Ireland, in common with most other destinations, has enjoyed a speedier and stronger than anticipated recovery in overseas visitors in 2022. The post pandemic rapid recovery in international travel has been driven by extensive pent-up demand, including deferred trips, and amassed personal savings, following the lifting of travel restrictions. However, the recovery remains fragile with the volatile and challenging geopolitical and macroeconomic, together with the risk of a new outbreak of COVID, threatening continued recovery into 2023.
The ongoing war in Ukraine, energy challenges, soaring cost of living, and higher interest rates represent a growing risk of recession across Ireland’s tourism source markets. In addition, supply side constraints, rising input costs and a tight labour market combine to threaten the sustainability of many tourism and hospitality businesses struggling to recover from the pandemic shutdown.
It is timely to look forward to the outlook for Irish tourism, the country’s largest indigenous industry and biggest regional employer. The Irish Tourism Industry Confederation (ITIC), in this bulletin, looks at inbound tourism from overseas markets and estimates how 2022 will end up in terms of the volume of international visitors. We project 3 different scenarios for how future years might unfold, the most likely of which suggests a softening in visitor numbers in 2023 followed by a gradual climb back to pre-pandemic levels. The challenges and risks facing the Irish tourism and hospitality sector are analysed as are the economic outlooks of our key source markets and we share Fáilte Ireland’s latest analysis on domestic tourism’s performance.
Tourism is universally susceptible to economic cycles and geopolitical instability which now threaten the continuation of an upward recovery trajectory in 2023. Hence many forecasters are revising downwards their outlook for international travel.
Past experience shows that people tend to adjust their travel behaviour in difficult economic times, either by reducing the number of trips, down trading, reducing length of stay to cut costs, and substitution of domestic for international travel. Typically, short leisure breaks tend to reduce in frequency, to protect the main annual holiday. Ireland’s past experience has been a deeper downturn in demand, and a longer period of recovery, than many other European destinations.
Most research points to a significant pent-up intention to travel, however, the extent to which this will carry over into 2023 is unknown. While there are recession-proof segments of the market which can be expected to travel despite the economic conditions, the ‘squeezed middle’ are perhaps the most exposed to the economic downturn and would have to rely on savings to maintain their travel behaviour.
Undoubtedly 2023 will be more challenging, despite the sharp recovery in 2022 which exceeded expectations.