September 2011

The first half of the year recorded a welcome return to growth in overseas visitor numbers.

However, growth in demand is slowing from many source markets as the economic outlook turns negative and investment, business and consumer confidence dips once again.

While Ireland saw a double digit growth (+13%) in visitor arrivals in the first half of this year – an expected bounce back from the depressed demand in the same period in 2010 due to the ash cloud – the number of foreign arrivals for the first six months this year is still 10% below the level in 2009.

The evolving economic conditions across Europe and the fear of a double dip recession in the US, make the task of recovery of tourism to Ireland even more challenging. As planning gets underway for 2012 the outlook, as of now, is for another difficult year in the international and domestic markets.

To avoid renewed contraction and loss of market share it is critical that the marketing strategy targets the best prospects and allocates resources accordingly.

As always, your comments are most welcome on

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Deteriorating market conditions
The outlook for travel demand is weakening as economies of the western world struggle and consumers cut back on spending due to ongoing uncertainty. Travel costs may stabilise as fuel prices trend downwards but are still 50% up on last year. Airlines report that gains in passenger yields have slowed. A clearer picture will emerge when Q3 results become available in October, but most analysts suggest that travel demand has softened over the summer months as market conditions deteriorated.


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Source: Central Bank – monthly average
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Update on Air Services
New Dusseldorf – Knock flights for summer 2012Lufthansa will start a new service operating every Saturday between May 17th and September 29th 2012, which could generate an estimated €1 million plus for the west and northwest next year. Connecting services to Berlin, Frankfurt, Hamburg and Munich will also be available for booking as part of the new service. This is a major success coup for Knock and the West of Ireland as the first European service catering to inbound tourists.

Emirates to start Dubai – Dublin serviceEmirates Airline will begin a new daily Dublin-Dubai service, effective January 9th, 2012, providing another direct link to the Middle East and onward connections into India, Africa, South East Asia, Australasia and China. Emirates, the world’s sixth largest airline, operates over 1,000 flights per week to destinations in 6 continents through its Dubai hub in the United Arab Emirates. The new service will compete with Etihad’s 10 flights per week to Abu Dhabi.

New PSO contracts awardedAer Arann has been awarded the contract to operate the subsidised Dublin to Kerry route, and Loganair the contract for the Dublin-Donegal service, under new public service obligation (PSO) contracts for regional air routes. The new contracts are for a three-year period beginning on November 3rd with two return flights each day on both routes. It will involve an average subvention of €7.6 million a year.

Ryanair ending its services from Kerry and Cork to Dublin.The airline terminated its Kerry-Dublin service on September 7th and will cease to operate a service between Cork and Dublin on October 30th blaming falling demand for flights between the two cities due to improved road and rail travel times.

Stena Line closes HSS Dun Laoghaire-Holyhead route for winterThe HSS fast craft Dún Laoghaire-Holyhead service was suspended from September 13th, while maintaining conventional ferry service to/from Dublin Port. Last winter the HSS was replaced by the smaller Stena Lynx fast ferry but this will not be the case for the coming winter. The company is terminating its HSS service between Belfast and Scotland later this autumn as it moves port from Stranraer to Carnryan and introduces two new ferries on the route.


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490 new jobs created by Irish restaurants
In the two months since the Joint Labour Committee Employment Regulation Order (ERO) were abolished in July almost 500 new jobs have been created, with three out of every five restaurants surveyed taking on more staff. The Restaurants Association of Ireland also reports that 93% of its members surveyed have passed on the VAT reduction.


Improved financial results from Aer Lingus
The airline returned a profit before tax of €42.2m in Q2 2011, compared to €15.4m for the same period in 2010 which had been impacted by closure of airspace due to volcanic ash. Operating profit also improved over the period. Total passenger numbers increased by 8.3% in the quarter, with positive yield performance contributing to year-on-year revenue growth. Yield per passenger was up 6.6% compared to Q2 2010.
Results for the half year to end June show a loss before tax of €14.2m compared to loss before tax of €20.8m in H1 2010, as a result of reduced operating costs.


DCC celebrates its 1st birthday
The Dublin Convention Centre – Ireland’s first ever purpose built international convention venue – hosted over 300 events in its first year. Feedback from clients has been excellent and has boosted demand for hotels, restaurants and other tourist services.2012 is shaping up to be an incredibly busy year at DCC, with over 200,000 delegate days already booked, exceeding the 170,000 delegate days in the first 12 months of operation.
International business travel continues to bounce back. Worldwide business travel spending is expected to grow 9.2% this year, following a rise of 8.4% in 2010, according to the Global Business Travel Association. Growth in demand from Brazil, Russia, India and China is projected to be two to three times faster than in developed economies like the UK, the US, France and Germany.The increase in demand for business travel is collaborated by IATA airlines reporting strong growth for premium seats in several markets around the world.


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The outlook for the eurozone economies has worsened over the past month as the euro debt crisis escalates. As the prospect of a Greek default becomes more of a prospect, the larger economies and political powers struggle to avert a major economic and banking collapse. Amid the deepening eurozone crisis, Moody’s downgraded the credit rating of two of France’s largest banks as several major banks across Europe struggle to raise funds in the markets to withstand a Greek default.Latest forecasts from Brussels point to no economic growth across the EU by the end of this year, sharply revising downwards previous forecasts. Both the Commission and the ECB warn of the downside risk to the latest forecasts.
The fragility of Britain’s economic recovery was underscored by the biggest monthly fall since April 2001 of an index of activity in the service sector, which accounts for three-quarters of GDP. The decline, even steeper than that after the collapse of Lehman Brothers in September 2008, came amid more calls for the government to slow the pace of its budget-cutting programme. Outbound travel from Britain for the three month period May to July was up +1%, with spending down by 2%.
The U.S. economy is at stall speed and needs a dose of fiscal stimulus as economic sentiment is on a downward slide. Growth has slowed sharply in the first half of 2011 and the jobless rate remains stuck above 9%. It is unclear if the Republicans in Congress will approve the President’s proposal for a $447 billion job stimulus programme, to be funded either by eliminating tax deductions for the wealthy or by savings found over and above the $1.2 trillion it has already targeted. Understandably consumer confidence and spending has taken a downturn in recent weeks.
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