September 2013

For the first time in several years the CSO results are very encouraging, with arrivals for the first 8 months up 6.5% compared to the same period a year ago. The peak period June through August shows visits from overseas up 7%, with strong performance from most source markets. Perhaps the most positive news from the latest CSO release is the growth in arrivals from Britain in recent months. With the year to date typically accounting for at least two thirds of annual arrivals, Irish tourism looks set for annual volume growth in visitors of at least 5% for 2013, barring any significant downturn in current performance trends. Of course this measure refers to total arrivals and does not provide any indication of how much the country is earning from tourism or how many holiday visitors came, where visitors stayed in the country or the extent to which The Gathering is driving the growth in this year’s numbers.

While the news has turned positive the Minister’s recent launch of a Tourism Policy Review is most welcome and opportune. Understandably the industry’s efforts in the recent past have been focused on recovery. Now is the time to review the value of tourism to the economy and to evaluate the opportunities and challenges ahead to arrive at a policy road map for developing a stronger sustainable industry. As an important indigenous sector of Ireland’s economy, tourism deserves a whole of Government approach to ensure that growth is facilitated and that the State Agencies and businesses have a clear set of goals and priorities. All engaged in the industry are strongly encouraged to submit their views to the Minister by Friday, November 1st.

CLICK HERE to access the consultation document relating to this Tourism Policy Review from the Department of Transport, Tourism & Sport website.

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

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

 

 

VISITOR ARRIVALS UP 6.5% TO END AUGUST

Over 4.7 million arrivals over the first eight months of the year are 6.5% ahead of last year. This means that Ireland welcomed 291,000 more visitors so far this year, with increases in demand across all the major source markets. Year to date arrivals from Britain at 1.95m is 3.7% ahead of last year (almost 69,000 additional visits) with a 4.8% increase in visits from mainland Europe to 1.7m (+79,000). North American arrivals continue to show the strongest rate of growth with arrivals year to date up 16.5% to 807,000, an impressive 115,000 additional visitors. Arrivals from other long haul markets were up 11% to 285,000 or almost 30,000 additional visits.

The number of arrivals over the peak months from Britain has put the market into a growth situation after a very slow start, while the rate of growth from other markets, while still positive, appears to have slowed somewhat.

A top line analysis of CSO estimated arrivals shows that August was a good month with aggregate arrivals up by 8%. Perhaps the most encouraging result was a 15% jump in British visitors compared to the same month last year. While August 2012 was soft from Britain during the Olympics, the upswing from Britain continued from July hopefully pointing to a sustainable recovery. Demand from mainland Europe showed little change over the same month a year ago, while arrivals from North America for the month were estimated at +7%, a slow down on the rate of increase in previous months, and would appear to be at variance with carryings on direct air services. Estimated arrivals from other long haul markets – Australia and New Zealand plus new developing markets – were up a whopping 34% for the month.

Data from the CSO for the peak months June to August shows that arrivals from Germany, Benelux, the Nordics, and Spain were up on the same period last year, while arrivals from France, Italy and ‘other Europe’ showed a decline.

For the 8 months January-August 2013 Britain still remains by far the biggest source market by volume with 1,949,000 visits to Ireland, followed by mainland Europe with 1,712,000 visits. To date arrivals from North America have topped 800,000, with arrivals from other long haul markets at 285,000.

To put the results for the year to date in perspective the aggregate volume of arrivals this year is almost back to 2009 levels. Only the long haul source markets of North America and further afield now exceed 2009 levels, with mainalnd Europe on a par and Britain still almost 15% below the level of four years ago.

The results to date are exclusively on a volume basis, so there is no way of knowing how Irish tourism is doing in terms of revenue earned from overseas arrivals or the composition of that demand by purpose of visit.

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Competition increases on cross-channel routes to/from Dublin with both Aer Lingus and Ryanair adding services on key routes this winter. Aer Lingus is maintaining increased frequency introduced this summer on routes from Manchester and Birmingham to Dublin, while Ryanair is adding flights from Dublin to Stansted, Manchester, Birmingham, and Edinburgh.

Ryanair’s Shannon-Liverpool service goes year round with 3 departures per week this winter.

New Aer Lingus Regional Dublin-Newcastle service with a core double daily schedule will operate from October 27, and provide feed to transatlantic services.


Knock-Bristol: Ryanair has suspended the route for winter season.

Birmingham-Knock: Flybe will operate the route with 4 services per week from October 27.


Aer Lingus adds Shannon-Lanzarote weekly service for winter in competition to Ryanair.

Dublin-Toulouse: Aer Lingus will operate a weekly (Sat) service from December 22. Up to now the route had operated only during the summer.

New Cologne/Bonn – Knock service for summer ’14: Germanwings, Lufthansa’s low cost arm, will operate a weekly (Sat.) service from early April. This replaces the Lufthansa Dusseldorf-Knock service that operated for the past two summers.


Middle East services continue to grow with Etihad retaining a larger aircraft (B777-300ER) over the winter on 6 of the carrier’s 10 weekly departures between Abu Dhabi and Dublin.

Oxford-Dublin service fails – the short lived route closed after only 3 months.
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MORE AT WORK IN THE HOSPITALITY SECTOR

The numbers employed in the Accommodation and Food services sector in Q2 2013 were up by just over 15,000, an increase of 13.3% on the same period in 2011. The CSO data estimates a total of 129,600 employed in the sector in Q2 2013. The last time the numbers employed in the sector were as high was back in Q1 2010, while the peak record was in Q3 2007 when 139,000 were employed.

 


DUBLIN AIRPORT TRAFFIC YTD UP 6%

Almost 2.2 million passengers passed through Dublin Airport in August, an 8% increase on the same month last year, according to the Dublin Airport Authority. For the 8 months to date, almost 13.7 million passengers have travelled through Dublin Airport, a 6% increase when compared to the same period last year.

Transatlantic traffic at Dublin Airport will set a new record this year with more than 1.8 million passengers expected to travel on flights between North America and Dublin during 2013. Already this year, Dublin Airport has welcomed almost 1.3 million transatlantic passengers, which is a 14% increase on the same period in 2012. Transatlantic passenger numbers peaked at 1.75 million in 2008, during Ireland’s economic boom, but subsequently declined to just under 1.5 million in 2010.


AIRLINE PROFITS GROW IN 2013

The International Air Transport Association (IATA) revised its 2013 global industry profit forecast to $11.7 billion on revenues of $708 billion. Airline performance continued to improve in the second quarter, however at a slower pace than was expected, reflecting the impact of the oil price spike associated with the Syrian crisis and disappointing growth in several key emerging markets. Nonetheless, performance in 2013 is considerably better than the $7.4 billion net profit of 2012. The upward trend should continue into 2014 when airlines are expected to return a net profit of $16.4 billion. This would make 2014 the second strongest year this century after the record breaking $19.2 billion profit in 2010.

European airlines are expected to record profits of $1.7 billion, a considerable improvement on the $400 million profit that European carriers made in 2012. Slowly improving performance is largely being driven by long-haul markets and economic stabilisation in the eurozone. Overall, IATA expects the outcome for 2013 to show a 4% increase in demand with only a 2.8% increase in capacity. The strongest performance is seen in the German and UK markets.


TOURIST SPEND IN BRITAIN SETS NEW RECORD

Overseas visitors to Britain in July spent £2.52 billion, beating the previous monthly record of £2.43 billion set in August 2012. Spend was 23% higher than in July 2012. The first seven months of 2013 have seen record spend (in nominal terms) of £11.24 billion, 13% higher than the same period in 2012. Spend per visit was also at record levels in the 12 months to July 2013, with visitors spending an average of £629, 7% more per visit than in the previous 12 months.

Visits from overseas were up by 3% on July 2012, to 3.26 million, with arrivals for the first seven months up 4%.
July also set a record for holiday visits, with 1.53 million holiday visits.

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UNDERLYING IMPROVEMENT IN EUROZONE?

Eurozone business activity grew at its fastest pace in more than two years in September. The Markit composite purchasing managers’ index – which includes manufacturing and services – shows a rise to 52.1 points, from 51.5 in August, where a number higher than 50 indicates growth. The pace of growth beat average analyst expectations and suggests that the recovery in the eurozone was gaining some traction.

Business activity in Germany, Europe’s largest economy, grew at its fastest rate for eight months, while in France, the bloc’s second biggest economy, activity increased – albeit marginally – for the first time in more than a year and a half. The data provides further evidence of the eurozone’s exit from recession, as GDP grew by 0.3% in the second quarter of 2013.

German Chancellor Angela Merkel’s re-election victory was helped by an unemployment rate near its lowest level in two decades and her handling of the euro crisis. The Bundesbank said it sees signs that the German economy will improve in the rest of this year, even after industrial output slowed. German investor confidence is at a three-year high, while German consumer confidence is solidifying as people’s expectations for the country’s economy brighten. However, for the troubled economies of Europe austerity and a slow recovery to growth is still forecast.


UK RECOVERY GATHERING MOMENTUM

The economy grew by 0.7% in the second quarter of the year, according to the latest estimates. Earlier this month, the OECD said it now expected the UK to grow by 1.5% this year, up from the 0.8% growth it previously forecast.

Retail sales volumes fell unexpectedly by 0.9% in August according to the Office for National Statistics (ONS), but separate surveys brought better news from the manufacturing sector. Consumers reining in spending, particularly on food, came as somewhat of a surprise when compared with July and may be attributed to the good weather. However, while sales were down in August from the month before, they were still 2.1% higher than in August last year, when the Olympics hit spending.

The CBI reported that factory order books were at their highest since the start of the global economic crisis. Car production in the UK in August was 16.2% higher than a year ago.

Positive pointers for the recovery gaining momentum include the Bank of England expecting growth in the third quarter to be stronger than first thought, the unemployment rate dropping to 7.7%, and the housing market recovery spreading.


U.S. ECONOMIC DATA REVISED UPWARDS

The US economy grew at an annualised pace of 2.5% in the second quarter of the year, the Commerce Department said in revised figures. That was more than double the pace recorded in the previous three months, and above estimates of 2.2%. The rise, helped by an increase in exports, is a further sign that the economy may be getting back on track. The government had originally estimated that GDP grew at a 1.7% rate in the second quarter.

Housing and business investment, two key sectors of the economy, remained strong in the revised figures. Housing construction grew at an annual rate of 12.9%, the fourth consecutive quarter of double-digit growth. Meanwhile, business investment was revised up to a 16.1% rate.

However, US retail sales grew at a slower-than-expected rate in August, despite increased demand for high-priced, one-off items such as cars. Sales have now risen in 13 of the past 14 months, the exception being last March, indicating that shoppers have not been deterred from spending by issues such as the payroll tax rise at the start of the year and worries about the fiscal cliff, as many had feared. Many economists still anticipate that the Federal Reserve will announce it is starting to reduce its $85bn a month economic stimulus at its next meeting.


IRELAND – EXITS RECESSION BUT CHALLENGES REMAIN

Consumer spending is up, but confidence remains fragile as the economy has emerged from recession, according to official figures. The economy grew by 0.4% in the second quarter of the year, although this was much weaker than many economists had forecast. The government has projected growth of 1.3% for 2013 as a whole. While exports increased by 4.3% in the quarter, consumer spending was up by only 0.7%. A different measure of the economy, GNP, which is taken as a more accurate figure by some economists, fell by 0.4% in the three months from April to June.

While there are signals that the economy may be over the worst, as retail sales figures have improved and the bottom of the housing market appears to have been reached in some parts of Dublin, there are still many challenges. Unemployment stands at around 13% and almost 17% of owner occupiers are having trouble paying their mortgages. There will be another cost-cutting “austerity budget” in October which will include up to €3bn in spending cuts and tax rises.

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