6 national development 128-34 National Development Plan (19891993) 52 National Development Plan (20002006) 59 National Economic and Social Council report (1980) 48-9 national identity see national identity nationalism 85, 95 New Horizons for Irish Tourism 59-60, 76-7, 139 Operational Programme for Tourism, 1989-1993 53-4 pharmaceuticals 38-9 politics 63 Programme for National Recovery 36, 52 recession 136-7 Regional Tourism Authorities (RTA) 77 sea ferries 114, 115 social problems 7

159

state 62 and tourism 64-72 Taoiseach, Department of 69 tax incentives 37-8 tourism 10-12, 42-7, 60, 127-8 business 64-72, 137 consumer culture 93 domestic 43-4, 47, 137-8 employment 44-5, 52, 55-6, 12930, 131 EU funding 53-4 event 137 exchange rates 137 Finance, Department of 65 foot and mouth disease 43, 58, 90 Good Friday Accords 89 growth 129 institutional change 73-7 as invasion 92-3 market analysis 138-9 market breakdown 45-7 marketing materials 82-7, 134-5 nation branding 81-2, 92-4 national identity 82-7 new markets 139-40 9/11 43, 58, 90 performance 55-8 promotion of 82-7 short stays 92 speciality 73 and the state 64-72 Troubles 84 visiting friends and relatives market (VFR) 46, 99, 103 Tourism and Transport, Department of 68-9, 72 Tourism Policy Review Group (TPRG) 59-60, 75, 76, 139 Tourism Working For Ireland: A Plan for Growth 49-50, 68 tourist spending 99 transnational corporations (TNCs) 32 Troubles 84 unemployment 32, 33, 34-5, 52, 130 workforce 90, 130-31 writing the nation 82-7 Irish Business and Employers Confederation (IBEC) 64

160

Brand New Ireland?

Irish Hotels Federation 49-51, 66-7, 70, 104 Irish Tourism Industry Confederation (ITIC) 51, 67-8, 70 ISA (International Studies Association) 64 ITIC (Irish Tourism Industry Confederation) 51, 67-8, 70 Jurys Hotels 104, 107 Jurys Inns 107, 109 Lauer, Matt 135-6 low-cost carriers (LCCs) 113, 122, 125, 126 see also Ryanair McCreevy, Charlie 68-9, 71 MRO see air transport, maintenance, repair and overhaul (MRO) companies narratives of national identity 82 nation branding 2, 12, 26-9, 87-92, 134-6 audience 29 globalization 26 internal 97 national development 81 national identity 27, 29-30, 94-8 nationalism 30 normalcy 28 peacefulness 28 tourism 28, 81-2, 92-4 nation-states 3 national development 3-4, 15-16, 128-34 globalization 15, 19-23 nation branding 81 patterns 131-4 state 19-21 National Economic and Social Council report (1980) 48-9 national identity 1-2, 5, 9, 24-5, 96-7 globalization 5, 24 narratives 82 nation branding 27, 29-30, 94-8 as a social construct 25 state 97 tourism 11, 82-7, 127-8, 134-6 National Tourism Council 67, 72 nationalism 25-6, 30, 85, 95

Netherlands 117 networked polity 22 New Horizons for Irish Tourism 59-60, 139 New Horizons for Irish Tourism: An Agenda for Action 76-7 niche tourism 18 9/11 43, 58, 90 Northern Ireland Tourist Board (NITB) 73-4 Omni Hotels 104 Open Skies agreements 112, 117, 123 Overseas Tourism Marketing Initiative (OTMI) 72, 86-7 PDC (producer driven commodity chains) 17 pharmaceuticals 38-9 political economy model 8 producer driven commodity chains (PDC) 17 Regional Tourism Authorities (RTA) 77 Ryanair 114-15, 116, 118-20, 122, 125-6 sea ferries 114, 115 Shannon Airport 114 Shannon export processing zone 36, 85 Shannon stopover 117, 123 South Korea 62 state agencies 22-3 autonomy 21-2, 64 Celtic Tiger 61-4 civil society 64 class struggle 62 globalization 20-21, 23-4 institutional capacity 19-20 national identity 97 power 19, 64 tourism dynamism 47-55 Taiwan 62 Taoiseach, Department of 69 TBI (Tourism Brand Ireland) 12,13, 74, 88 technology-driven commodity chains (TDCs) 17-18 Telesis Report 35

Index tourism 1-2, 10-12, 42-7, 127-8 B&B sector 103, 104, 106-7 business 137 Celtic Tiger 60, 127 domestic 43-4, 47, 137-8 dynamism 47-55 employment 44-5, 52, 55-6, 129-30, 131 event 137 global spatial diffusion 18 governance 19 growth 43, 129 in Ireland see Ireland institutional change 73-7 as invasion 92-3 market analysis 138-9 marketing materials 82-7, 134-5 nation branding 28, 81-2, 92-4 national identity 11, 82-7, 127-8, 134-6 niche 18 planning 58-60 promotion of 82-7 speciality 73 sub-industries 18-19 transportation expenditure 99 visiting friends and relatives market (VFR) 46, 99, 103 Tourism and Transport, Department of 68-9 Tourism Brand Ireland (TBI) 12, 13, 74, 88

161

Tourism Ireland, Ltd. 58, 92, 135 Tourism Ireland Ltd. 2, 74, 79, 89 Tourism Policy Review Group (TPRG) 59-60, 75, 76, 139 Tourism Satellite Accounting (TSA) 45 Tourism Task Force 69 Tourism Working for Ireland: A Plan for Growth 49-50, 68 TPRG (Tourism Policy Review Group) 59-60, 75, 76, 139 transnational corporations (TNCs) Celtic Tiger 37-40 commodity chains 17 exports 44 foreign investment 38 Ireland, Republic of 32 Travers, John 75 TSA (Tourism Satellite Accounting) 45 United States air transport deregulation 117 foreign investment 38, 39 Open Skies agreements 117 tourists 84-5, 90, 92, 138 VFR see tourism, visiting friends and relatives market welfare state and globalization 23 writing the nation 82-7, 92-4