So how is the 2019 tourism year shaping up?

The monthly tourism figures from the CSO can at times sow more confusion that clarity. Are overseas visitor numbers really up 5.5% for the first quarter and this with the Easter bounce falling in March of last year? Certainly feedback on the ground from tourism and hospitality businesses is less buoyant. Rising costs and Brexit pressures, as well as the Vat hike, are impacting on trading and many operators and owners feel that 2019 will be a softer year.

Occupancy figures from hotel benchmarking experts STR are actually down 1% for the first quarter which leads to the obvious question of where the increased number of tourists are staying? Airbnb will account for some of the visitors but this short-term let channel is also feeling the strain of increased regulations due to come into effect next month.

It is important to note that the monthly CSO tourism figures are arrival numbers so include day trips and transfer traffic, both of which continue to grow significantly particularly at Dublin Airport. Of more value is the more detailed breakdown of CSO Q1 figures which came out just last week and these make for interesting reading.

Value trumps volume

Although volume is up the actual spend by overseas tourists when in Ireland is actually down 4% for Q1 when compared to the same period last year. Spend from big source markets such as Britain, France, Germany and Australia & New Zealand all fell with North America the only market to show modest growth for the 3 months in question. Of course this is only the first quarter which typically accounts for less than a 5th of the year but nonetheless a trend is appearing that is causing the Irish tourism industry a degree of unease. Reports from the industry also point to a disappointing April and May.

Q1-19-v-Q1-18-SPEND-CHART

The public and media can take headline figures and adopt them as fact. But the feeling on the ground from those who actually run tourism and hospitality businesses is less rosy and now is the time to call out the challenges facing Irish tourism after a number of strong years and what needs to be done to counteract the slow down.

Ireland’s tourism industry remains confident for the years ahead – Aer Lingus’s recent purchase of 6 new Airbus planes for transatlantic services is a case in point – but 2019 is undoubtedly a more challenging year. If the Irish Tourism Industry Confederation’s (ITIC’s) strategy for success and growth out to 2025 is to be realised then all actors – industry, agencies, local authorities, and Government – need to renew focus. Tourism has a proven track record in delivering growth with collaboration across the private and public sector and this is something that is as important as ever.

A view from Killarney

Last week the Irish Tourism Industry Confederation (ITIC), the representative body for the sector, held its Council meeting in Killarney, the traditional “home” of Irish tourism. A working dinner was held attended by 70+ tourism partners and as one sage correctly commented about the issue of growth in volume versus a slowdown in revenue “numbers are all well and good but a bank manager will only ever cash a cheque”. Selected photos of the Killarney gathering – which included leading hoteliers, activity providers, vintners, restaurants and B&Bs in the area as well as the  local authority and tourism agencies – can be seen below and the consistent feedback was that business was not as strong as hoped for.

ITIC-Kerry-June-2019
The Vat hike – estimated by Government to add an additional €466 million tax burden to the sector this year – was mentioned as a significant challenge and all were of the view that the costs of business, particularly insurance renewals, were becoming prohibitive. Demand had undoubtedly softened and tightening air access over the summer including Norwegian’s cancellations of its air services into Cork and Shannon had compounded the situation. Industry leaders were of the view that Irish tourism’s competitiveness had weakened and that the Government needed to do all within its power to improve the environment for running a tourism business. ITIC’s 8-point plan as to how to improve competitiveness for the sector will be published very shortly.

The Brexit challenge & the need for more funding

To add to 2019 difficulties is the great Brexit challenge. With the likely advent of Boris Johnson to the PM hotseat, a hard Brexit on October 31st looks a very real threat and tourism is uniquely vulnerable to this. Fáilte Ireland have already estimated that a hard Brexit would cost Irish tourism €390 million and this coupled with the Vat hike adds up to nearly a billion euro hit on Ireland’s largest indigenous industry and biggest regional employer.

ITIC-Boris-Johnson

In this context ITIC calls for a redoubling of effort from Government, Minister, Department and Agencies to ensure that the environment for business is as favourable as possible as Irish tourism faces a more challenging period. The commitment and investment by tourism’s private sector in new products and experiences continues at a remarkable pace. Indeed, when accounting for investment in hotels, attractions, activities, and transportation, it is estimated that the wider tourism sector is spending approximately €2.5 billion nationwide over the next three years alone. A huge investment by Ireland’s tourism industry in its own future. Now isn’t it time for the Government to up its commitment to tourism and play its part in supporting a key economic sector for Ireland and its regions?

Restoring Irish tourism’s competitiveness is key as is funding for tourism agencies. Exchequer budgets for tourism in 2019 are only now back to where they were in 2008. That is a long decade of under-investment. Overseas marketing in particular helps drive demand and a supplemental budget is required now to sustain business as tourism faces into a volatile period of uncertainty.

Determined and positive: Tourism at a key juncture

Ireland’s tourism industry is fortunate that it is populated by positive, proactive professionals and the sector can be confident of the years ahead. Whatever the true tourism numbers in the first few months of 2019, what we can certainly say is that the sector is at a key juncture. With Brexit rumbling ominously in the background, external factors that always impinge on tourism are less favourable than in recent years. Have we reached a new, albeit higher, peak of tourism numbers into the country and are  now set for a cyclical slump or can we steady the ship and ensure sustainable steady growth into the future? Ireland’s tourism industry is certainly up for the latter and is putting its money where its mouth is. However, like all parts of the economy, Government, regulatory authorities, and state agencies need to ensure that there is an appropriate environment for business to continue to prosper and in this regard tourism is no different.

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