PROSPECTS FOR IRISH TOURISM 2002

Lost Tourist Business won’t be recovered this year.

The latest independent assessment of the tourist season indicates that the majority in the industry are pessimistic about prospects of recovering in the current year the business lost in 2001.

There is considerable concern that the lucrative American market is declining further, with serious implications for revenue earning and for sectors such as hotels, coach touring, car rental, visitor attractions and high-quality shopping.

Commissioned by the Irish Tourist Industry Confederation (ITIC), the industry representative body, and carried out by TTC consultants, the assessment is based on in depth interviews with major companies in the airline, car ferry, tour operating, hotel, car and coach hire sectors.

The main concerns arising from the survey are:

  • a marked decline in demand for Ireland from the US market, – which is falling back to 1996 levels – with the coach tour sector experiencing a decline of up to 40%;
  • an under-funding of destination marketing campaigns at a time of increasing competition and later booking patterns.
  • a reduction in projected holiday traffic to Ireland from mainland European markets, with especially weak demand reported from Germany;
  • any expectations of an increase over last year from Britain, is dependent on bookings for the summer materialising closer to the time of travel and a buoyant autumn season;
  • a lack of buoyancy in the home holiday market, in the face of increasing attractiveness of overseas travel;

The tourism sector is facing the prospect of a second year of decline in several markets and a further reduction in US visitors, Ireland’s highest-spending visitors. Many businesses are experiencing a second year of very difficult trading conditions – extremely keen competition in the light of a reduced demand for international travel is putting prices under pressure, while costs continue to increase.

Promotional pricing, normally a feature of off-season, is still continuing as the sector fights for business. Consequently, yield and profitability will be seriously affected.

Industry representatives feel that Ireland’ situation has been further exacerbated by a number of c adverse factors, including:

  • a loss of share of marketing voice/presence in markets and the absence of campaigns in May and June when competitors are still chasing late bookings;
  • the loss of access capacity on routes from the US;
  • the ‘positioning’ of Ireland in some markets; and;
  • the significant growth in lower air fares to the UK from continental Europe and North America.

There is also growing concern in the industry that the domestic market will not grow this year, despite promotion and heavy price discounting on the part of Irish hotels. The buoyancy of the home market last year cushioned the damage to the industry caused by Foot & Mouth in particular. This year the same buoyancy is not expected, in part due to increased promotion and price attractiveness of outbound travel.

In Dublin, business traffic continues to be depressed, while one-off events, conferences and leisure weekends appear to be buoyant. However with the loss of coach tours and fewer overseas tourists, in contrast to the expansion of supply, occupancy and yields will fall below budget for most properties. Discounting will adversely impact yields. The 4* and 5* properties – due to the growth of this sector in recent years – appears to be performing less well than the 3* and budget categories.

Based on the experience and projections of the firms interviewed by the consultants, the projected demand scenario for the current year is:

ex UK +5% to +10%
ex US -20% to – 15%
ex C. Europe 0 to +4%
ex O. Areas -10% to 0

There is still the possibility that the number of visitors from Britain could grow by 5-10%. This will depend on the level of late bookings materialising, at a time of increased competition and active promotion by competing destinations. If this happens, the overall number of visitors to Ireland in 2002 could come close to 6 million, compared to 5.84 million in 2001 and 6.27 in 2000.

However, the consultants say that care should be exercised in using these projections of an increase in visitors from Britain to determine the likely effects on the overall tourist season. An increase in British visitors will not compensate for the shortfall in US visitors – either in regard to length of stay or spending power.

In recent years the average length of stay in Ireland by British visitors was approximately 5.6 days, compared with 9.6 days for US visitors. In 2001, the average spend by a British visitor in Ireland was €363, compared to €793 spent by a US visitor.

The outlook based on available indicators would suggest that the US market to Ireland will have fallen away by more than 25% since 2000, setting Ireland back to the 1996 level of US visitors.

The fall-off in visitor volumes has serious repercussions, due to the higher average expenditure of US visitors. Businesses suffering from the decline in US visitor include;

  • Hotels, particularly those catering for coach tours and those in areas heavily dependent on US (e.g. Shannon area, Killarney and Dublin);
  • Car and coach hire;
  • Speciality tourist retail outlets and
  • Visitor attractions.

Key concerns expressed by the industry in relation to the main markets included:
UK

The absence of continuous destination advertising is a serious concern. Since the advertising campaigns have ceased Ireland is seriously disadvantaged and its ability to continue to capture a share of a market is in jeopardy – a market which has proven to be responsive to promotion and one where bookings are being made much closer to time of travel.
USA

The coach tour series appear to be the segment of the market showing the sharpest decline, with principal operators reporting a fall-off of up to 40%, depending on product and month.

An evident late booking pattern is contrary to the previous behaviour of the market. There is grave concern that short lead time bookings for the coming months will be frustrated by unavailability of airline seats or high price of seats where they exist.

Most operators report a slowing down in reservations over the past 3 to 4 weeks, which would appear to coincide with the termination of Tourism Ireland’s advertising campaign.
Continental Europe

Overall outlook from Europe is not encouraging. At best a marginal increase of up to +4% could be achieved.

German market is unanimously regarded by carriers, operators and product providers as being ‘very depressed’. Apart from the serious economic downturn, concerns are voiced regarding the marketing position of Ireland; the quantum and content of Ireland destination marketing programme; the cost and value perception of the Ireland product; and increasing competition. Virtually all segments of the market, other then VFR are reported to be down on last year.
Domestic Market

The home market is not expected to grow, unlike last year where a good home market performance helped many sectors weather a very difficult season. There is significantly increased competition for Irish business from the outbound market and high visibility destination campaigns by other destinations, notably that of the British Tourist Authority.

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