You probably have formed two questions in your mind already; why is he telling us something we already know, and what is the relevance of this to Irish tourism?

The answer to the first question is that if you read on you will definitely learn something new, and secondly, this information, properly put to use, can have significant implications of a positive nature for the future of Irish tourism.

Still with me?

A new book, produced by the authoritative Boston Consulting Group (BCG), outlines the rise of a new emerging market, one that may end up being the largest and most powerful of all…women. The book is based on a survey of 12,000 women from 22 countries – one of the largest quantative marketing studies ever undertaken.

-Women represent the largest market opportunity in the world.
-Despite women’s dominant buying power, many businesses continue to market mostly to men, and fail to explore how they might meet women’s needs.
-Businesses that can offer tailored products and services, going beyond “make it pink”, will be positioned to win big as the economy begins to recover.

Women are now poised to drive the post-recession world economy, thanks to an estimated $5 trillion in new female-earned income that will be coming on line over the next 5 years. Worldwide income for men at $23.4 trillion is still nearly double that for women but the gap is shrinking significantly, because the vast bulk of new income growth over the next 5 years will go to women. This is due to a narrowing wage gap and rising female employment. That means women will be the ones driving the shopping, and economists hope, the recovery. This growth represents the biggest emerging market in the history of the planet – more than twice the size of the two hottest developing markets, India and China, COMBINED.

Globally, women control about $20 trillion in annual consumer spending, and that figure could climb as high as $28 trillion in the next 5 years. Their $13 trillion in total yearly earnings could reach $18 trillion in the same period. In fact, women already make the majority of the world’s purchasing decisions.

Newsweek magazine doesn’t believe that the impact of this seismic shift is yet fully grasped by either political or business leaders. Another recent report by Goldman Sachs, rather patronisingly named The Power of the Purse, proclaims women to bethe economic engine of the future. It notes that future spending by women which tends to focus more on health, education and children’s wellbeing should support the development of human capital to a greater extent than spending by men, thus fuelling economic growth in the years ahead.

There is a wide body of research to suggest that women’s spending patterns may be exactly what the world needs at this point in time. According to UNIFEM (the UN agency dedicated to women), “Economists have studied how women spend in comparison to men, and they tend to spend more on things that are linked to people’s well-being, like health and education. They also tend to save more and exhibit less risky financial behaviour”.

One of the key insights gleaned from the BCG research is that women everywhere struggle with a shortage of time. This lack of time influences women’s purchasing decisions. Women will quickly embrace products or services that enable them to “take back time”. They will shun those that add complication or inconvenience. Above all, women want “agents of leverage” ways to find time, save time, free up time.

Women are both the primary spenders and savers in our consumer society, so they seek value. They are hard-headed household purchasing agents and tender-hearted dreamers. They want quality and effectiveness, as well as attention to design and marketing narrative.

Businesses that truly understand women and serve them well follow the 4 Rs: Recognise, Research, Respond, Refine. Female-centric businesses are also adept at understanding women’s value calculus. Women in particular rely on a personal value calculus to assess every product or service from several perspectives. They consider its technical, functional, and emotional merits. They gather facts and opinions about usage from many sources, especially their personal networks. They plug all these factors into an unwritten, but rigorous calculus that enables them to determine the product’s value and whether its price justifies its purchase.

The book concludes that; businesses that really get women and respond to their unmet needs, with skill, nuance and genuine engagement, will enjoy breakaway growth, unprecedented customer loyalty, and category dominance.

The authors of the book, Women Want More, Michael Silverstein and Kate Sayre, believe that women represent one of the largest market opportunities of our lifetime and that they will be an important force in hastening a recovery and new prosperity. The rewards for businesses that do understand what women want and are able to serve them well, will be enormous. Female consumption power is leading consumption power in the world, and overlooking that would be a huge marketing error.

The financial crisis will come to an end, and now is the time to lay the foundation for post-recession growth. A focus on women as a target market, instead of on any geographical market, will up a business’s odds of success when the recovery begins. Understanding and meeting women’s needs will be essential to rebuilding the economy; therein lies the key to breakout growth, loyalty, and market share.

Let us know what you think. VISIT OUR BLOG and make a comment.

September 29th 2009

It’s been a year of celebration for the Guinness Company, as they celebrate 250 years since the signing of the lease on the world famous headquarters at St James’s Gate Dublin, by their founder Arthur Guinness.

Today, September 24th, has been declared "Arthur’s Day" to honour the remarkable man who brought us Guinness beer.

For many years having a pint of Guinness in the home of Guinness has been high on the list of things to do by Ireland’s overseas visitors. But now a trip to the Guinness Storehouse itself has become the number 1 attraction for visitors. Last year 1,038,910 people went there, making it Ireland’s most popular tourist attraction.

To find out more about his double-success story, and to raise a glass to Arthur on this special day, ITIC spoke with Paul Carty, Managing Director of the Guinness Storehouse. Click on the image below to hear what he had to say.

September 24th 2009

The debate on global warming and the extent to which it is being compounded by human-based activity still goes on.  Studies continue to validate the impact that it may have on our climate, and this makes global warming a key consideration for stakeholders in the tourism industry.

The tourism industry has a dual relationship with the environment:  It is affected by climate change, but it also contributes towards it.

Click here to learn more about global warming from CO² emissions.  You will be surprised by some of the facts.

Don’t forget… if you want to comment on anything you’ve heard here, VISIT OUR BLOG!

September 17th 2009

The Irish Tourist Industry Confederation is part of Business for Europe, which is campaigning for a Yes vote on October 2nd. 53 employer and professional organisations have got together to fully support a ‘Yes’ vote for the Lisbon Treaty.

The Lisbon Treaty reforms the E.U. to make it more efficient, more effective, and more democratic. The need has never been clearer for a strong E.U. within which Ireland and its economic interests can continue to compete and succeed.

A dedicated website, www.businessforeurope.ie, has been launched, and it provides a comprehensive guide to the many compelling reasons why we must vote ‘Yes’ on October 2nd.

Just a small sample include:

- Europe produces over 82% of Ireland’s overseas visitors, and has been our fastest growing market for several years.
- Looking forward, it is an unquestionable fact that Europe will continue to be our main source market.
- Ireland has created an extra 1 million jobs since joining the E.U. in 1973.
- One in 5 beef burgers eaten in McDonalds in Europe is made from Irish beef.
- In the past 10 years, Irish companies have nearly doubled their exports into E.U. Member States from €44 billion to €87 billion.
- Average Irish wages have increased from 60% of E.U. average in 1973 to 138% of the average today.
- Ireland has built over 500 kilometres of motorway with E.U. funding.
- Ireland exports 25 million pasta meals to mainland Europe.
- Article 195 makes enhancing the tourism sector and improving competitiveness in this area, a priority for the E.U.

What has changed since the first referendum?
The Government, after discussions with all E.U. Member States, has ensured that when the Irish people vote on the Lisbon Treaty on October 2nd, it will come with additional legal guarantees and assurances to address their main concerns.

It has now been confirmed by the E.U. that:
- Ireland, and all other Member States, will keep a Commissioner.
- Ireland will remain in control of its own tax rates.
- Irish neutrality will not be affected – no conscription, no defence alliances.
- Ireland retains control of sensitive ethical issues such as abortion.
- Workers’ rights and public services are valued and protected in Ireland and across the E.U.

Voting ‘Yes’ will enhance Ireland’s reputation as being a good place to do business at the heart of Europe.

Click here for more good reasons to vote ‘Yes’, learn more, and do the right thing on October 2nd.

Got a comment on anything you’ve heard here? VISIT OUR BLOG and have your say.

September 9th 2009

The National Asset Management Agency, more commonly known as N.A.M.A., is a new body which will operate as an independent commercial agency under the aegis of the National Treasury Management Agency. Its task will be to deal with the problems caused by excessive lending by the banks during the property boom. These are massive and complex problems, not easily understood, often understated, and frequently misrepresented. ITIC spoke with Tony Foley, Head of Economic Finance and Entrepreneurship at Dublin City University (DCU), to attempt to explain N.A.M.A. in non-technical language. Here’s the result…

BANKS AND LENDING

Role of banks
Banks obtain money from deposits and from borrowing on the money market. They lend this money at higher interest rates to borrowers. The difference or spread between the interest rates is the source of profits and operating expenses. This provides funds to cover bad debts, operate the banks and give a return to shareholders. Banks normally expect that only a very small share of loans will not be repaid. The loan may be fully lost or there may be an asset, e.g. land, which is used as security and which can be sold by the bank to recover all or part of the loan. Banks also hold reserves which can be used if operating profits are too low to cover the bad debts.

The Problem
The problem which N.A.M.A. is intended to fix is that the Irish banks lent very large amounts of money to individuals, mainly for property related projects, which will not now be repaid according to the original loan agreement, if ever.

Some borrowers may have given personal guarantees to repay the loan and, in our illustration, the borrower may have a spare €700 million to add to the land price and repay in full. If so, all would be well. This happy (except for the borrower) situation is going to be very rare indeed. The borrower’s resources just simply will not cover the loans.

Essentially, it means that the banks will not get back large sums which they loaned. This is a serious problem as the monies loaned belongs to depositors or was borrowed on the money markets, and their owners will want it back.

Let the banks sort the problem?
Unfortunately the banks cannot sort the problem. It is too big. There may be about €70 billion to €80 billion in bad loans. Say the banks could recover €30 billion of this, which is optimistic, they would have a bad debt loss of up to €50 billion. They do not have the corporate resources to cover this amount. They would not be able to pay back all the deposits and money market loans made to them. They would be out of business. If all depositors and lenders to the banks looked for their money the Government would have to fill the gap because of the bank guarantee scheme. Even if the bad loans could be worked through over a period of years by the banks they would be limited in making credit available while they improved their balance sheets.

N.A.M.A. and Options
The Government proposes to buy the bad loans and some good ones from the banks. The Government talks of a total of €80 billion to €90 billion of loans. This would relieve the banks of the worry of the bad loans, remove them from their balance sheets and enable banks to make new loans and start providing credit again. N.A.M.A. will manage these loans and seek maximum payment of them. If necessary it will seize physical assets and activate any personal guarantees to ensure recovery of the loans. The big issue is what price will be paid by N.A.M.A. (or we taxpayers) to the banks for the loans.

The Government has said it would impose a levy on the banks if N.A.M.A. did not break even over some long period of time. However, in the meantime, the taxpayer would be carrying the cost of a high purchase price and the bank shareholders would be happy. But it may not be practicable to threaten to impose a levy, because the threat of a future levy to cover possibly tens of billions of euro would restrict the current operational freedom and value of the banks.

No good options
The banks need to be fixed and the bad debts removed. There is no good costless way to do this. There are lots of bad loans, and they will not be repaid in full. The taxpayer will inevitably bear a substantial financial burden. If the aim is to minimise the cost to the taxpayer and get a better contribution from the bank shareholders, the high purchase price is not the best option. However, if the aim is to strengthen and improve the attractiveness of the Irish banks, regardless of whether it involves a substantial transfer from taxpayers to shareholders, the high purchase price model is of course the best. The issue is not actually NAMA or an alternative; it is the price that is paid to the banks for the loans in question.

In recent days the Minister for Finance has been at pains to emphasise that banks will not be overpaid for the loans, and that the taxpayer will be protected as far as possible. This emphasis on protecting the taxpayer is a very welcome and belated aspect of the ministers presentation and defence of the project. Of course, as noted above, if the price of the loans is relatively low there will be a major question mark over the ability of the banks to absorb a very substantial bad debt provision, or write down on the loans. We are then back to substantial, or majority, or total Government ownership of the banks. The sooner all this becomes clear the better. If the current Government emphasis on the proper price for the loans is carried through, and the cost to the taxpayer is kept as low as possible and seen to be so (although it will still be large), I can see N.A.M.A. being implemented and accepted by a grudging public.

Our man from DCU, Tony, is of the view that the current approach seems to imply a relatively high purchase price for the loans, which would result in the taxpayer carrying an excessive share of the risk and the burden.  But he is also adamant that other institutional structures, including nationalisation, will not make the bad loans go away. The policy task is to get the least bad situation for the economy and for the taxpayer.

So now you understand all about N.A.M.A. VISIT OUR BLOG and let us know what you think.

September 2nd 2009