June 2011

A bright summer for Irish tourism?

The past few weeks have seen some welcome positive signs of recovery in Ireland’s tourism. Failte Ireland’s Barometer suggests that the industry is much more positive in its outlook for the season ahead than in recent years. The highly successful visits of Queen Elizabeth and President Obama will undoubtedly help to restore Ireland’s damaged image in two key markets, while the unprecedented initiatives from Government on VAT and the travel tax will help restore Ireland’s competitiveness.

Despite the positive news from the CSO that arrivals were up 8% in January to March, the industry still faces some major challenges in a depressed domestic market and on-going economic uncertainty in our main overseas markets, higher airfares and increasing competition. Results for Quarter 2 are also expected to show an increase on last year, but the real acid test of proof of recovery must wait for the results for the peak season.

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

> Current Market Conditions & Outlook
> Currency Watch
> Transport Updates
> Economic Updates

 

CURRENT MARKET CONDITIONS & OUTLOOK

 

 

Good Q1 results
Overseas trips to Ireland were up by 8% in the first 3 months of the year compared to a year ago according to the latest CSO data. Visitors from North America increased by 11.9% while trips from Europe and GB were up by 8.9% and 7.2% respectively. Trips abroad by Irish residents were down by 12%.

 

Irish Travel Tax to be abolished & VAT reduced
The Government plans to drop the €3 travel tax and reduce VAT on tourism services to 9% from July 1st, as measures to stimulate the tourism industry. However, if the airlines do not expand services by 2013 the travel tax could be re-instated.

 

Surge in interest after high profile visits
Hotels.com reports a surge in searches for Irish destinations following recent visits of Queen Elizabeth II and President Obama. Searches by UK tourists for Kildare and Cork were up 191% and 74% respectively compared with this time last year while searches from the US were up 111% and 104% respectively.

 

UK is most fragile of European markets
TUI Travel chief executive has stated that the UK was the most fragile of the operator’s 25 markets in terms of consumer confidence, based on rising fuel prices, increased taxation and sterling’s weakness against foreign currencies.

 

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CURRENCY WATCH

Source: Central Bank – monthly average
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TRANSPORT UPDATES

 

Update on Air Services
Aer Lingus carried 2.66million passengers in the four months to April 2011, down 4.9% on the same period in 2010, with short haul down 4.8% and long-haul down 6.0%.

Ryanair’s profits increased by 26% to €401m for the full year to the end of March, despite disruption caused by the volcanic ash crisis, higher oil prices and the global recession. However the airline will ground one third of its fleet for the coming winter, and is not predicting profit growth for the current year.

Dublin Airport traffic up 5.8% YTD, with just under 5.4 million passengers. May should see a further increase.

Delta is increasing its daily JFK-Dublin service with two extra flights per week in the peak.

Continental is reducing service from Newark to Dublin to a daily service from October 1st.


American will suspend its Chicago-Dublin service for the winter, a reversal of an earlier announcement.

 

US Airlines optimistic about international travel demand this summer
The Air Transport Association has issued a rosy forecast for international airline travel over the summer. ATA predicts a 1.9% jump in the number of airline passengers flying internationally on U.S. airlines for June, July and August.

 

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ECONOMIC UPDATES

 

  • UK interest rates remain at 0.5%, while consumer price inflation rose to an annual rate of 4.5% in April. The rate of unemployment in the UK fell to 7.7% in the three months to March.
  • Eurozone interest rates remain at 1.25%, while the economy grew by 0.8% in the first three months of 2011.
  • US Federal Reserve cuts its economic growth forecast for the US in 2011 to between 3.1% and 3.3%. Unemployment nudged up to 9% in April.
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