The tourism boom has peaked and trouble may lie ahead

There is a mounting volume of evidence to show that the Irish tourism industry has now peaked, and more difficult times may lie ahead for the sector. This is bad news for the Government, which, rightly or wrongly, will be blamed by the industry for increasing the sector’s VAT rate in the budget a year ago this month.

The Irish Tourism Industry Confederation, the umbrella lobbying group for the sector, told its members this week that "regrettably 2019 could see Ireland's tourism economy decline, the first reversal in eight years".

It highlighted that the latest data from the Central Statistics Office shows a decline in arrivals of foreign tourists to the Republic for three out of the last four months of the peak summer season.

“More worrying, receipts from all main markets were in retreat with the exception of north America,” it said.

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The industry’s competitiveness is under strain. Brexit uncertainty is keeping sterling in a weakened state, making Ireland a more expensive destination for its most important single-source market – the UK. A no-deal Brexit scenario in the coming months would bring even more pressure to bear.

There are also signals beginning to emerge that the US economy may be in the early stages of a slowdown, with the latest monthly job-creation numbers from the US on the wane.

While the British market softened, the growing US market had been doing the heavy lifting, feeding growth in the sector. If the US economy nears recession over the next year that performance will come under pressure.

The 2018 performance of the K Club, revealed in accounts filed this week, also shows how individual properties at the top end of the market are coming under pressure. Its revenues declined by more than 6 per cent last year.

The official mantra from Government is that the tourism industry is still riding the crest of a wave. It may crash onto the beach over the next 12 months.