February 2013

With only a fractional change in the number of arrivals in 2012, tourism recovery is still not assured. There were some encouraging signs, particularly from North America where overall numbers exceeded 1 million, its second best year ever after 2007, and arrivals from Continental Europe were up 3% to 2.35m. But following a slight recovery in 2011, our biggest source market Britain once again declined, this time by 4% to 2.77m.

The results point to the need for a change in strategies if Ireland is not to lose out to other destinations, many of whom are experiencing tourism growth, however modest.

As GB Path to Growth is being implemented in 2013, ITIC is pressing for a comprehensive review of tourism policy and strategy to provide a road map for investment and marketing over the next 5 years. The collaboration between the industry and the tourism agencies on the Tourism Recovery Taskforce (TRT) over the past year has amply demonstrated the benefits of the engagement in designing business development strategies for the industry.

Tourism is frequently mentioned alongside agriculture and food as an indigenous sector capable of contributing to Ireland’s economic recovery. Recent growth in jobs in our sector has demonstrated the potential of tourism, however, a new plan must be a priority if sustainable growth is to become a reality. The plan is needed to identify a new market prioritisation with defined target segments in each source market together with appropriate strategies and allocation of resources. In a slow growth environment, recovery will only be achieved if Ireland wins market share in a number of key markets.

As always, your comments are most welcome on itic@eircom.net.

VISITOR ARRIVALS
CURRENT MARKET CONDITIONS & OUTLOOK
CURRENCY WATCH
TRANSPORT UPDATES
TRAVEL INDUSTRY NEWS
ECONOMIC UPDATES

 

 

CSO DATA SHOW ARRIVALS UP 0.2% IN 2012

6.5 million arrivals in 2012 represents only a fractional year on year change of an additional 12,000 visitors. Visitor numbers to Ireland did not reach target and the recovery in 2011 after three years of decline has stalled.

 

VISITOR ARRIVALS – JANUARY TO DECEMBER 2012 ESTIMATES
NO’S % CHANGE VS 2011
% OF TOTAL
GREAT BRITAIN 2,774,200 -3.6%
42.6%
C. EUROPE 2,347,500 +2.8%
36%
Germany
448,200
+6.0%
France
396,300
-1.3%
Italy
251,700
+14.4%
Spain
253,100
+3.3%
Benelux
237,300
+0.9%
Nordics
191,000
+5.1%
Other Europe
569,900
-1.3%
NORTH AMERICA 1,016,900 +3.0%
15.6%
OTHER 378,600 +6.1%
5.8%
Other Areas
222,900
+3.4%
Aus / NZ / Oceana
155,700
+10.3%
TOTAL 6,517,200 +0.2%
100%
Source: CSO published report January 28, 2013

 

The increments of increases in 2012 from N. America (+30,000); Italy (+30,000); Germany (+25,000); and Other Areas (+22,000), were roughly negated by a drop of 100,000 in arrivals from Britain.

 

Q4 ARRIVALS BOOSTS 2012 RESULTS

The outcome for the year was boosted by a better than expected fourth quarter when arrivals grew by 5%, compared to the same period a year earlier. In contrast arrivals in Q3 were disappointing with a 3% decline overall, including a 9% drop from Britain. This followed on a very soft July and no growth in the first half of the year.

The latest CSO Q4 data shows almost 10% growth from mainland Europe and double digit growth from North American and other long-haul markets, while the drop in arrivals from Britain slowed to -1.3%.

Regrettably as we do not have the benefit of a breakdown of arrivals by purpose of visit, it is not possible to disaggregate the performance of the ‘promotable segment’ from those visiting for business or VFR. It would be surprising if the recent migration trends has not had an impact on those returning for Christmas – arrivals from Australia/New Zealand were up 27% in the quarter, with a 14% increase from North America and 19% from ‘other Europe’. Interestingly too, at Dublin Airport, December was the fifth consecutive month with air traffic growth in excess of the European average.


INTERNATIONAL TOURIST ARRIVALS TOP 1 BILLION

International tourist arrivals worldwide grew by 4% in 2012, surpassing the 1 billion mark for the first time, according to the latest UNWTO World Tourism Barometer. Arrivals to Europe are estimated to have increased by 3% to 535 million last year, with Asia Pacific continuing to be the fastest growing destination, with a 7% increase in arrivals to 233 million. Although the highest growth rates in expenditure abroad among the ten top source markets came from emerging economies – China +42% and Russia +31% – important traditional source markets also showed particularly good results. Despite economic pressures, UK outbound travel expenditure returned to growth with a 5% rise after two flat years, but France and Italy registered declines in outbound travel expenditure of -7% and -2% respectively, while expenditure abroad by Germans is estimated to have increased by 4%.

Visitor arrivals to the UK for the year to November 2012 showed little change on the previous year, with expenditure estimated to be up 3%. The UK suffered a dip in arrivals in August although visitor expenditure spiked during the Olympics.


IRISH OUTBOUND UP 0.5%

6.3m overseas trips by Irish residents in 2012, although only 33,000 more than the previous year, marked a slim recovery after 3 years of falling demand. Outbound travel picked up as the year progressed, perhaps due to poor summer weather.


DAA REBATE €1.5 MILLION TO 25 AIRLINES

Passenger numbers at Dublin Airport increased by 2% to 19.1 million in 2012, the second consecutive year of traffic growth but still below the peak of 23 million in 2008. Aer Lingus, Air Canada, American Airlines, Etihad, Lufthansa, SAS and Turkish Airlines grew traffic at Dublin to earn a rebate on their airport fees. The scheme will continue to operate in 2013. Passenger numbers at Cork Airport declined slightly by 1% in 2012 to 2.3 million, while Shannon Airport recorded a drop of 14% to 1.4 million.

Passenger numbers at Knock Airport were up 5% to 685,000, due to expanded services principally from Ryanair


AER LINGUS REPORTS STRONG RESULTS FOR 2012

Passengers on mainline services grew by 1.5% to 9.65 million, while traffic on Aer Lingus Regional services increased by 33% to just over 1 million. Mainline growth came mainly from trans-Atlantic services with a 9.4% increase in passengers, while short haul grew by less than 1%.

Load factor increased by 2.1 points to 77.7%, while market share ex Ireland increased by 2 percentage points from 41% to 43%. Operating profit of €69.1m before exceptional items was up 40.7%.

A statement from the company states that, “Aer Lingus continues to gain profitable market share from legacy and low cost carriers by offering a combination of competitive intra- European point-to-point services, a profitable long haul business focused on our key markets in Europe and the USA overlaid with competitive connections worldwide with our partners in Europe, the Americas and the Middle East. In 2012, we continued to build our network of strong industry alliances, completing agreements with Etihad and Air Canada. We have also extended our franchise agreement for Aer Lingus Regional services with Aer Arann.”

 

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EU to deliver its decision on Ryanair’s bid for Aer Lingus by March 6th

Ryanair is reported to have offered 43 routes to Flybe and Aer Lingus’ Heathrow routes to BA in a last ditch effort to appease concerns of the competition authority.


25% increase in US-Ireland flights for peak 2013, with up to 20 flights per day
  • Aer Lingus adds service from Chicago and Boston to Dublin.
  • American Airlines launches a daily JFK-Dublin service from June 12.
  • United adding new Chicago-Shannon service (5 per week, June 06 to August 26).
  • Delta increases capacity and frequency on JFK-Dublin service.
  • US Airways adds Philadelphia-Shannon service.

Aer Lingus on the move at JFK to Jet Blue’s T5 from March 27th

Air Canada is resuming its seasonal Toronto-Dublin service on May 18th


Aer Lingus at Cork: increased departures this summer to Barcelona & Faro, reduction in frequency to Brussels and axing of services to Gatwick and Rome. Aer Lingus Regional services to will operate reduced frequencies to Birmingham, Edinburgh, Manchester, and Rennes.

Ryanair at Knock: this summer the airline drops Frankfurt Hahn and Paris Beauvais routes, maintaining service on routes to Milan-Bergamo, Girona, Alicante, Malaga, Faro and the Canaries. The airline is increasing its Luton and Stansted services.

Iberia Express is augmenting its daily Madrid to Dublin service during July & August.

Lufthansa is adding a 3rd flight each week from Munich to Dublin (May – Sept).

New Helsinki-Dublin service on Norwegian – twice weekly, April 14th – October 26th

Air Baltic has cancelled its seasonal summer service from Riga to Dublin.

Flybe to serve Shannon from Glasgow, 3 times weekly from May 01. The airline is withdrawing its Leeds Bradford-Knock service.


Ryanair will operate a new route from Zadar to Dublin, with twice weekly service.

Wizzair withdraws Cork services from Warsaw, Wroclaw and Vilnius to Cork as of January 13 after Ryanair enters the markets.

Etihad increases capacity for summer 2013 with larger aircraft on its 10 services per week from Abu Dhabi to Dublin.

Emirates carried over 220,000 passengers and over 10,000 tonnes of cargo in the first year of service between Dublin and Dubai.


New Oxford-Dublin flights announced by a Greek registered airline, Minoan Air
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BRIGHTER OUTLOOK FROM AIRLINE INDUSTRY

Airline business confidence improved in January, according to IATA’s latest quarterly survey. Confidence has been improving since bottoming out at the start of 2012. Despite global economic weakness, airlines saw a rise in both passenger and cargo volumes in Q4 on a year ago, with the 12 month outlook also improving. Passenger yields are reported to have improved over the past 3 months and an increase is also expected in 2013.


RYANAIR PROFIT FORECAST UPPED

Buoyed by strong pre-Christmas demand at higher than expected rates, Ryanair upped its profit guidance for the year. The airline reported after-tax profits of €18.1m for Oct-Dec quarter, a 21% increase on the period a year earlier despite higher fuel costs. Revenues rose by 15% on a 3% increase in passenger numbers, with an average ancillary spend of close to €13 per passenger.


IRELAND IN TRAVELZOO’S ‘TOP 5 DESTINATIONS’ FOR 2013

Ireland is listed in the company of New Zealand, Niagara Falls, Colombia and Alaska for North American travellers this year. Travelzoo, one of the world’s top online travel companies, claims to have 25 million subscribers in North America.


HOTELS BOOST ANCILLARY SERVICES

While airlines may have stolen the publicity on generating ancillary income, hotels are getting in on the act. From breakfast and bike rentals to in-room entertainment and event tickets, ancillary sales offer a compelling way for hotels to boost their bottom line. According to a forthcoming PhoCusWright Analysis, Hotel Ancillary Revenue in Europe, European hotels lag their U.S. counterparts in add-on revenue – but opportunity abounds.


AMERICAN AIRLINES & US AIRWAYS ON VERGE OF MEGA-MERGER

 


The two airlines have been circling each other for the past year and the deal if it comes about would result in a mega airline worth about $8 billion dollars.


WORLDWIDE DEMAND FOR CRUISES CONTINUES TO GROW

Over 20 million cruise trips were taken globally in 2012, with 17m originating from a North American port, a record according to Cruise Lines International Association (CLIA). Estimates for 2013 are that the number will increase to almost 21m, including 17.6m originating in North America, two thirds of whom are expected to be residents of the USA & Canada.

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2013 GLOBAL OUTLOOK

Global growth is projected to increase during 2013, as the factors underlying soft global activity are expected to subside. However, this upturn is projected to be more gradual than previously forecast. The International Monetary Fund trimmed its 2013 global growth forecast to 3.5% from the 3.6% it had estimated last October, largely based on the “unexpectedly stubborn Eurozone recession”. Policy actions have lowered acute crisis risks in the euro area and the United States. China is still an engine of global growth, with forecast 8% GDP growth, together with more modest pick-up in several other emerging economies. However, downside risks remain significant, including renewed setbacks in the euro area and risks of excessive near-term fiscal consolidation in the United States.


2013 – A BETTER YEAR FOR EUROPE?

Europe continues to be a drag on global economic growth. The IMF’s World Economic Outlook (WEO) predicted that the broad eurozone would witness a contraction of 0.2% this year, compared to its October forecast of growth of 0.2%, with the lower growth outlook from the nations on the periphery (Spain, Italy, Greece, etc.) accounting for much of the weakness. Some slow recovery is expected by 2014. The IMF expects France and Germany to grow, if barely, in 2013, but the outlook for Spain and Italy remains poor, with output shrinking and unemployment rising. However, the latest German unemployment data shows that it unexpectedly declined in January for the first time in 10 months, giving some hope that Europe’s largest economy is gathering pace.

UK – FEAR OF A ‘TRIPLE DIP’ RECESSION

Britain’s economy shrank by 0.3% in the fourth quarter of 2012 prompting fears of a triple dip recession. If the economy shrinks again in the first quarter of 2013, Britain will be in recession for the third time since the economic crash of 2008. The government insists that its policy of cutting expenditure is the only course available but critics argue that the absence of growth is increasing the deficit rather than cutting it.

Most recently an influential group of economists has said the government debate over having an “in or out” referendum over Europe is damaging economic growth. In contrast to the official economic growth data, consumer confidence improved in January as Britons became more optimistic about the outlook for the economy and proved more willing to make big purchases, according to the latest sentiment index from the London-based GfK NOP Ltd. However, it states that “it is too soon to say if more positive views on the general economy mark the start of sustained rise in the index.”


US – ECONOMIC OUTLOOK POSITIVE

Despite an unexpected fractional contraction in Q4 2012, the underlying growth in consumer and business spending remains positive. The US economy grew 2.2% in 2012, improving on the previous year’s recovery. Latest data show that consumer spending, which accounts for 70% of GDP, increased by over 2% in the last quarter while the impact of avoiding the fiscal cliff has pushed up disposable income by almost 7%. Job growth continued at a moderate but sustained pace in Q4 and into January. The major consumer spending indicators including house prices, car sales and other large ticket items continue to improve. While many commentators expect private consumption to weaken during the first half of the year, consumer confidence as took a hit in January, the expectation is that it will recover in the second half.


IRELAND – STRONG GROWTH STILL ELUSIVE

Economic forecasts have been revised downwards recently as a result of poor economic prospects in the rest of Europe and heightened consumer worries at home. Growth as measured by GDP is estimated at 1.3% for 2012 and is forecast at 1.3% and 2.3% in 2013 and 2014 respectively. Domestic demand remains very weak and is due to contract again in 2013 and 2014, though the pace of contraction is easing, according to the ESRI’s latest economic commentary. The forecast pace of economic growth is slower than previously forecast, with growth continuing to be driven by exports which in turn is heavily determined by the performance of the global and European economies. Unemployment rate is expected to decrease marginally, largely due to net emigration.

IBEC, in its latest Quarterly Economic Outlook, states that while the Irish economy is performing relatively well, given the slowing demand in export markets, it now expects GDP growth of 1.8% in 2013 (previously 2.3%). Consumer spending will drop by a further 2% this year and domestic demand remains fragile, with no growth in consumer spending forecast for the year ahead, with continuing pressures on income and discretionary spending. Speculation on further austerity budgetary measures is expected to continue to dampen consumer confidence.

 

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