At least €92 million was spent last year by Irish tourism businesses on overseas marketing, according to research recently conducted by the Irish Tourism Industry Confederation (ITIC). In what became a record year in terms of tourism numbers, Irish tourism businesses invested heavily in promoting the destination and their products and services to overseas audiences.

The North American market received most marketing attention while the biggest overseas marketing commitment came from Ireland’s accommodation sector.

Analysis of overseas marketing by the Irish tourism industry makes for interesting reading and with market diversification a priority, particularly in light of Brexit pressures, it is now incumbent on the Government to match industry ambitions and invest accordingly in “Brand Ireland” to support Irish tourism’s future.

Irish based businesses, including airlines and ferry companies, hotels and other accommodation providers, visitor attractions, activities and tourist services, invest sizeable annual budgets in marketing the destination and their products and services across a range of source markets. While responsibility for marketing the destination primarily rests with Tourism Ireland, the marketing of Ireland has become increasingly dependent on the campaigns undertaken by businesses as funding for the state agency has been in decline over recent years. Tourism Ireland’s annual budget is now approximately one third less than it was 10 years ago. Over that period the tourism industry has shown its resilience in recovering from a recession driven fall in demand to attracting record numbers and expenditure from overseas visitors from a broadening range of source markets.

With the decline in investment by the state in destination marketing the business community has stepped up to assume an increasing role in marketing Ireland to potential visitors. While the primary marketing focus of individual businesses is on generating demand for their respective enterprises, the challenge of generating sales from trade and consumers in overseas markets with limited exposure to or awareness of Ireland results in the industry having to increasingly sell the destination.

While many businesses partner with Tourism Ireland for advertising campaigns or in-market promotional events, the bulk of the marketing investment by businesses is undertaken independently through a variety of communication and distribution channels in overseas markets.

This report by TTC was commissioned by The Irish Tourism Industry Confederation (ITIC) to gauge the scale of the annual investment by the industry in marketing Ireland in overseas markets, an exercise which had not been undertaken for over 10 years.

Based on information supplied by participating businesses and published sources, upwards of €92 million is the best estimate of the aggregate expenditure by Irish based tourism business on marketing the country and their enterprises in overseas markets in 2017.

The total spend on promoting tourism to Ireland in overseas markets is in excess of this figure. The €92 million estimate is based on Irish businesses, exclusive of the investment by foreign airlines, OTAs, and market based tour operators. The addition of marketing expenditure of foreign companies on promoting Ireland would bring the total to well in excess of €100 million.

The indicators from business community is that marketing budgets will increase in 2018, with best estimate suggesting that aggregate marketing expenditure will be up to 10% ahead of last year, as the industry is confident of driving increased demand.

The accommodation sector, primarily hotels, account for more than half (56%) of overseas marketing expenditure, and is conservatively estimated at €52 million in 2017. Upwards of 180 hotels are heavily dependent on overseas demand, including top category hotels which are amongst the big spenders on international marketing. Hotels with a focus on the international marketplace typically have an intensive digital presence, undertake selective high quality advertising, attend in-market promotional events; carry out sales calls; and engage in publicity campaigns. Many hotel properties are aligned with an international franchise or branded marketing campaigns as a component of their overseas marketing presence.

Airlines, airports, ferry companies and sea ports maintain a highly visible presence in the market, spending an estimated €22 million last year. The carriers spend considerable funds on promoting the destination and reasons to visit Ireland. The carriers are increasingly active in the digital space, building on awareness generated through traditional consumer media advertising campaigns. The travel component is a key constituent of the decision and the cost of a visit. Each airline and ferry company operates in a highly competitive environment and actively stimulates demand by keenly priced offers to attract demand.

Incoming tour operators, engaged in attracting leisure and business visitors, spent an estimated €14 million in 2017 according to the ITOA which represents over 30 companies. Businesses in this sector are very active in the marketplace promoting the leisure and business traffic through a range of B2B channels representing the entire suite of products and services Ireland has to offer. Just over 50% of the tour operators' investment is spent on in-market activities with 20% spent on advertising. The balance is spent showcasing the Ireland product and experiences to prospective trade buyers.

Visitor attractions, activities and other tourist services, ranging from some of Ireland best known attractions and visitor activities to smaller scale enterprises providing sporting, cultural, food and retail experiences, cumulatively spent in the region of €4 million on overseas marketing.

Perhaps not surprisingly, North America currently attracts the largest slice of the industry’s aggregate marketing spend. An estimated €38 million was invested by the industry in the US & Canada in 2017 – a fast expanding, high spending source market for Irish tourism. Additionally, it is an expensive marketplace in which to do business. Aer Lingus, together with many hotels and ITOA member companies, account for the majority of the dollars spent in the market. The industry’s marketing programmes are aligned with, and in many cases integrated with Tourism Ireland’s and Aer Lingus’ campaigns in the market. The results from the market yield a good rate of return for Ireland’s economy, due in large part to the sizeable investment by the private sector compared to the less than €10m spent by the state in this market.

An estimated €25 million was spent by the industry in the British market last year. Visibility of Ireland in the market is increasingly a function of adverting and promotions by the air and sea carriers, spending over €10 million in 2017. Expenditure by Ryanair, Aer Lingus, Irish Ferries and Stena Line combined, on a mix of traditional and digital media and other promotional programmes, is more than double Tourism Ireland’s budget for destination activities in Britain. Market penetration and conversion is increasingly dependent on the carriers who are heavily invested in the market. Hoteliers and other accommodations, activity and attractions combined providers combined spent up to an estimated €15 million last year – promoting short leisure breaks, touring and activity holidays and attracting business visitors. Several companies appear to have intensified their marketing in Britain to counter the Brexit induced fall in the value of sterling and consumer confidence.

Almost €23 million was spent on marketing in Mainland Europe, with hotels accounting for just over half of the total and Irish carriers accounted for almost one third, with the balance spent by incoming tour operators, activities and attractions. It is perhaps interesting that the level of marketing investment in mainland Europe compared to that in other source markets is below par when considered against the value of visitor expenditure in Ireland by Europeans.

The level of aggregate marketing expenditure in long haul markets including new and developing markets around the world is estimated at between €6 million and €7 million. Marketing campaigns in Australia and New Zealand, together those in Asia, Middle East and South America represent an important bridgehead in penetrating, as yet, relatively untapped market opportunities for Ireland. A selected number of high profile visitor experiences, hotels, incoming tour operators and carriers working alongside Tourism Ireland underpin Ireland’s investment in developing future growth from these new, high value source markets.

Objective

To estimate the quantum of annual investment by Irish based tourism businesses in overseas marketing and promotion.

Approach & Methodology

The approach adopted, in the absence of a large scale representative sample survey, is based on extrapolating from secondary sources validated by means of primary research through selected interviews and consultations. The research was conducted amongst the top companies known to have a significant engagement in marketing overseas, including air and sea carriers, hotels, visitor attractions and other services. Data was compiled from published sources including annual reports; reports from representative associations; the advertising industry in selected markets; and other industry publications. The approach provided coverage of Irish based carriers, together with Stena Line, ports, upwards of 100 hotels with a focus on overseas markets, the Incoming Tour Operators Association (ITOA) plus selected visitor attractions and other tourist services.

The research allowed the compilation of the marketing expenditure profiles of selected businesses to deliver insight into the scale and scope of marketing programmes being undertaken by each sub-sector. The output generated some key metrics, for example, marketing expenditure as a percentage of revenue; the scale of engagement in selected markets; and the range of marketing activities. Data collected from interviews and sample surveys was grossed up to provide an indicative spend for each sub-sector.

For the purpose of the exercise marketing expenditure was defined to exclude salary costs, in so far as it was possible, together with the costs of contributions of services in kind for marketing purposes.

Output and Limitations

The output is an estimation of the current annual aggregate expenditure on overseas marketing activities, based on the limitations of the methodology. While every effort has been made to validate the data collected, the interpretation of many expenditures and activities was inevitably subject to a number of assumptions. This fact together with the need to gross up to arrive at aggregate it is possible that the estimates for some sub-sectors may be an under or over estimation, while the expenditure by many smaller enterprises may be underrepresented.

Acknowledgement

TTC acknowledges the cooperation of the many businesses which willing participated in the project and shared commercially sensitive information on a confidential basis with the consultant. The information gathered has been used solely to produce aggregate estimates, thereby safeguarding the responses of individual businesses. The latter has been held in confidence and has not been disclosed to ITIC or any third party.