February 2014

The feel good factor generated by the increase in visitor arrivals in 2013 has focused the industry on how best to sustain growth in 2014 and beyond. Last year’s good results, which benefitted from the stimulus of The Gathering, should not lead to complacency. Moreover, additional visitor arrivals are no guarantee of improved profitability for some businesses engaged in the sector. Despite improving economic conditions in most source markets, the trading environment remains challenging. Happily there are positive indicators out there, with the industry poised to invest in growth and job creation.

The tourism policy review underway represents a unique opportunity for the industry to develop a policy framework and an agreed public-private sector strategy to deliver sustainable growth. The focus has to be on a robust investment and business model which will grow Ireland’s unique holiday experiences. To sustain growth in the highly competitive global marketplace Ireland needs to win market share in key traditional markets, while at the same time successfully penetrating new developing markets. A coherent and integrated approach between Government and the business community, based on clear and measurable economic objectives, will be a ‘sine qua non’ for success.

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

CURRENT MARKET CONDITIONS & OUTLOOK
TRANSPORT UPDATES
TRAVEL INDUSTRY NEWS
ECONOMIC UPDATES

 

 

 

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Ireland will benefit from increased capacity on access air and ferry service for the coming summer. The suspension of the air travel tax has had a positive impact in encouraging airlines to put on new routes and services. The principal changes on the main routes serving inbound tourism, compared to last year, include:

AER LINGUS

San Francisco to Dublin: new service with 5 departures per week, effective April 2nd.

Boston to Shannon: year round daily service from Feb 5th.

New York to Shannon: year round service from March 30th with 6 departures per week.


UNITED AIRLINES

Newark to Dublin service will increase to two daily departures from June 6th to August 19th.

Chicago to Shannon summer service starts earlier this year, with 5 departures per week from May 22nd to September 14th.


CANADA – IRELAND

Aer Lingus: new daily Toronto – Dublin service effective April 14th.

Air Canada Rouge: planned expansion of seasonal service to year round operation.

WestJet: new St.John’s – Dublin daily service operating from June 15th to October 4th.


MIDDLE EAST ROUTES & BEYOND

Etihad: increasing from 10 departures per week to double daily service between Abu Dhabi and Dublin from July 15th.

Emirates: launching a second daily Dubai-Dublin service, effective September 1st.


GERMANY – IRELAND

Aer Lingus: new Hanover-Dublin service with 4 departures per week

Ryanair: new services from Munich and Berlin to Shannon, with 3 & 2 weekly departures respectively.

Lufthansa/Germanwings: Dusseldorf-Dublin seasonal service will increase from 2 to 4 weekly departures, with one added departure to 4 per week on its Munich-Dublin summer service. A new summer service from Cologne/Bonn-Knock replaces Dusseldorf-Knock service.


FRANCE – IRELAND

Aer Lingus: increased services from Bordeaux and Nice to Dublin, and from Rennes to Cork.

Ryanair: new services from Paris, Nice and Poitier to Shannon.


CROSS-CHANNEL ROUTES

Aer Lingus: frequency from Heathrow to Cork will increase from 4 daily departures to 5.

Aer Lingus Regional: new services from Newcastle to Dublin and to Cork; plus additional services from Manchester and Birmingham to Shannon, and from Manchester and Bristol to Cork.

Ryanair: adding frequency from Birmingham, Bristol, Edinburgh, Manchester, Prestwick, and Stansted to Dublin; and a new service from Edinburgh to Knock.


FERRY NEWS

Irish Ferries has increased services from Holyhead to Dublin, adding a third ship on the route as well as operating a new weekly service from Cherbourg to Dublin.

LD Line has launched a new weekly service from Gijon in northern Spain via St Nazaire to Rosslare.

 

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AIRLINE DEMAND AND PROFIT EXPECTATIONS REMAIN STRONG

2013 saw a 5.4% increase in passenger demand for international air travel compared to 2012, despite the very difficult economic environment, according to The International Air Transport Association (IATA), with strongest demand growth in the Middle East, Asia-Pacific and Latin America. European carriers saw traffic rise 3.8% in 2013 compared to 2012, a slowdown compared to annual growth of 5.3% in 2012. Capacity rose 2.8% and load factor was 81%.

There is confidence that air transport volumes will continue to grow over the next 12 months and that input costs and yields will remains stable. The largely positive outlook for air travel is based on rising business confidence and continued accelerating world trade growth boosting business travel, which helps support airline profitability.


DUBLIN AIRPORT TRAFFIC UP 6% IN 2013 ON BACK OF GROWTH INCENTIVE SCHEME

20.2 million passengers passed through Dublin Airport last year, a 6% increase on the previous year as an extra 1.1 million people used the airport, the busiest year since 2009 according to the Dublin Airport Authority. Transatlantic traffic hit a new record with a 13% increase to 1.9 million passengers, while more people travelled on routes to mainland Europe, Britain and the Middle East.

Transfer traffic also saw strong growth during 2013, up 36% to almost 550,000.

As a result of the strong growth in passenger numbers, the DAA is paying a €5.6 million rebate in airport charges to a total of 40 airlines that increased their business at Dublin Airport during 2013. The airport authority recently decided to renew the Growth Incentive Scheme for a further three years up to 2016. The new scheme will apply to all scheduled airlines using Dublin Airport, and will operate alongside DAA’s existing generous route incentive schemes.

Dublin will see several new routes in 2014 together with increased services on many existing routes, as well as attracting new carriers.


SHANNON AIRPORT LOOKS TO ANOTHER GOOD YEAR IN 2014

Having stemmed a five year decline in passenger numbers last year, as traffic through the airport rose from June onwards, Shannon is set to see further growth in 2014. A 22% increase last year in transatlantic passengers, with new services from Chicago and Philadelphia, is further boosted this year with the launch of year round Aer Lingus services to Boston and New York. In addition, Ryanair are launching 8 new European routes while Aer Lingus Regional services are also increasing.

Aer Lingus cabin crew, Grainne Frawley, captain Leo Smyth, Christoph Mueller Aer Lingus CEO Hugh Flynn, ASL’s Group and Lesley Murphy at the launch of the Shannon Boston Aer Lingus daily flights.

2013 A RECORD TOURISM YEAR FOR BRITAIN

Overseas visitors to Britain are expected to have spent over £20 billion in 2013, based on the 11 months results which showed a 12% increase compared to the same period a year earlier. Provisional figures for the first 11 months of 2013 indicate the UK has already broken 12 month records for the number of holiday visits from overseas and the number of visits from ‘Rest of World’ markets outside Europe / North America.


SPAIN ENJOYS RECORD YEAR IN 2013

Spain welcomed in excess of 60.6 million international tourists in 2013, a 5.6% year on year increase. Spending by foreign visitors in Spain also reached record highs, with a total in excess of 59 billion euros in 2013, up 9.6%.

Increased demand from the UK, France and Nordic countries drove the increase in spend, with Catalonia and the Canary Islands benefitting the most. The UK accounted for 20.3% of the total tourism spend, generating in excess of 12 billion euros, up 7.8% per cent year on year. The UK is Spain’s largest inbound market with more than 14.3 million visits in 2013, accounting for 23.6% market share, and a 5.2% year on year increase. Arrivals from Germany, the second top market, were up 5.8%, followed by arrivals from France up 6.9%.


RYANAIR’S NEW CUSTOMER FRIENDLY IMAGE

The appointment of Cork man Kenny Jacobs as the airline’s new marketing guru is key to the new strategy of improving Ryanair’s image and wooing the new customers, including business travellers. Jacobs previously worked for Moneysupermarket, Tesco, and Germany’s Metro Group. The airline is embracing social media and increasing it advertising budgets. It recently rolled out a number of customer service improvements, including reduced charges, simplifying the online booking process, and allocated seating. A new website and easy to use mobile app are on the way.


THE RESPONSIBLE TOURISM CONFERENCE 2014

A one day conference aimed at stimulating debate and discussion around the concept of responsible tourism in Ireland will take place on Wednesday March 19th at the Radisson Blu Royal Hotel, Golden Lane, Dublin.

The event, featuring a number of prominent international and national speakers, is being organised by the Irish Centre for Responsible Tourism (ICRT) and Green Hospitality Programme (GHP).
Details: http://eventful.com/events/responsible-tourism-conference-2014-/E0-001-066288441-0

 

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ECONOMIC SENTIMENT CONTINUES TO IMPROVE IN THE EURO AREA AND THE EU

Modest economic improvements in the Eurozone in the latter half of 2013 and rising consumer and business confidence thankfully are providing a stronger demand base for international travel. After weakness in previous months, there is growing evidence that unemployment has reached a peak as job losses in the Eurozone stabilized in December.

So far, 2014 has seen a continuation of this positive sentiment. Although GDP growth in the Eurozone remains soft, there are some signs of recovery, including Purchasing Managers Index (PMI) data across most of the member states in expansionary territory and trending upwards. Investor confidence would appear to be returning slowly as indicated by a tightening of spreads on peripheral sovereign bonds. In January the Economic Sentiment Indicator (ESI) increased in the euro area and in the EU. While the upward trend observed since May 2013 has been continued, the magnitude and sectoral scope of the improvement in confidence has moderated somewhat. The European Central Bank chairman Mario Draghi’s ongoing commitment to do “whatever it takes” to save the eurozone economy is undoubtedly playing a large part in the optimism, helping to alleviate concerns of record low interest rates and limited credit growth. Overall, the consensus view warns against complacency as the recovery remains fragile.


BRITAIN’S ECONOMY GREW BY 1.9% LAST YEAR, THE FASTEST PACE SINCE 2007

British consumer confidence surged in January to its highest level since 2007 after falling for three months, according to the latest UK Consumer Confidence report, its best reading since September 2007. The latest official figures suggest that Britain has now recovered the lion’s share of GDP lost during recession as the IMF recently upgraded its forecast for growth in the UK. Although growth slowed slightly to 0.7% in the fourth quarter, the economy has significantly expanded over four successive quarters, with the services sector being the most buoyant. Most interpretations of the data point to economic growth accelerating at the start of 2014 building on Britain’s recovery last year, as business confidence hits a four year high.

While Britain’s economy has had one of the fastest recoveries of the world’s largest industrialised nations in the past year, critics have warned that growth is being driven by consumer spending, despite little if any growth in incomes, and a resurgent property market – a trend which the BoE wants to see balanced by stronger exports and more business investment.


U.S. ECONOMY LOOKS SET FOR CONTINUED GROWTH IN 2014

The US economy grew at a brisk 3.2% annualised rate in the fourth quarter of 2013, while consumer spending grew at its fastest rate in three years. The growth trend is supported by low interest rates, strong job creation and a reduction in households’ debt.

pic-USA-0214

The indicators for 2014 are positive, leading to the Economist Intelligence Unit recently increasing its real GDP growth forecast to 3% for the full year 2014, from 2.6% previously. The prospects of a broadening of economic growth leading to an extended period of economic upturn are not assured as risks include a slowdown in the housing market and disappointing business investment despite buoyant corporate profits. The latest employment figures for January when only 113,000 jobs were added, below expectation, has raised concern that it could indicate a loss of momentum. That said the US economy appears to be set for one of its best years in a decade.


IRISH CONSUMER CONFIDENCE MORE POSITIVE

The Irish economy is forecast to grow by 2.1% this year as consumer spending and business investment increases, according to the Central Bank’s first quarterly bulletin for 2014. Fiscal consolidation remains the biggest challenge facing the economy, while restoring bank soundness and growing employment by increasing competitiveness are also essential to ensure growth. The forecast is more bullish than previous ones based on increased household spending on high ticket items, such as cars and furniture, for the first time since 2010. GDP growth is forecast to rise to 3.2% in 2015.

Consumer confidence has returned to the 2007 peak levels, according to the latest monthly sentiment index, jointly compiled by KBC Bank Ireland and the Economic and Social Research Institute (ESRI). The index showed consumer sentiment increased in January to 84.6 from 79.8 in December. The 3-month moving average increased from 75.7 last month to 78.5 in January, boosted by Christmas spending and January sales. However, the underlying trend would suggest that the Irish consumer is showing signs of more confidence in a recovering economy with rising job prospects.

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