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Tourism sector battling the recession
10 January 2010 By Michelle Devane
The tourism industry in Ireland had one of its toughest ever years in 2009,with the global economic downturn, a drop in consumer confidence and adverse currency movements all impacting on visitor numbers and revenue.
There are around 18,000 tourism businesses across the country, and the sector is worth around €1.5 billion to the exchequer, but last year saw an unprecedented number of such businesses - including hotels and pubs - going to the wall.
The latest Fáilte Ireland figures, which were released last week, show that overseas visitors numbers to Ireland were down by 12 per cent last year. There were 6.5 million trips made here last year, compared with 7.4 million in 2008 and 7.7 million the year before.
Domestic trips within Ireland were down 5 per cent to 7.9 million and total tourism revenue declined by almost 17 per cent to €5.2 billion last year, its lowest level since 2004.
Minister for Arts, Sports and Tourism, Martin Cullen, said that tourism would be a priority in the drive for recovery in 2010 and said there was ‘‘real potential to return to growth from next year’’. The budget for the department’s tourism services for this year will be more than €155 million, representing a 2 per cent increase on 2009.
Fáilte Ireland chief executive Shaun Quinn said that, as Ireland grappled with the enormity of the current economic climate, it was ‘‘imperative that it does not neglect sectors such as tourism, which has delivered time and again’’.
Quinn said that all the key markets were down in 2009, particularly Britain, which showed a 15 per cent decline. ‘‘But the visits outbound from Britain to all countries were down by 15 per cent, so we managed to hold our market share," he said. ‘‘Three quarters of business now comes from the home holiday market. The volumes have held, but the revenues are down, due to intense competition."
Quinn said that 2010 would ‘‘still be a year of tough trading’’, and that Fáilte Ireland was investing more than €20 million under its capital investment programme to improve and broaden the appeal of Ireland’s portfolio of tourist attractions and activities. Fáilte Ireland will also launch its biggest ever home holiday marketing programme, as the domestic market now accounts for 65 per cent of business in the hotel sector.
Quinn believes the industry is ‘‘resilient’’ and will see an improvement towards the second half of this year, because ‘‘interest in Ireland is strong and we’re much more competitive now’’. He believes the prospect for some markets, including Germany and other continental European countries, appeared relatively favourable and ‘‘growth is expected in 2010’’.
Last month, Tourism Ireland, which promotes Ireland to overseas visitors, announced plans to attract 7.85 million visitors in 2010 - an increase of 3 per cent on last year. However, international tourism experts have predicted a decline of at least 2 per cent in visitors to Ireland in 2010.
Niall Gibbons, chief executive of Tourism Ireland, described 2009 as ‘‘one of the most difficult years in living memory’’ from a trading perspective. ‘‘Visitor numbers are down by 12 per cent compared with the same time last year. But many other countries are experiencing the same downturn," he said.
Gibbons said that the body had a plan in place ‘‘well in advance of 2010’’, and that its aggressive marketing strategy for 2010 would be singling out Britain and Germany.
‘‘We’ve a new plan for Britain, which has always been the most important for Ireland," Gibbons said. Traditionally, Britain represents 50 per cent of visitors to Ireland each year, and is worth 40 per cent of overall tourism revenue into the country.
The plan includes price-led campaigns which will highlight good value deals on offer, featuring a new ‘‘value in Ireland’’ brochure advising visitors where the best deals can be found. Tourism Ireland also plans to create a British-wide programme of events for St Patrick’s Day, and the overall campaign will focus on Ireland’s strong heritage in film, literature, music and festivals.
The tourism body’s first ever British television ad campaign started this month on Channel 4 and some Sky channels. However, Gibbons recognises that Britain is still in a recession, and that it will be difficult to boost visitor numbers.
A separate campaign featuring ads based on Dublin, Galway and the North will be aired in Germany. Only 0.5 per cent of Germany’s 80 million inhabitants have visited Ireland for holidays. Gibbons said Tourism Ireland intended to increase that figure dramatically over the next few years. ‘‘Germany is a priority. It has the largest population in Europe with 60 million outbound journeys made each year.
It’s a huge market," he said. The US market also continued to be very important to Ireland, Gibbons said. This segment of the market represents around 12 per cent of visitors and 20 per cent of overall revenue. ‘‘Americans tend to stay longer and spend more, and that’s why we’re working with airline carriers to do more offers to entice Americans to Ireland," he said.
The domestic travel trade has also had a tough year. Trips abroad by Irish people declined last year, and it is believed that final figures will show that it was down by around 20 per cent. Last year saw the demise of the largest tour operator in the country, Budget Travel, which was wound up last November with the loss of 172 jobs and the closure of the company’s 17 shops.
According to the Irish Tour Operators Federation, the sector has seen a contraction of 40 per cent over the past 12months, with a further decline of 10-15 per cent to come. However, some operators are more optimistic.
Despite the demise of some of its competitors, Falcon Holidays has announced that it will increase its capacity for the 2010 summer season with additional weekly flights.
Its managing director, Damien Mooney, anticipates strong sales during this month but recognises that the holiday market continues to undergo difficult changes. ‘‘There’s been a lot of realignment in the sector. 2009 brought a lot of changes - a number of companies have left the marketplace," he said.
‘‘Travel is a disposable spend, and has been impacted by the significant downturn in the overall economic market. We have to make sure the proposition to customers is value for money."
Mooney said he had noticed consumers becoming more price-sensitive. He added that an increasing number were opting for the all-inclusive packages in their brochure so that they knew exactly how much the holiday would cost.
In the last 12 months, Falcon has had to adjust its operating model and close three shops. But Mooney believes 2010 will see an improvement and an increased number of people booking their main family holiday.
‘‘The pace of life is no different. Hopefully, the economy will stabilise in the next few months. People may be cautious with their spending, but they still want to go on holidays," he said.
Despite last week’s optimism for the year ahead, the tourism sector has a battle to avoid further declines in 2010, though it is hoped the outlook will brighten by the end of the year.
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