February 2011

The tourism industry has hit the ground running at the start of 2011 by taking the lead with a major campaign to stem the downturn in overseas demand and help businesses regain a viable future. The crisis requires urgent action if more business failures and job losses are to be avoided. The upcoming general election offers a rare opportunity to influence policy and gain practical support for our industry.

As well as sustaining180,000 jobs, the tourism sector can add over 20,000 more by 2015 as the industry reaches annual earnings of over €6 billion.

‘Tourism Opportunity – driving economic renewal’, an industry led initiative, sets out a new plan necessary to secure our industry’s survival and future growth.

For full details of the Plan go to: www.tourismopportunity.ie

A new video highlighting the importance and opportunities of the tourism industry has had phenomenal success – watched by over 40,000 on YouTube in less than 2 weeks – http://www.youtube.com/meetinireland

To help tourism recover speedily and get businesses growing again, please:

  • Read the report;
  • Forward it to candidates in your area; and
  • Pass it on to your friends and colleagues.

As always your views are most welcome.

> Tourism Opportunity –
driving economic renewal
> Current Market Conditions & Outlook
> Economic Snapshots
> Access News
> Tourism News

 

TOURISM OPPORTUNITY – driving economic renewal

 

Tourism in Ireland is in crisis following the collapse of overseas demand over the past 2 years. Urgent action is needed if the industry is to recover, according to a report recently prepared by a national coalition of business interests led by the Irish Tourist Industry Confederation (ITIC) and the Irish Hotels Federation and including IBEC, Chambers Ireland and the IFA.

The industry led initiative sets out the need for an immediate international campaign to redress the damage to Ireland’s image around the world following the banking and economic crisis; a more focused and results driven marketing programme in tune with the needs of businesses; continued efforts to improve our competitiveness; and a review of the structures and operations of the state agencies to ensure that they are appropriate to today’s world.

Tourism Opportunity – driving economic renewal, was prepared by TTC – Tourism and Transport Consult International and Jim Power Economics, working with a group of industry practitioners. “Despite the setback, further meltdown can be avoided”, according to Eamonn McKeon, Chief Executive of ITIC, “and tourism can recover to become a major engine of Irish economic growth if the 10 objectives laid out in the report are pursued. But growth”, he went on, “will have to come from our principal overseas markets since the level of demand from the domestic market is likely to be muted for some time.”

Also speaking at the launch Paul Gallagher, President of the Irish Hotels Federation, said that “this industry led plan proposes a bold series of actions, which if followed, can by 2015 sustain 180,000 jobs and create over 20,000 new jobs whilst generating some €6.2 billion revenue for the economy. But we must be bold,” he went on, “and set targets that are well beyond the consensus growth rates forecast for tourism within Europe over the coming years.”

The industry 10 point plan for urgent action includes:

  1. Recover Ireland’s damaged reputation around the world.An intensive, co-ordinated campaign to promote brand Ireland, involving the Government, state agencies, high profile personalities from business, the arts and sports
  2. Re-launch Ireland as a tourism destinationWorking in conjunction with other sectors of the economy develop a new brand Ireland identity to boost the country’s image and awareness abroad.
  3. Capitalise on quality and value as Ireland regains competitiveness.The industry is offering good value for money to today’s more value-conscious customer. Restoring competitiveness, already underway, requires reducing the cost burden of public sector charges and urgently finalising the review of employment agreements.
  4. Focus on winning a larger share of top overseas markets at a time of little growth in domestic demand.Urgent need to recover British market and increase penetration of top producing markets – USA, Germany and France – by setting more ambitious targets.
  5. Get the marketing right:
    • Urgent review of the ‘messaging’ and channels needed
    • Aim to be world class in e-marketing
    • Harness the Irish Diaspora
    • Better leveraging of traditional trade distributors for ‘quick wins’
    • More joined-up planning with carriers
    • Strengthen research and development appropriate to evolving consumer needs.

     

     

  6. Sell to our strengths:
    • Ireland for its heritage, culture, activity holidays and the unique appeal of the West of Ireland.
    • Boost the promotion of Dublin as an international gateway and increasingly popular city destination.
    • Create a more ambitious programme of events.
    • Increase Ireland’s share of the international conference, meetings and incentive travel markets.



    A Commitment to Make it Happen

     

  7. Industry-led Tourism Recovery Task Force.Establish immediately to work with state tourism agencies to design and monitor a Turnaround Implementation Plan.
  8. Re-engineer tourism agency structures.Recognising the value of an all-island approach to marketing, the industry calls for a root and branch reform to improve synergies, reduce complexity, improve flexibility, deliver greater efficiencies and increase spending on frontline marketing.
  9. Introduce a business loan guarantee scheme.Credit is vitally important to the sector. Lack of credit availability is seriously threatening business viability and investment in physical and service quality.
  10. Establish a high level inter-departmental working group.Work with the Irish Hotels Federation (IHF) to address hotel oversupply and related issues to ensure sustainability of this vitally important accommodation sector.

Full details of the Plan are available at www.tourismopportunity.ie

 

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CURRENT MARKET CONDITIONS & OUTLOOK

 

The severe weather disruptions at the end of last year further impacted the number of overseas visitors coming to Ireland, finishing the year 15% below 2009, the third year of decline.As recovery in world tourism got underway in 2010, Ireland was one of a handful of countries which saw visitor numbers continue to fall. The expectation is that the bottom may have been reached and that Ireland will begin to recover in 2011. It is not unreasonable to expect some ‘bounce’ in the year ahead given that last year’s downturn was deepened by external events including the volcanic ash cloud and bouts of severe weather.

 

The short-term outlook for travel from each market is based on the best current information available, including economic and other factors influencing demand for travel. The summary presentation, depicted in weather symbols, is intended as a guide to marketers. The monthly series is also intended to highlight any change in market outlook from month to month.

 

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ECONOMIC SNAPSHOTS

 

Economic Outlook
Global outlook for 2011International tourist arrivals are forecast to increase by between 4% and 5% in 2011 according to the UN World Tourism Organisation.

The IMF updated its estimate for global growth this year. It now thinks the world economy will expand by a slightly higher 4.4%. The fund expects the price of oil to average $90 a barrel in 2011 and other commodity prices to rise by 11%.

 

German growth sustains eurozone

After a deep recession in 2009 Germany’s economy grew by 3.6% last year, the fastest pace of growth since 1981. German, French and Belgian business sentiment picked up by an unexpectedly high degree at the start of the year, suggesting that Germany’s broadening economic recovery is sustaining manufacturing in other parts of the eurozone. Favourable outcomes to bond sales for both Portugal and Spain have eased tensions relating to sovereign debt in peripheral Eurozone nations.

Economists see Europe’s largest economy growing about 2.5% this year, against forecast French growth of only 1.5% and a Belgian rate of 1.8% as public spending cuts and oil price rises bite.

Last year’s export-led recovery in Germany drove unemployment down, spurring private consumption for the first time in years. The improvement in consumer spending is good for travel although the largest outbound travel market in the world is a mature market, so any growth will be marginal. However, Ireland can aim to win a larger share, helped this year by some additional air services following a significant pull-back by Ryanair in 2010.

 

Uncertain outlook in UK

Britain’s economy contracted in the last three months of 2010 with GDP down 0.5%, with the winter snow storms contributing to the downturn. The governor of the Bank of England warned that inflation in Britain could reach 5% in the coming months and that real wages in 2011 would be no higher than six years ago, something that has not happened since the 1920s.

 

US economic growth accelerates

The US economy grew at an annualised rate of 3.2% in the final three months of last year as stronger consumer spending added momentum to the recovery, although consumer confidence fell back slightly in December. Spending grew at the fastest rate in more than four years as consumers released pent up demand. Despite continued woes in the housing market, weakness in the labour market and rising energy prices many economists are expecting faster growth this year and raised their forecasts after Republicans and Democrats agreed to a fiscal deal in December that cut payroll taxes to stimulate spending. Happily there are signs of an upturn in demand for international travel.

 

Currency Watch
On the currency markets the euro strengthened a little in the past 10 days after softening against sterling and the US dollar in mid-January. Year on year comparison shows both sterling and the US dollar stronger against the euro. Good news for Irish tourism.

  • The pound sterling worth €1.18, up 4% on the same period a year ago and up 8% on this time two years ago;
  • The US dollar worth €0.75, up 7% on the same period a year ago but almost unchanged from this time two years ago.

January 2011

January 2010
January 2009
GBP £1.00 =
1.18 euro
1.14 euro
1.09 euro
USD $1.00 =
0.75 euro
0.70 euro
0.76 euro
Source: Central Bank – average over the 27 trading days since the start of the year.

 

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ACCESS NEWS

 

More air services for summer 2011
Announcements of the additional services within the past few weeks include:

Aer Lingus Dublin to Stuttgart, Perpignan & Izmir
Cork to Palma
Shannon to London Gatwick
Aer Lingus Regional Shannon to Edinburgh
Ryanair Cork to Milan Bergamo
Flybe Knock to Edinburgh
US Airways Dublin to Charlotte
Helvetic Airways Zurich to Shannon (Charter)

Frequencies will increase on a number of routes, including from Dublin to Bourgas, Brussels, Budapest, Dusseldorf, Hamburg, Marseilles, Milan/Malpensa and Zurich (Aer Lingus); Dublin to Heathrow (bmi); Dublin to Manchester (Ryanair); and from Cork to Amsterdam, Faro, Lanzarote and Tenerife (Aer Lingus).

A number of services will be reinstated for the summer season including American Airlines’ daily Chicago-Dublin service and Ryanair’s routes from Shannon to Nantes, Malaga and Palma.

Delta Air Lines will increase capacity on its Atlanta-Dublin service but reduce capacity on the JFK-Dublin route.

PSO routes cut from 6 to 2 from mid 2011
Subsidised Public Service Obligation (PSO) routes from Donegal and Kerry to Dublin are the only ones to survive as Government support for routes between Dublin and Sligo, Knock, Galway and Derry will end from July 2011. The cutback in PSO subsidy has serious implications for Sligo Airport and Aer Arann.

 

2m fewer passengers use Dublin Airport in 2010
Passenger numbers at Dublin Airport fell by two million last year because of the recession, the volcanic ash crisis and the big freeze. 18.5 million passengers passed through the airport in 2010, a drop of almost 20% from the peak of 2008.

 

DFDS pull off Irish Sea routes
The Danish owned DFDS ferry operator closed its two routes from Dublin to Birkenhead and Heysham at end January 2011, and are in the process of selling its Belfast routes to Stena Line. DFDS, which acquired the routes in its take-over of Norfolk Line last year, offered only limited tourist car capacity on its routes but controlled a fifth of the freight market between the Republic and Britain.

 

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TOURISM NEWS

 

£100 “Britain – You’re Invited” campaign
A £100m public/private marketing fund over the next 4 years aims to enhance the UK’s position as one of the world’s leading destinations for international tourism.VisitBritain will issue an invitation to audiences in 20 key markets to visit Britain in a unique period of celebration, and will continue to leverage the tourism opportunity around the Royal Wedding, the Diamond Jubilee and the London 2012 Olympic and Paralympic Games.

 

US tour operators see better year in 2011
Last year was one of rebound and higher sales for 2011 are expected, according to three-quarters of US Tours Operators in a USTOA survey. Less than 15% saw business down, and nearly 10% said business was unchanged.Optimism over Europe sales is tempered by events such as Oberammergau Passion Play helped spike 2010 sales. This business will need to be replaced in 2011 by other products if sales to Europe are to maintain their momentum, USTOA members said.

 

European online travel market to grow by 10% in 2011
Despite their dramatically different economic circumstances in the aftermath of the global recession, Spanish and German online travel bookings are projected to top other key European markets with increases of 14% and 13%, respectively, in 2011. The overall rate of growth in online travel bookings is forecast to be around 10%, led by solid double-digit gains in countries that have been slower to adopt online booking channels in the past, according to the latest PhoCusWright’s European Online Travel Overview.The economic downturn has erased pre-recession gains for hotel branded websites, as market pressures increase reliance on online travel agencies (OTAs). As the recession hit, value-conscious consumers flocked to the mass-market OTA channel. The result: supplier website share of hotel bookings is expected to have shrunk to 54% in 2010. OTAs and hotel websites will settle into similar growth patterns in 2011 and 2012 as hotels gain more control over OTA inventory.
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