Where lies the best potential?

  • Over the past several weeks we have looked at each of Ireland’s top producing markets.  The good news is that all appear to have potential for further growth in the future.  Predicting where the best potential lies is complicated by the present unprecedented economic global turmoil.  But of one thing we can be sure, this period of economic recession will end, people will still have a great desire to travel, and growth will return to the tourism industry.
  • It’s interesting to see that the top four countries (UK, US, Germany, France) produce 72% of our visitors, and 67% of associated revenue.  While there will be some shifts in the coming years, it seems improbable that any newcomer will break into that quartet in the next decade.
  • Just to confirm how change is a constant, if gradual thing, let us recall briefly how Irish tourism has developed over the past 50 years or so.  There was an industry before that but of no great economic consequence.
  • In 1960 there were 941,000 overseas visitors.  Almost 90% came from Britain, 7% from North America, 3% from Continental Europe, and elsewhere.
  • In 1969 about 1.5 million overseas visitors arrived.  About 75% came from Britain, 18% from North America, and 8% from Continental Europe.  It can be assumed that most of these were visiting friends and relatives.
  • The 1970s was a dreadful decade with visitor numbers growing by a mere 300,000 over 10 years to 1.8 million in 1979.  Revenue that year was estimated to have reached £220 million.

    The nationality mix changed substantially however with visitors from Britain dropping to 62% of total, North America down to about 16% and Continental Europe grew to 20%.

  • The 1980s weren’t great either, particularly the early 80s, but annual visitor numbers grew by 56% to just under 3 million in 1989, with attendant revenue of almost £700 million.  Virtually all of this visitor growth came in the last 3 years of the decade.  1987 marked the first year that tourism revenue reached £1 billion, when domestic holidays were added in.

    Britain dropped down to 61%, Continental Europe remained at 20%, while North America dropped back to 15%.

  • Things improved substantially in the 1990s.  Visitor numbers doubled to 5.9 million by the end of the decade, and revenue grew by 164% to £1.8 billion.

    And by 1999 the visitor mix had changed again with Britain down to 58%, North America up slightly to 16%, Continental Europe grew to 22%, and other 4%.

  • In many respects you could say that this is an improving mix, with dependence being spread more evenly.  But currency movements are a significant determinant of travel patterns and the shifts in the euro value against the pound and the dollar has not always worked to our advantage, particularly in recent years.
  • Last year 7.7 million visitors came and spent €4 billion.  For the first time ever, less than 50% of those visitors came from Britain, at 49%.  Continental Europe has grown to 33%, while North America provided just under 14%.  About 4% came from elsewhere.
  • Of the €4 billion revenue, Britain accounted for 35%, Continental Europe also 35% and North America 20%.  New and developing markets accounted for the balance.
  • There have been three revolutions in the travel and tourism industry in the past 50 years.  The first came in the 1960s in the shape of cheap air charter travel and package tours.  Rising incomes enabled people of modest means to travel more and to take advantage of the all-inclusive trips.
  • The second was the advent of the Internet which has allowed countless millions to book flights, hotels, car hire, and package tours without ever going near a travel agent.
  • The third was the emergence of budget air carriers which coincided with the generally good economic times of the last 15 years.  Flying became a commodity at low prices, regional airports all over Europe boomed and you were as likely to meet an Irish stag party in Dubrovnik as in Dingle.  A variation of the low cost model spread to long haul flights, and Christmas shopping for some was as likely to be done in Tiffany’s New York as in Tesco’s in Tralee.
  • And then?  And then subprime followed by the credit crunch.
  • The current global economic uncertainty makes short term forecasting difficult, if not unwise.  But what we can reasonably be sure of is that this downturn will end, and tourism and travel will prosper again in the growth cycle which will follow.
  • The probability is that Continental Europe will consolidate its position as Ireland’s largest source market, by visitor numbers and revenue.  Germany will be the market to power that growth, with France, Italy, Spain and the Nordic countries also showing some progress.  Tourism Ireland’s soon to be completed review of the European markets will outline a new strategy for growth from this area.

    Britain will remain our largest single country market for a few more decades, if not always.  Recent performance by this market has been less than optimal, particularly in the pure holidaymaker category.  The present market review which is underway is timely therefore.

    The US economy will recover, and with that recovery will come renewed growth in visitor numbers and revenue for Ireland.  Breaking the elusive 1 million visitor landmark came very close in 2007 with 975,000 U.S. visitors.  It seems evident now that this milestone will not be reached just yet.  Maintaining at least the present level of direct air services will also be crucial to reaching that magic million number.

  • These are extraordinary times, but consumer confidence will eventually pick up, and travel and tourism will prosper once more.  When?  Probably by 2011.  In the meantime tight business management and a concentration on the top 5 markets will lead the industry to a recovery and growth path.  Britain, Continental Europe, particularly Germany and France, the United States and the domestic market are still where it’s at.
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