After five struggling years, 2013 showed the most positive indication that tourism has finally got traction on the road to recovery. Best estimates indicate that arrivals from overseas reached close to 7 million, up 5% on 2012, based on the latest data from the CSO. More importantly, best estimates for expenditure by overseas visitors suggest it will have risen by 13% in current terms to almost €3.3 billion, with a further €880 million earned by Irish carriers. To put this performance in context however, visitor volume in 2013 is still almost 1 million below the record year of 2007.

The good news results for 2013 include:

• Spending in the country by overseas visitors has shown a rate of increase ahead of volume increase reflecting higher average spend per day and an increase in average length of stay.
• A return to growth in volume from Britain, the largest source market, after 5 years of depressed demand.
• A record number of 1m plus visitors from the US, amongst the highest spenders in Ireland.
• Steady growth from most European source markets.
• The Gathering boosted demand from a number of markets, especially amongst the Irish diaspora and created a unique programme of events throughout the country.
• Double digit growth from new developing markets, including Australia & New Zealand.
• A return to good growth in holiday visitors from most source markets.

The latest release from the CSO based on data for Q3 and the period January to September provides some insights into the profile of the demand from overseas in 2013*.

*Estimates prepared by ITIC are based on CSO’s latest statistical release, Tourism and Travel Quarter 3, 2013,
(20 December 2013).

January – September 2013

The total number of bednights spent in the country by overseas visitors for the first 9 months of 2013 is estimated at 18.5 million, up 8.7% on the same period in 2012, representing almost 1.5 million additional bednights. The distribution of bednights by category of accommodation is interesting, showing that demand for hotels did not increase, while other categories were the main beneficiaries of the increased demand. Guesthouses/B&Bs enjoyed a 24% increase in demand to just over 2.1 million bednights, driven mainly by holiday visitors. Rented accommodations saw a 31% increase in demand to an estimated 1.9 million bednights, with VFR and visits for other reasons pushing up the demand for the sector. However, staying with friends and relatives saw the largest volume increase, up 18% to 5.1 million bednights, an extra 790,000 bednights driven almost exclusively by the VFR sector.

July – September 2013

During the three peak months of July to September those visiting for holidays increased by almost 8% compared to the same period in 2012 to reach a total of 1,141,000 visitors. Over the same period, VFR visits grew by 18% to almost 600,000.

Holiday visits increased across most markets, with the main grouping of established source markets returning an average growth rate of 8%, while new emerging long-haul markets recorded growth of 27%. In volume terms mainland Europe was the source of an additional 35,000 holiday visits over the 3 month period, followed by roughly 20,000 additional holiday visitors each from Britain, North America and Other Areas.

VFR traffic saw double digit growth, undoubtedly stimulated by The Gathering, with almost 90,000 more visitors over the three months compared to the previous year. VFR visits from Britain increased by 32,000, with 25,000 additional visits from North America, 20,000 from mainland Europe and 10,000 from other parts of the world.

The average length of stay for holiday visitors increased marginally from 7.6 to 7.9 nights, while VFR average stay increased from 7.8 to 8.9 nights and business visits from 4.7 to 5.4 nights. The increase in average length of stay was apparent across most markets with only a few exceptions by purpose of visit.

Leveraging Tourism Potential

Tourism paid a high price for the loss of competitiveness in the latter part of the last decade, with most cost inflation outside of its control. Despite low inflation, some easement of labour rate increases and cost absorption by businesses Ireland still struggles to remain competitive compared to Eurozone and other European destinations. The decision by Government to extend the reduced rate of VAT at 9% is a considerable help to the industry in its drive to remain competitive.

The commitment of Government to the realisation of tourism’s potential to deliver economic growth is evident in the measures it has taken over the past two years and again reiterated in its recently published economic plan ‘Strategy for Growth 2014-2020’.

The policy review underway is both opportune and timely as the sector regains growth in the overseas markets and the domestic economy is set on a course for growth. Tourism, as an indigenous sector composed of thousands of SMEs throughout the country and strong linkages to the agri-food sector, is well placed to deliver growth in export earnings, new jobs and support a rebalancing of regional prosperity. Tourism can’t be ‘off-shored’ and as such warrants appropriate investment and supports to ensure its potential can be realised.

In 2003 a ten year target for tourism arrivals was set at 10 million – Ireland was on course with 8 million arrivals in 2007 before the global financial and economic meltdown. With recovery underway ITIC proposes that the lost years can be regained and that the 10 million mark could be reached in the next 5 years provided there is a supportive policy environment, a clear business strategy and appropriate investment.

A New Policy for the Future

The tourism industry looks forward to a new policy framework based on a whole-of-government approach which will facilitate an effective partnership with business to ensure that Ireland can be positioned as internationally competitive, thereby delivering greater economic and social benefits. The ITIC position is that the new tourism policy needs to be based on the following core values:

• Robustly evidence based.
• Integrated across the whole of Government.
• Cognisant of all stakeholder interests and goals.
• Transparent & consistent in its implementation.
• Responsive to international market trends and demand.
• ‘User friendly’ from a stakeholder and visitor perspective

ITIC looks forward to the opportunity of working with the Minister in shaping a new policy framework for the industry and, following its publication, to partnering with the Department and the state agencies in producing a new forward looking agenda and strategic business development plan for tourism.

Need for Capital Investment

With the upturn in demand Ireland urgently needs to reassess, and provide for, the level of investment necessary to allow tourism to cater to sustainable growth from overseas and domestic tourism. Now that Ireland has exited the ‘bailout’ and the Government is developing plans for economic growth between 2014 and 2020, the tourism industry needs a fully functioning banking sector to facilitate the investments necessary to deliver innovation, a refreshed tourism experience and expanded capacity to cater to new demand. The tourism sector has been deprived of investment in recent years, particularly in the state sector – a major stakeholder in tourism product. Public sector funding for the OPW and other state departments and agencies responsible for the supply and maintenance of natural, heritage and cultural attractions needs to be adequately funded if Ireland is not to again lose competitiveness. Considerable state investment in tourism infrastructure, of at least €150 million, would be more than justified based on the return in foreign earnings and exchequer receipts.

The Wild Atlantic Way

Ireland's first long-distance touring route, stretching 2,500km from the Inishowen Peninsula in County Donegal to Kinsale in County Cork, received a boost of €8 million in the recent Government budget. The new touring route, first proposed by ITIC in its 2011 report ‘New Directions for Tourism in the West’, presents an exciting opportunity to attract increasing numbers of visitors to the western seaboard. The route will offer future visitors an opportunity to truly discover the west coast with its 156 strategically placed discovery points and a series of looped itineraries off the spine. Already the Wild Atlantic Way has generated exciting publicity abroad and interest from tour operators. Over the coming months it will form a core element of Tourism Ireland’s marketing around the world. However, continued investment will be required over several years to ensure that the plan to leverage the full potential of the route is realised. The impact is likely to see not only new visitors attracted to Ireland but also a shift in demand patterns within the country which will redress the decline in recent years in visits to the western half of the country.

Dublin Positioning Itself for More Growth

A new strategic plan for the capital will be launched in January, following on from ITIC’s report of June 2012 Capitalising on Dublin’s Potential. A taskforce has been working on the report’s recommendations, including a new brand proposition for the city, to reverse the capital’s loss of share in the growth of tourism to European cities. Even allowing for a strong performance in 2013, Dublin will still be well short of the levels achieved in visitor numbers and revenue in 2007, in sharp contrast to some other European city destinations. It is hoped and expected that a robust strategy will outline how Dublin can achieve the targets outlined in Capitalising on Dublin’s Potential, namely almost 6.5 million overseas visitors annually spending close to €2 billion by 2020.

Kilkenny Crowned National Tourism Town

The medieval cultural hotspot was the overall winner in this year’s competition which rewards towns and villages that work hardest at attracting tourists. The competition, organised by Failte Ireland, was proposed by ITIC to recognise local initiatives in tourism. Mulranny, situated along the hugely popular Great Western Greenway, won the Best Small Town Award, while other towns recognised this year included Cobh, Drogheda, Ennis, Kenmare, Letterkenny, Murrisk, Tralee, and Westport. Kilkenny in carrying off the trophy was awarded a €10,000 grant towards further development of the city as a tourism destination.

The number of seats on airline services into Ireland looks set to increase by at least 5% for summer 2014. Many new routes and expanded services have been announced over recent weeks, helped by the suspension of the Air Travel Tax.

The principal developments for inbound tourism include:

• New Aer Lingus routes from San Francisco and Toronto to Dublin together with year round service to Shannon from Boston and New York.
  
  
• Further increases in lift from Canada with a new service from St.John’s to Dublin and expanded service by Air Canada Rouge.
  
  
• New European routes include Basel and Hanover to Dublin; Berlin, Munich, Nice, and Paris to Shannon; Eindhoven and Cologne/Bonn to Knock. Aer Lingus and Ryanair are adding service on several existing routes.
  
  
• Cross-channel routes see a major boost of frequency and capacity by Ryanair and Aer Lingus Regional on services from Manchester, Birmingham, Bristol and Edinburgh to Dublin, Cork, Shannon and Knock.

Stena Line Takes Gold!

Congratulations to Stena Line which was voted ‘Best Ferry Company’ by the media at the annual Blue Insurances Travel Media Awards in Dublin recently. This year was the first time that a ferry category has been included in the prestigious awards ceremony.

Irish Ferries Adds New Services

Irish Ferries expands on Irish Sea routes adding a new ship, Epsilon, which will increase the line’s frequency and capacity on the Dublin to Holyhead route from December 2013. The new passenger car and freight vessel will increase Irish Ferries’ 4 daily departures in each direction to 6 departures each weekday. The new ship will also operate a new economy style passenger car ferry service linking Dublin with Cherbourg with weekly departures each weekend from January 18th.

New Ferry Link from Spain

A new weekly ferry service, operated by LD Line, will connect Gijón in northern Spain, St Nazaire on the west coast of France with Rosslare from January 5th.


Record Year for Cruise Tourism

2013 was a bumper year for cruise tourism in Ireland with the number of visiting ships hitting a new record. Dublin Port, catering to over 100 cruise ship port of call visits over the season, welcomed its millionth cruise liner passenger to the capital since records began 20 years ago.

Impressive visitors to Dun Laoghaire amongst 14 port visits this year were the iconic Queen Mary 2, the world’s largest cruise liner, and her sister ship Queen Elizabeth.

Britain Enjoys Record Year in Tourism

2013 has enjoyed the highest international spend by tourists in its history, with overseas visitor spending up 11% and numbers up 6% over the first 9 months of the year. Holiday visits are estimated to be up 7% over the period. The outcome for the year is for the volume of visits to be back at the record levels of 2008 and spending at new record levels.

Meanwhile, the UK Government has committed a further £90 million to the overall GREAT campaign in export markets over the next two years. Tourism as one of the UK's leading export industries is set to benefit from the increase over the £30 million allocation in 2013.

Spain sets New Record in 2013

Tourism spend in Spain is up 8.2% for the period January to October, compared with the same period in 2012, according to the Spanish Ministry of Industry, Energy and Tourism. The country is on track for a record tourism year. Britain and Germany, which combined account for almost half of Spain’s foreign tourists, yielded increases of 7% and 6.2% respectively.

Airlines Expect 25% Rise in
International Passenger Demand By 2017

Almost 300 million more passengers will take an international flights in 2017 compared to 2012, according to the latest forecasts from the International Air Transport Association (IATA). The growth to 1.5 billion international passengers per year represents an average compound annual growth rate (CAGR) of 4.6%. Emerging economies of the Middle East and Asia-Pacific, followed by Africa and Latin America, are expected to exceed this average rate of growth, while Europe and North America are forecast to see growth rates of 3.9% and 3.6% (CAGR) respectively.

Online Travel Sales Continue to Grow

Europe's online travel market continues to forge ahead, with record bookings in 2012 surpassing the pre-recession peak and projected to hit a record €251 billion in 2013. This despite mixed economic conditions across European markets, according to PhoCusWright’s latest European and Global Edition report. Growth in Europe's online travel market is forecast to grow at an average annual rate of 8% through 2015, continuing to outpace growth in the total travel market. Online sales are expected to win at least 20% share of gross travel booking by 2015. Online travel agencies’ (OTAs) sales are projected to grow faster than supplier websites over the next two years, although they will still represent a less than half (41%) of online bookings by 2015.

Across the Atlantic, OTAs have shifted their growth focus to hotel reservations as their airline ticket sales decline. Airlines are successfully winning back direct online sales hurting the up to now cornerstone of US OTAs’ business model. As a result OTAs are aggressively targeting hotel and lodging sales, which are forecast to grow faster than supplier-direct bookings resulting in hotels surpassing air to become the largest OTA segment.