45126-Invest. Qual-No111

Competitiveness, Continuous Improvement and Learningcompensate for high levels of wage increases with associatedproductivity improvement. The tourism industry consumes arelatively high proportion of low-skilled labour which has beensubject to significant wage inflation in recent years itself, associatedwith labour market tightness. However, this particular cost pressurehas eased somewhat in recent times and wage levels in Accommodationand Catering, a significant proportion of the employmentengaged in tourism, were virtually static from Q1 2001 to Q1 2002(CSO, 2002).Tourism will also have benefited from the relative weakness of theeuro to the extent that tourists were sourced outside of the euro areaand the statistics for 2001 show that only 28 per cent of touristrevenue was sourced from other European countries. However,combined with the relative recent weakness in the US dollar whichaccounted for another 24 per cent of tourism revenue in 2001 over50 per cent of tourism revenue is immune to recent euro weakness.Combined with the fact that the euro is beginning to show signs ofmodest appreciation against Sterling it would appear that thetourism industry has suffered and is suffering a potential decline inoverall cost competitiveness.The Irish Tourist Industry Confederation launched A RecoveryProgramme for Tourism in February 2002 following the events of2001. In particular it focused on the need to return Irish tourism tothe growth targets set out in the NDP, to place a greater focus onsustainable tourism growth by attracting those who stay longer andspend more, and the need for a year round marketing presence inBritain, continued investment in North America and a reappraisal ofIreland’s positioning and market effectiveness in key Europeanmarkets. To achieve these goals they put forward programmes inmarketing, access and business relief measures such as tax breaks.Like other goods the market in tourism is governed by the supplyand demand balance, and the lags in adjustment. One significantcomponent of supply is changes in the number of beds available andtheir occupancy rates. A further proxy for this is the level ofconstruction activity in the tourism sector. The ConstructionIndustry Review 2001 notes that the volume of construction output575