The United States – Ireland’s second largest market

  • Good morning America, how are you?
    On the day when the United States elected its first African American President, we review this enormous market and its future potential for growth.But first, congratulations and best wishes to President-Elect Barack Obama.  Not just America, but the World needs this man to be a truly great President.  He inherits an ursine economic situation which is global in reach, and which can only be resolved effectively by remaking the US financial systems.  That’s quite a challenge.

    President-Elect Barack Obama
    President-Elect Barack Obama
  • In the decade from 1997 to 2007, US visitors to Ireland grew by 36% to reach 975,000 last year.  They are estimated to have spent over €750 million, which was unchanged from the previous year.  But while US visitors only account for 12.5% of visitors, they account for over 15% of total overseas tourism revenue.
  • You think “what might have been” when recalling that in 2000 we had 958,000 US visitors, but that fell back by 21% following 9/11 and the economic downturn which followed, before recovering to earlier levels in 2006.
  • But first, let’s look at the United States itself.  Britain’s American colonies broke with the mother country in 1776 and were recognised as the new nation of the United States of America following the Treaty of Paris in 1783.  During the 19th and 20th centuries, 27 new states were added to the original 13 as the nation expanded across the North American continent and acquired a number of overseas possessions.  The two most traumatic experiences in the nation’s history were the Civil War (1861-65), in which a northern Union of states defeated a secessionist Confederacy of 11 southern slave states, and the Great Depression of the 1930s, an economic downturn during which about a quarter of the labour force lost its jobs.  Buoyed by victories in World Wars I and II and the end of the Cold War in 1991, the US remains the world’s most powerful nation state.
  • The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $46,000.  In this market-oriented economy, private individuals and business firms make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace.  US business firms enjoy greater flexibility than their counterparts in Western Europe or Japan in decisions to expand capital plant, to lay off surplus workers, and to develop new products.  US firms are at or near the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment.The onrush of technology largely explains the gradual development of a “two-tier labour market” in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits.  Since 1975, practically all the gains in household income have gone to the top 20% of households.  Imported oil accounts for about two-thirds of US consumption, which might seem surprising given that the US produces almost 7 million barrels a day.  But here’s the thing, it consumes 20 million barrels a day.

    Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an ageing population, sizable trade and budget deficits, and stagnation of family income in the lower economic groups.

    New England Fall
    New England Fall
  • The United States is currently experiencing the deepest economic slump since the early 1980s, with rising unemployment, home foreclosures, falling consumer spending and tight credit.  The motor industry has usually been a good barometer of economic health in the US, and on Monday of this week the auto industry reported October sales for cars and light trucks.  It was not a pretty picture.  General Motors reported a drop of 45% on last year, Ford was down 30%, and the usually steady Toyota was down 23%.  Scary or what?
  • The United States is the world’s 3rd largest country by size (after Russia and Canada) and by population (after China and India) with 304 million inhabitants.  It is one of the world’s most ethnically diverse and multicultural nations, the product of large scale immigration from many countries, and there are 31 ancestry groups with over a million members.
  • About two-thirds of Americans who visit Ireland are here for vacation purposes.  Just over 20% are visiting friends and relatives, while under 10% are on business.
  • Over the past six years there has been a marked shift in where visitors to the island of Ireland live in the US.  The traditionally strong source markets of the North East have declined in absolute and share terms, while the Western and Southern (including South Eastern coast) states have produced growth and are now relatively more important.  The Mid-West showed little change over the period.
  • Ireland has been notably successful in attracting increasing numbers of Americans (+30%) with no Irish connections.  This has significantly broadened the market by reducing Ireland’s high dependency on those with Irish ancestral links.
  • The US market is especially important for Ireland as it is the source of the highest per visitor spenders reflecting length of stay and high consumption of ‘high-end’ products.  The market is also of above average importance in terms of regional spend, seasonal spend and for several business sectors including hotels, car rental and coach touring.
  • Since the late 1990s the trend has been for an increasing share of American holiday visitors to arrive and depart directly on transatlantic services to/from the island of Ireland.  Last year over 60% arrived directly into the island of Ireland compared to 55% in 1999, reflecting the substantial growth in direct services from the US to Ireland over the past 10 years.
  • Their average length of stay has dropped below 8 nights and the per capita spend has also dropped in recent years, due to the shorter stay and a weaker dollar.  In fact the declining value of the dollar has almost certainly been hindering growth for some years.  Just recall that in 2002 a Euro could be bought for 94 US cents, while earlier this year it cost almost $1.60.  In recent weeks the dollar has strengthened to about $1.25, and there is some confidence that it may settle in the $1.30 to $1.35 range.  That would be good news for travel to Europe.

    Grand Canyon
    Grand Canyon
  • The other good news is that Americans really like Ireland.  In a survey of Dream Destinations where they were asked for their preferred holiday destination, with money no object, Ireland came in fifth position (after Australia, Italy, Great Britain and France).
  • Direct access is a major factor in driving US business to Ireland, and in this regard there are excellent services available to Shannon, Dublin and Belfast by Aer Lingus, Delta, US Air, Continental and American Airlines.  Cities with non-stop services include New York, Newark, Philadelphia, Washington DC, Orlando, Boston, Atlanta, Chicago and San Francisco.
  • Economic conditions are such that 2008 will show the first decline in US visitors since 2002, and it is difficult to see any growth in 2009.  Much will depend on the timing of economic recovery.  But the US is a vast market, consider this, 64 million US residents travelled abroad last year and spent $105 billion.  Over 12 million came to Europe.  Ireland must fight to retain its share of this vast and valuable market.As sure as day follows night, economic recovery will come to the United States, and with it renewed growth in international travel.  This will always remain a key market.
  • For much more information on this market of tremendous current and future potential, click here to visit the Tourism Ireland website.
  • Next up – the UK.
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