September 2014

‘It’s the economy stupid’, to borrow a Bill Clinton phrase, is undoubtedly why 2014 is a ‘good news’ year for Irish tourism. Visitor arrivals are up 10% over the first 8 months. Tourism has generated a great number of new jobs and is contributing to the increase in Exchequer receipts, as the industry moves from recovery to growth. More than one in every three jobs created in the past 24 months has been in the food and accommodation sector.

Q. What is driving this growth in demand?

A. Buoyant economic conditions in some key source markets, most particularly Britain and the USA, coupled with a more competitive product.

Ireland lost its way by becoming uncompetitive in the noughties. Since then Government interventions have helped to reduce costs for businesses which in turn are delivering significantly better value to the customer as well as increasing their marketing efforts. Airlines and ferry companies have invested in expanded capacity to provide for growth. Recent CSO data confirm the economic benefits to the country from a more buoyant tourism sector.

Ireland is not unique in experiencing a spurt in tourism demand this year. However, the rate of growth to Ireland, and in turn its market share position, are outpacing the competition.

The vibrant economic conditions in Britain, a stronger currency together with Ireland’s new marketing strategy, has seen a double digit growth rate over the past 12 months, while the higher spending long haul markets are also delivering double digit growth. In contrast, the more modest growth from within the Eurozone reflects the less favourable economic conditions there.

In planning for 2015, Ireland – businesses and the state agencies working together – need to selectively focus on the markets and segments which have the best growth prospects. This year has amply demonstrated the opportunities for further growth if the tourism offering, including access, remains competitive, and marketing is focused on source markets with the most favourable economic conditions.

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

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

 

 

 

 


2014 CONFIRMS RETURN TO GROWTH OF THE TOURISM INDUSTRY

Come the year end, overseas visitors are likely to be 8% to 9% ahead of last year. Building on the success of The Gathering in 2013, the current boost in demand is being driven by the improved competitiveness of the Irish tourism offering, and the more buoyant economic environment in key source markets. July proved to be another good month, although showing a deceleration of the growth rate of previous months, with an estimated 820,000 arrivals up 8% on the same month a year ago. All major source markets showed a double digit year on year growth for the month with the exception of Britain. Visitors from Britain were marginally ahead of a very strong demand in July 2013, the month last year that marked the start of the turnaround in demand from a market that had collapsed.

The rolling twelve month growth rates to end July are very impressive, with 9% more arrivals compared to the previous 12 months. Growth from mainland Europe lags the rate of increase from each of the other source markets, although some individual European country markets, notably Germany, are outperforming the average.

With the improvement in the domestic economy and more robust consumer confidence, tourism prospects from Irish residents is expected to show a fillip in demand, particularly for short breaks. The most evident impact of expanded tourism demand is in the creation of new jobs.

The latest data from CSO bears out the direct impact on employment of the robust recovery and expansion of tourism demand. The accommodation and food services sector added 17,500 new jobs in the two years between Q2 2012 and Q2 2014, a 14.5% rise in employment in the sector compared to a 3.8% increase in overall employment in the country. As the accommodation and food services sector accounts for about two thirds of total employment in tourism, this implies that in excess of 25,000 jobs have been added by the tourism industry over the past two years.


ITIC WELCOMES DRAFT TOURISM POLICY STATEMENT

Following extensive consultation, the Minister published a draft Tourism Policy Statement, approved by Government, on July 08, 2014.

From a tourism industry perspective the draft policy statement is welcome and addresses most of the issues raised by ITIC during the consultative stage. The following policy proposals are especially welcomed:

  • The Government’s stated commitment to tourism as one of the country’s most important economic sectors, recognising the sector’s significant potential to contribute to Ireland’s economic renewal.
  • The focus of revenue as the prime measure of success with a target to increase income from overseas tourists by 50% in real terms over the next 12 years.
  • The formation of the Tourism Leadership Group (TLG) which will formulate the strategy and action plans from here on in, as well as reporting on progress.
  • The implied ‘whole of Government’ approach to tourism, with improved coordination between government departments, state agencies and local authorities.
  • The introduction of a multi-annual budgets for capital programmes and current accounts.
  • The modernisation of the regulatory and compliance frameworks, administered by Failte Ireland, governing tourism enterprises.

The Minister is expected to finalise the policy statement following receipt of comments from stakeholders and move to the formation of the Tourism Leadership Group to oversee its implementation in a coordinated strategy and action programme.

CLICK HERE for the Draft Tourism Policy Statement


ITIC MAKES SUBMISSION ON BUDGET 2015
The submission calls for a strong programme of capital investment in the tourism product. ITIC makes the case of the critical importance of competitiveness within the national economy for sustainable growth in tourism. After the understandably short-term perspective taken by many in both Government and industry over recent years in response to the economic crisis, ITIC now presents the case for a series of measures to ensure the longer-term viability of businesses within the industry and the continued economic contribution of tourism demand to the economy. It supports this proposition by pointing out that the tourism sector has delivered by far the greatest proportion of all the new jobs created in the Irish economy in recent years.

CLICK HERE or on the image for the Submission.

 

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AIRLINES CONTINUE TO BOOST CAPACITY THROUGH WINTER 2014

Airlines have announced new services resulting in more capacity on offer and increased competition on several routes. The principal changes compared to last winter include:

 

Transatlantic

  • Aer Lingus and Air Canada Rouge will operate Dublin to Toronto services – previously a summer seasonal route.
  • Aer Lingus’ Dublin – San Francisco will continue through the winter season.
  • Aer Lingus will operate Shannon to Boston throughout the season, with Shannon to New York service suspended during the period January-March 2015.
  • Delta for the first time will suspend service from Atlanta to Dublin from November to March.
  • United is suspending its Washington Dulles to Dublin and Newark to Belfast services over the January-March period.

  • American is suspending its JFK – Dublin service from November to March.

European Routes

  • Ryanair is launching service from Brussels-Zaventem to Dublin with up to 16 departures per week.
  • Ryanair will operate on routes it did not serve last winter between Dublin and Basel, Bucharest, Cologne, Lisbon, Marrakesh, Nice & Prague.
  • Ryanair will operate new winter services to Shannon from Paris, Berlin, Fuerteventura, Warsaw and Krakow.
  • Lufthansa is extending its Munich – Dublin service to year round.
  • Aer Lingus is suspending Brussels – Cork service.

Cross Channel Routes

A number of significant changes will take place from the start of the winter schedule on October 26, including the following:

  • Ryanair is moving its Dublin and Derry services from Prestwick to Glasgow International Airport, and increasing frequency on the Glasgow – Dublin route.
  • Ryanair are launching a new Shannon – Manchester service.
  • Flybe takes over the Southend-Dublin route previously operated by Aer Lingus Regional.
  • Flybe and BA are launching service from London City Airport to Dublin, to compete with CityJet.

  • Flybe is adding service from Inverness to Dublin and increasing frequency from Southampton to Dublin.
  • Aer Lingus Regional is launching service from Leeds Bradford to Dublin.
  • Ryanair is adding frequency on services to Dublin from Gatwick, Birmingham, Manchester, Bristol, Edinburgh, and Glasgow.

 

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HOTELS REPORT A BETTER PERFORMANCE IN 2013

All the key performance indicators – occupancy, average room rate, RevPAR, and earnings – moved in a positive direction last year, according to the annual survey from Crowe Horwath. The improvement in the business impacted all regions of the country, with each category of hotel benefiting from the upturn. However, the levels while an improvement on the past 5 years, are still below the performance and return on investment of the 2004-2008 period.

Two thirds of hotel rooms across the country were filled last year, with Dublin hotels achieving a 76.3% occupancy rate, marginally below its previous peak. Occupancy rates were lowest at 60% for economy hotels and hotels in the Midlands & East region.

Hotels increased revenues and earnings for the year, with RevPAR (revenue per available room) up 7% nationally, and profit before tax per room up 13%.

The average performance metrics for Dublin hotels masks a sharp variance between centre city hotels, where occupancy is reported to have reached close to 90% in many properties, and hotels on the periphery of the city. With the increasing business and leisure demand for city hotels, new rooms will be required if Dublin is to continue to grow as a visitor destination. ‘Dublin needs up to 3,000 extra hotel rooms to meet rising demand and dampen price inflation that could damage tourism’ according to Aiden Murphy, author of the Crowe Howarth report.


MORE POSITIVE OUTLOOK FOR THE GLOBAL AIRLINE INDUSTRY

Airlines earn a majority of revenues in Q2 and Q3, so the expectation is for solid results at this time of year. Latest data from IATA shows that airlines have been able to improve financial performance on the year ago period, at both the operating and net profits levels. The improvement has been driven by the performance of North American carriers. While capacity expansion is still ahead of demand growth, fare yields have improved. Worldwide airline shares rose 3% in August compared to July, slightly ahead of the broader market, with the FTSE Global All Cap up 2% over the month. The improvement in airline share values has been supported by further, albeit small, declines in jet fuel prices.


A GOOD YEAR FOR IRISH AIRPORTS

Passenger traffic at Dublin Airport is running 7% ahead on last year and expects to handle over 21 million passengers by year end. Dublin Airport caters to over 80% of the country’s annual traffic.

Shannon Airport, boosted by an increase in services, including Ryanair’s new routes, is reporting robust increases in traffic following a 15% increase over the first half of the year.

Ireland West Airport at Knock is heading for a record year of over 700,000 passengers, with its best ever month in August.


RECORD NUMBER OF CRUISE PASSENGERS EXPECTED IN 2015 FOR DUN LAOGHAIRE

2015 will be the most successful year ever for Dun Laoghaire in terms of attracting cruise passengers to the harbour, according to Gerry Dunne, CEO of the Dun Laoghaire Harbour Company. 23 cruise vessels have been confirmed to visit Dun Laoghaire in 2015 bringing over 60,000 passengers.

Dun Laoghaire Harbour Company is currently finalising an application to An Bord Pleanala under Strategic Infrastructure Development to build a new €15m cruise berth facility to cater for the ‘next generation’ cruise ships. The development of the cruise business is a key element of the Dun Laoghaire Habour Masterplan published in 2011.

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EUROPE’S FLAGGING ECONOMY

Last week the European Central Bank cut interest rates to a record low, marking its second reduction in three months, and unveiled a program to buy asset-backed securities (ABS). The goal is to revive the Eurozone economy by preventing falling prices and prompt commercial banks into easing credit. The saga of austerity has so far failed to trigger a sustained recovery, with unemployment still near record highs, and business and consumer confidence remaining fragile. Hence the bleaker forecasts for economic growth within the Eurozone.

This is in sharp contrast to what is happening in the United States and the UK, where economies are picking up and the number of people at work is rising.

Globally the economic outlook is a mixed bag, shaped by the absence of political agreement or will, on economic reform policy including sovereign and bank debt, and falling investor confidence shaped by geopolitical tensions in the Ukraine and the Middle East.

Domestically the Irish economy is moving forward and despite having paid a very high price appears to be well positioned to prosper from a sustained uptick in economic growth. Currently the export sector, including tourism is experiencing an upturn from the robust performance of the US & UK economies and a weakened euro. In addition, improved consumer confidence in Ireland is boosting spending.

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