July 2011

The Tourism Recovery Taskforce (T.R.T.) continues its work, and all 4 Market Partnership Groups (M.P.G.) have met, in Britain, Germany, France and the United States. A major review of consumer research in Britain carried out for Tourism Ireland has been conducted. Among the issues emerging are; Ireland is not competitively differentiated, British domestic destinations are Ireland’s key competitors, the fragile British economy is impacting negatively on all overseas travel from Britain, and Ireland is not perceived to be delivering sufficient value. It is against that background that the Agencies and the Industry must develop a plan to get Ireland’s largest source market growing again. It seems likely that modest growth will emerge in 2011, but there is yet a long way to go before returning to peak levels enjoyed in 2006.

The M.P.G.’s are composed of influential business leaders from the respective marketplaces. They include traditional and online tour operators, airlines and ferry companies, digital marketing companies and other commercial partners who can contribute to the local marketing effort. A member of the T.R.T sits on each of the Market Partnership groups to facilitate two-way communications and reporting from the markets to the centre and vice versa.

A study is underway as to how Ireland can best further develop the longstanding business partnerships with the travel trade in the main overseas markets.

An examination of the opportunities offered by the London Olympics in 2012 concluded that potential for add-on visits to Ireland was limited.

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

> Current Market Conditions & Outlook
> Currency Watch
> Transport Updates
> Travel Industry News
> Economic Updates

 

CURRENT MARKET CONDITIONS & OUTLOOK

 

 

Outlook for global tourism continues to be positive
International tourist arrivals grew by 4.5% in the first four months of 2011, with Europe exceeding expectations (+6%), according to the latest data from the UNWTO. While recent events in Japan, the Middle East and North Africa have at least temporarily impacted travel flows, the outlook is reported to remain positive for continued tourism growth, forecast at up to +5% for the year.

 

Airline Industry confidence more upbeat
Results from IATA’s quarterly survey conducted in July point to an improvement in the outlook for industry profitability compared to the sharp dip seen in April. While fuel prices remain high, expectations of further sharp increases have dissipated and traffic demand remains strong, helping to drive the expectation of a pick-up in profitability. Expectations for further improvements in demand over the 12 months are predicted on hopes of strengthening economic growth, while the outlook for yields looks flat.

 

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CURRENCY WATCH

Source: Central Bank – monthly average
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TRANSPORT UPDATES

 

Update on Air Services
Minister holds off on Air Travel Tax eliminationThe dropping of the €3 travel tax, pencilled in for removal on 1st July, has been deferred by the Minister pending evidence from the airlines of increased services.

Dublin Airport reports 6% increase in trafficStrong increases in April and May compared to a year ago saw passengers numbers through Dublin Airport increase by 6% in the first half of the year to almost 9 million. Passenger throughput in June was 1% ahead of the same month last year, with strongest growth reported on US routes (+7%) compared to 1% growth on UK and European routes. Reports indicate that outbound Irish demand is down ,with inbound visitor traffic up on last year.

Shannon loses flightsAer Lingus plans to withdraw Gatwick, Paris and Glasgow services from September/October, while Delta will suspend its JFK-Shannon service for the winter.

Winter flight programme at KnockAer Lingus is increasing its Gatwick service from 4 per week to daily this winter, whileFlybe will maintain its new Edinburgh route over the winter. Ryanair is maintaining 5 cross-channel routes but dropping Leeds Bradford and Bristol and adding flights to Tenerife and Lanzarote. bmibaby is withdrawing its Manchester service.

Aer Arann rebranded as Aer Arann RegionalThe airline has recently changed its branding with new logos and corporate colours in a move to reflect the airline’s change of focus as it expands its route structure under its own brand and under the Aer Lingus Regional franchise.

 

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TRAVEL INDUSTRY NEWS

 

Cash strapped destinations cut back on marketing
Public sector expenditure on destination marketing is feeling the pinch of government cutbacks. Earlier this year Visit Britain’s budget was cut by 34%. Even in tourism-dependent Hawaii the Tourism Authority’s budget has been capped at $69 million in each of the next four years – over 10% below last year’s budget – releasing more of the hotel room tax for other Government programmes. Washington State recently closed its tourism office in a move to help close a deep budget deficit.

 

Age of average US leisure traveller jumps 5 years
A significant drop in travel incidence among young adults, coupled with a bounce-back among younger baby-boomers increased the average leisure traveller age to 44 in 2010, up from 39 the previous year, according to PhoCusWright’s Consumer Travel Report Third Edition. The impact of the recession and sluggish recovery means that, at least in the short term, the older traveller pool has increased in importance.The incidence of taking a leisure trip declined sharply amongst 18-24 year olds, while at the other end of the age spectrum, a strong recovery among 45-54 year olds, along with a more modest rise in incidence among seniors (65 or older), further increased the average traveller age. However, despite the comeback, the 45-54 year old age group remains significantly below 2008 incidence levels.

 

Thomas Cook to become UK’s biggest travel retailer
The retail merger with the Co-operative Group to form a chain of over 1,200 high street shops has been given a provisional green light from the Competition Commission.The Thomas Cook Travel Group recently issued a profit warning and announced that it had started a “fundamental review” of its business. The group’s share price plunged 28% after it told the City that its full-year profits would be £60 million lower than expected. Thomas Cook has managed to reschedule its almost £1 billion credit facility.

 

InterContinental Hotels Group (IHG) reports rash of mobile device bookings
The hotel chain reported room night bookings made from mobile devices increased by almost 1,000% in just over a year, resulting in monthly revenue leaping from $1 million to $10 million over the same period.65% of IHG guests who book through a mobile device stay the same night or within one day. IHG has announced continuation of its mobile app strategy with iPhone booking apps for each of its seven brands including Crowne Plaza and Holiday Inn.

 

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ECONOMIC UPDATES

 

Europe
The outlook for the eurozone economies has improved following the positive markets response to the EU agreement designed to resolve the Greek debt crisis and reduce the turmoil in the eurozone. The escalating euro debt crisis had jeopardised economic prospects for the wider European region – the ERDB’s latest forecast for the 29-country region predicts growth of 4.8% in 2011.
UK
Outlook continues to be for modest average GDP growth of around 1.3% in 2011, rising to 2.2% in 2012. Consumer spending continues to shrink as fiscal policy tightens, credit conditions remain tight and price rises continue to outstrip earnings growth. Interest rates are unlikely to increase before Q4 2011.
US
Only 18,000 jobs were added in June, pushing the unemployment rate to 9.2%. The result shows the continuing challenges of adding jobs to the economy even at a rate that keeps pace with population growth, two years after the official end of the longest economic downturn since the Great Depression. Market confidence could falter due to protracted debt ceiling negotiations leading to a potential slowdown in economic activity.
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