Tourism earnings dip in difficult season

Consumer confidence, credit and cost control key to 2009 performance
Industry braced for a challenging year ahead

Irish tourism revenues declined marginally in 2008 to €6.3 billion (down 2%) as a consequence of the first decline in overseas visitor numbers (down 3%) in seven years and no growth in domestic expenditure for the first time in five years.  Speaking at Fáilte Ireland’s End of Year Review and Outlook, Mr Redmond O’Donoghue, Chairman of Failte Ireland, the national tourism development authority, said today “the out-turn for 2008 was pretty much in line with expectations and, if anything, was probably better at a national level than we originally forecast.
 
“That said, last year was very much a season of two halves with tourism performance falling off sharply and business becoming more difficult for operators as the second half of the year progressed – mirroring the difficulties in both national and global economies.
 
“Moreover, the overall figures fail to capture the very real difficulties facing individual tourism businesses as a consequence of rising costs, weak consumer demand, reduced credit lines and increased local competition – features which may persist throughout the coming season”. 

2008 Performance

Total overseas visitor numbers are estimated to have fallen by 3% in 2008, while encouragingly, domestic trips appear to have held up at similar levels to 2007.
 
The global economic recession and the decline in the value of both the dollar and sterling against the euro contributed to a drop in both numbers of visitors and revenue from North America and Britain. North American arrivals declined by 9% and spend dropped 18%, while visitors from Britain were down 5% with expenditure faring somewhat better with a drop of only 2%. Mainland Europe provided the strongest performance with revenue up almost 8% despite a modest drop in visitor numbers.
 
Numbers travelling for business reasons or visiting family or friends in Ireland showed growth in 2008 but holiday visitors were down 8%. The drop in holiday visitors, experienced across all of the major markets, had an adverse effect on many tourism businesses, particularly accommodation providers. There was also surprisingly strong business travel from Britain and North America during 2008, but not strong enough to offset the decline in leisure visits.
 
Analysis of the home market, based on Failte Ireland industry surveys, would indicate at best no growth in revenue or volume for the first time in many years. The home holiday market has grown by about 70% since the beginning of the decade, with one in every two Irish adults now taking a break at home.
 
The decline in overseas visitors was experienced by all regions, including Dublin which prior to 2008 had been the primary region for growth. Declines were most pronounced in the south of the country, reflecting the relative importance of US and British business and less marked in the North and West where they tended towards the national average. The high dependence of some sectors on the home market continued.

Accommodation Sector Performance

All types of accommodation report their overall business down on last year on balance - with three-quarters of hotels reporting business in 2008 down on 2007 while only one in ten are citing increases. Three quarters of hotels are also reporting that revenue per room is down while four in five have experienced an overall drop in profitability. More than 70% across all sectors reported that profitability was down.
 
Only one in five Hostels and Self-catering establishments reported overall growth and overall both sectors were down on average. The number of B&B’s, Guesthouses and Caravan/Camping operators experiencing growth was even less - approximately one in ten.
 
During 2008, Failte Ireland registered a further 33 new hotels which compares with 87 new premises registered in 2007. Taking account of closures there was a net increase in hotel bedroom stock to 60,548 rooms.  This compares with just over 30,000 rooms 10 years ago. The supply of registered self-catering units also continued to increase.
 
Fáilte Ireland’s research confirms that the main issues of current concern for enterprises are the economic recession, weakened consumer demand, energy and labour costs, local authority charges, and increasing prices generally. Labour costs now account for over 40% of total costs in many establishments, up from 25% a few years ago while local authorities charges continues to vary enormously around the country, often well in excess of general inflation. All these issues have had a knock-on effect on jobs with accommodation providers reporting no increase in employment levels in 2008 and half of Hotels actually reporting employment down on 2007. Analysis of preliminary Failte Ireland data would indicate that employment in the industry as a whole may have declined by up to 10% over the past year.

Prospects for 2009

Expectations for overseas visitors in 2009 are for a further decline with mainland Europe appearing to offer the best prospect for maintaining 2008 levels but even this is by no means certain. Elsewhere business from North America appears most vulnerable, followed by Britain.
 
Business sentiment within the tourism industry is also reflecting expectations of a further decline in performance in 2009. More than half of hotels, B&Bs and self-catering operators expect performance to be down in 2009. Two-thirds of guesthouses, car rental companies, visitor attractions and retailers reported that they expect difficult trading conditions in 2009.
 
The factors contributing to a more cautious view of the 2009 season include low consumer confidence and weak demand in most key markets, unfavourable exchange rates, rising costs, reduced credit and local competition. 
 
Operators are least pessimistic regarding the home market and many believe that further growth is possible. This assessment would tend to support Failte Ireland consumer research which indicates that there is further potential in the short break market with less Irish people considering a short break abroad in 2009 and more considering short breaks in Ireland instead.  

Priorities for 2009

A major part of Fáilte Ireland’s focus in 2009 will be on continuing to expand the home market with an aggressive marketing campaign to persuade more Irish people to take a break at home this year. In excess of €3 million will be invested with additional industry support for a year-round marketing programme incorporating television, radio, press and outdoor channels to promote awareness of, and interest in, taking a break during 2009. Key messages in the 2009 campaign will be the convenience and value of holidaying at home.
 
Fáilte Ireland’s CEO, Mr Shaun Quinn explained –
 
“Irish consumers will be looking for value and quality more than ever before and this will be the core of our home holiday campaign for 2009, which incidentally will be our biggest ever marketing drive. We fully intend to take advantage of the definite opportunity which exists to present Ireland to its own people as a convenient, good value alternative to an international holiday in 2009.”
 
An additional €4 million will be invested in supporting local and national festivals as a proven critical attraction within the home holidays offering. There will also be a strong focus on flagship sports events, namely the Volvo Ocean Race which is coming to Galway in May as well as the World Rally Championship and, with golf, both the Irish Open and the Ladies Irish Open.
 
Some €6 million will be invested with Tourism Ireland to promote the West, East Coast and Lakelands regions in key overseas markets.  

Practical Businesses Supports 

During 2008, Fáilte Ireland worked directly with in excess of 2,000 tourism businesses and in 2009 will be investing almost €6 million in the form of direct supports and advice for tourism enterprises. 
 
Mr Quinn emphasised –
 
“We are expanding our programme of supports for small tourism businesses as well as increasing their scope and reach across the country. We have experienced a significant increase in the numbers of businesses availing of our business support services over the past year and we expect that trend to continue in the current economic climate. We will be placing sharp focus on our supports on the three all important ‘Cs’ – cashflow, customers, and cost containment.”
 
The key elements of the support package in 2009 will include:
 
a new mentoring support service providing one-to-one advice;
a new ‘Biz-Check’ service designed to provide operators with on-site business diagnosis and solutions support;
a further expansion of the e-Biz initiative to improve online marketing and e-business skills generally within the industry;
a significant investment in on-site training of industry employees in customer care and food preparation;
Failte Ireland will also continue to support the retraining existing, former and potential new tourism employees at its regional training centres and through the various Institutes of Technology. 

Capital Investment

The drive to upgrade the range and quality of Ireland’s key visitor attractions and activities will continue in 2009 with funding allocated under the National Development Plan. Since 2007, Failte Ireland has invested some €30 million, in partnership with Local Authorities around the country, to upgrade walking and cycling routes, angling infrastructure, beach management facilities and tourist signage. An additional €18 million has recently been allocated to upgrading visitor attractions.
 
In 2009, Fáilte Ireland will be investing a further of €11 million to complete the rollout of its Historic Towns Project – bringing the initiative to a total of 65 towns. This capital funding will also be used to provide grant assistance for the development of significant tourist attractions and activities during 2009 as well as develop a number of additional looped walks in conjunction with the Department of Community, Rural and Gaeltacht Affairs. 

The Challenge ahead 

“There is still a great deal to play for in the tourism market. Even at worst, the predictions are that over seven million people will visit Ireland, and the foreign earnings tourism generates will be more important to the economy than ever before.   We have a much improved infrastructure that offers demanding visitors a better experience than ever before. By managing the downturn and preserving the strengths of the industry through it, we will be in a good position to recover our numbers as the global crisis alleviates.” said Mr Quinn, concluding that -
 
“The tourism industry has weathered external shocks before.  Following the setbacks of 9/11 and Foot and Mouth disease, the industry showed a resilience and tenaciousness that helped it trade its way through.  To counter the current global and local difficulties, Fáilte Ireland, will be working with tourism businesses to help them achieve sustainability in the short-term and greater competitiveness in the long-term.”
 
Mr O’Donoghue pointed out that, although during a Hidownturn consumer behaviour may change in several ways, people will not give up travelling and that Fáilte Ireland would be energetically working to maintain, and hopefully increase Ireland’s market share.
 
He encouraged all those in the industry to face the challenge ahead, adding -
 
“The economic situation is certainly serious but it is not hopeless. Recently, we’ve seen some ‘green shoots’: interest rates are tumbling, the dollar is strengthening, the price of oil has fallen dramatically, inflation is not an issue. The Irish people – and the tourism industry - are creative and imaginative, determined and courageous, and, if we use these qualities wisely, we will get through this extraordinarily difficult period – as we have done before. But, make no mistake, we will have to display those qualities in abundance”.  

ENDS

(Note on Failte Ireland Activity in 2008 is attached)

For further information please contact:
 
Louise Tolerton

PR Officer - 086 6086578/01 8847135 
 

Note for editor

Fáilte Ireland, the national tourism development authority, was established in 2003 to guide and promote tourism as a leading indigenous component of the Irish economy.

The tourism and hospitality industry employs an estimated 320,000 people and generates more than €6 billion in revenue a year. 

Fáilte Ireland – Highlights from 2008
 

Tourism Investment and Development

• Continued progress was made through 2008 on implementing Fáilte Ireland's Product Development Strategy, primarily via the National Development Plan’s Tourism Capital Investment Programme.
• Following the start made in 2007, when €10 million in grants were approved, a further €13 million in such grants was approved by Fáilte Ireland in 2008. In addition, a national programme for the interpretation and walking route signage of our one hundred most notable Historic Towns was rolled out, with the first thirty-five town councils being approved for grants of €2.2 million.
• In addition to the Infrastructure Fund, a national call for proposals under the Attractions and Activities Funds was issued, with 130 proposals being received by the closing date.
• The first grant announced under this Fund was for a major redevelopment of the Dublinia historic attraction and visitor attraction, for which funding support of just over €1.25 million was announced in November.
• A further eight projects have had grants of almost €15.5 million approved in principle. 
• Mid-Shannon Tourism Investment Scheme
• The Mid-Shannon Corridor Tourism Infrastructure Investment Scheme was launched in June 2008. This provides the opportunity to undertake specified tourism capital investments which will benefit from accelerated capital allowances.
• Leader and Rural Development Programmes
• In addition to the incentives which it directly administers, Fáilte Ireland has been actively engaged with the agencies of the Department of Rural, Community and Gaeltacht Affairs in seeking to maximise the impact of the €45.4 million allocated for tourism within the Leader and Rural Development Programmes. Extensive advisory services have also been provided to over 200 potential tourism investors throughout the course of the year.  

Business Tourism

• Fáilte Ireland’s Business Tourism Unit supported approximately 100 international conferences in 2008. These conferences brought in over 29,000 overseas delegates to Ireland with a revenue yield of almost €36 million to the Irish economy.
• 250 potential conference ambassadors – to promote Ireland as a business venue abroad - have been identified and almost 20 conference ambassadors have been introduced to professional conference organisers. In terms of current business events being promoted by these new ambassadors, there is a potential for 12,000 delegates and €16.5 million in revenue.
• International Sports Tourism Initiative
• In 2008, with a budget of almost €9 million (inclusive of VAT), 9 significant sports events were identified and supported by the Initiative.
• The main highlight of 2008 was securing a Stopover of the prestigious Volvo Ocean Race (formerly known as the Whitbread Round the World Race) for Galway in 2009. As part of its sponsorship of the event, Failte Ireland has a stake in an entry in the race, the Green Dragon.
• The Solheim Cup, the most prestigious team event in women's professional golf, will be hosted in Ireland in 2011.
• Another highlight of 2008 was the second staging of the Tour of Ireland cycling race which was included on the 2008 UCI (Union Cycliste Internationale) World Calendar. This event raced through twelve counties and provided an excellent opportunity to showcase the countryside to a large international television audience. 
• Other events supported through the International

Sports Tourism Initiative n 2008 included:

• Golf: One tournament on the European Tour calendar and One on the Ladies European Tour
• Sailing: Cork Sailing Week
• Equestrian: The Failte Ireland Dublin Horse Show at the RDS
• Adventure: The Turas adventure race (Galway)

The Arts, Festivals, Culture, Heritage and the Islands 

• €3.5 million was allocated to 66 festivals in 2008 with a further €800,000 allocated to 180 smaller festivals by our regional offices. €1.3 million was allocated to St Patricks Festival Dublin and over €90,000 was awarded to Wexford Festival Opera which together had an estimated economical benefit of over €100 million.
• Under the NDP Infrastructure Fund, funding was approved in 2008 for the development of Historic Walking Trails in 35 towns around Ireland, with a further 65 towns selected for similar funding in Phase 2 of the initiative.  The aim is to make the Heritage sites & attractions in these towns more accessible to visitors by establishing a coherent series of pedestrian trails.
• A New 'What’s on' guide to cultural events and attractions in Dublin was developed and published during the summer months

Walking

• The number of looped walks developed will have reached 83 trailheads and 120 Looped walks in 26 counties by the end of the year.  42 Trailheads and 61 Loops were completed in 2008 alone.
• The first National Trails Day was held on Sunday the 28th of September, with events at a number of the Fáilte Ireland developed Looped Walks. 

Equestrian

• A new Tourism Category for Equestrian Centres was introduced with the agreement of the equestrian centre operators. The categorisation follows from the Equestrian Tourism Strategy and inspections were carried out by AIRE (Association of Irish Riding Establishments). 50 Centres have been approved to date under this scheme – these centres will receive additional training and marketing support in 2009. 

Cycling 

• Signage work is nearing completion on a number of cycling hubs: Achill, Clifden, Westport, Mullingar and Skibbereen will all be launched in Spring 2009. Signage for half day and full day cycling loops will be in place for each location, along with map-boards and cycle stands. 

Outdoor Adventure Programme

• A development programme for adventure providers in two hubs in the South West – Bantry and Killarney - was followed by an extensive marketing campaign which concentrated on media not usually covered in general home holiday promotions – DART advertising, ad words and internet search engine strategies were all used.  

Family Holidays 

• Integrated campaign for family holidays for Tramore, Dunmore East and The Hook continued in 2008. 

English as a Foreign Language 

• The 130 approved English as a Foreign Language (EFL) Schools in Ireland have been assisted with a series of familiarisation trips from key markets such as Spain, France, Italy, Japan, China and Brazil. 

Angling
 

• As part of the Strategy for Irish Angling Tourism, a new suite of brochures has been produced in both print and e-brochure formats. There are five brochures in the series Coarse, Pike, Sea, Salmon and Sea Trout & Brown Trout 
• Six centres of excellence have been established, with one in every region of the country.
• Accommodation and Hospitality Development
• The Hospitality Small & Medium Enterprise Support programme provided support to ten national representative bodies and marketing groups for the small accommodation categories in 2008. Investment of over €350,000 supported key actions and activities including a wide range of marketing and promotional activities, e-Business development, new product offers and support for strategic research and development.
• A number of development programmes for the Small and Medium Enterprise (SME) accommodation sector were developed and implemented in 2008. An e-Business programme for small and medium accommodation providers was designed to help operators promote their business online and sell more rooms through this channel. Over 40 training programmes catering for over 500 operators were delivered in every region.
• A number of workshops and toolkits to support B&B and guesthouse operators deliver an enhanced Irish Home Food experience, attract more customers and increase business and profitability were piloted in 2008. These included cookery workshops and demonstrations, tool kits to manage food costs and support menu planning and resources to address food hygiene, health and safety.
• The Irish Homes Bed & Breakfast Working Group was established in June 2008 and has developed an action plan to support the growth and development of the B&B sector taking into account the competitive environment and the needs of consumers and operators.
• Work commenced on the formulation and development of a Food Tourism Strategy in 2008. Initiatives to support development in this area included trade support for a number of food marketing and product development activities that included the development of food tours, trails and promotions. Specific promotion platforms were provided and supported at the range of Taste Festivals in Ireland and UK and through participation at the BBC Good Food Shows. Two new food festivals were piloted in Waterford and will be part of the food calendar of events in 2009 and beyond.
• An autumn publicity and advertising campaign for food festivals resulted in coverage for the Irish food experience in a number of overseas publications, domestic press and TV features.

Enterprise and Management Support 

• During 2008, Fáilte Ireland launched an award winning e-Business initiative which helped over 500 small and medium enterprises to improve their e-business skills and improve their web presence. This initiative won the “Hospitality, Travel and Leisure” category award at the Inspired IT 2008 Awards.
• Fáilte Ireland’s Tourism Learning Networks saw over 560 owner / managers from a wide range of tourism enterprises participate in this year’s Tourism Learning Network initiative. Over 1,000 separate learning events took place throughout the country, supported by over 400 business coaching sessions for owner / managers.
• In 2008, our Enterprise & Management Support services developed a valuable Food Costing CD Toolkitand distributed it to over 3,000 pubs and restaurants throughout the tourism industry.
• Fáilte Ireland’s Professional Development Service has seen over 1000 senior managers receive training in core skills areas and gain professionally accredited qualifications from DCU, CIPD and MII. Managers have graduated from programmes including the Management Skills Programme, Certificate in Marketing, Supervisory Management Skills and Training Techniques.
• In 2008, Fáilte Ireland launched new Business Finance Workshops offering essential, practical, and easy to implement solutions based on real life situationsaimed at helping tourism businesses in this increasingly challenging economic environment. The workshops cover topics including profit planning, cash flow management, pricing decisions and managing costs.
• Fáilte Ireland launched the first ever dedicated Human Resource Network in Irelandfor tourism and hospitality HR professionals and managers. The network provides a unique forum where people can discuss emerging issues, listen to the experts’ views and experiences of HR management and best practice across other industries and countries.
• 30 Senior Managers graduated in May from the fourth Executive Management Development Programme run by Failte Ireland inassociation with Cornell University. The flexible programme, designed for busy executive managers, focuses on the necessary steps for managers to develop and maintain market share - particularly in this current economic climate. The fifth programme was launched in September and covers core areas including management strategy, marketing operations, finance and HR management.
• A Foundation Level Tourist Guide Programme was launched in 2008 to address a shortage of guides with foreign language skills working in Ireland. Working in close consultation with the Irish Tour Operators Association (ITOA), Failte Ireland designed and implemented the programme aimed at those fluent in English plus a number of foreign languages including French, German, Italian and Spanish speakers.

Marketing
 

• National Advertising Campaign 
• A multi media Discover Ireland advertising campaign, focussing on national and regional press, radio and television was undertaken throughout 2008. 
• The television campaign which ran until the end of July 2008 reached 95% of our target audience. The radio and press campaign was similarly successful in terms of reach. 
•  An intensive press campaign highlighting festivals and events and regional advertising was also carried out in 2008.  The domestic ad tracking research indicates a strong performance with awareness of Discover Ireland registering as very high. 

Discover Ireland brochure

• The Discover Ireland brochure was redesigned to present a more contemporary image of our domestic holiday propositions. A single edition was published for 2008. A comprehensive door drop campaign was undertaken to over 600,000 homes throughout Ireland and an additional 300,000 were distributed through tourist offices.

Publicity

• 1,050 journalists visited Ireland in 2008 on 510 media trips from all of our overseas markets. They included journalists from television, radio, newspapers, magazines, and online media.
• These resulted in over 3,450 major articles and broadcasts with an Estimated Advertising Value of over €63 million and an audience reach of 1.2 billion.  

Trade Service

830 overseas tour operators/travel agents visited Ireland on 55 familiarisation trips from many of our overseas markets - from the U.S. to the United Arab Emirates and Canada to China.
 
In May our annual trade Workshop (Meitheal) was held in Citywest Hotel, Co. Dublin and it was attended by 237 overseas buyers and 270 Irish suppliers. 
 

Visitor Services

During 2008, some 1.5m visitors to our 59 tourist information offices were assisted by 200 travel advisors and in excess of €2m of accommodation business was generated for the tourism trade through the network.
 
Five tourist information offices were re-fitted in 2008 as modern, state of the art, Discover Ireland Centres – these were in Donegal Town, Galway, Killarney, Mullingar and Waterford. 

Industry Standards & Quality 

A review of the approach to inspections and appeals was carried out in 2008 with all sectors within the remit of the National Tourism Development Authority Act (2003) within the scope of the study. Changes in the approach, criteria and methodology have been designed to benefit both the operator and the consumer. 
 
A new online renewal and inspection approvals system for individual Self-Catering operators was developed and implemented during 2008. A new system was also developed to regulate and organise Self-Catering properties previously approved under the Resort Scheme and administered by individual Regional Tourism Authorities.
 
The new system of categorisation and Standards for the Health and Wellness sector is now fully in place and a total of 100 Health and Wellness Spas were inspected and categorised during 2008. 
  
During 2008 a total of 180 establishments, mainly hotels, participated in the Optimus Programme – Fáilte Ireland’s quality of service programme - and benefited from a range of development interventions, including mentoring, training and standards workshops. To date 2,200 tourism and hospitality managers and staff have participated in a series of quality and service excellence initiatives including Standards Development Workshops. Forty six tourism establishments were subsequently honoured at the Fáilte Ireland Optimus Awards held in December, 2008. 

Education and Training  

In 2008, 1,500 students attended Fáilte Ireland supported training programmes in the Institutes of Technology around the country, including Professional Cookery, Bar Operations, Tourism with Business and Tourism and Hospitality. 
 
To encourage new entrants to the tourism sector, a new DVD and CD Rom promoting the broad range of careers in tourism was developed and distributed to schools and a new fifteen to eighteen year old careers website was developed. A special magazine, “Get a life “(in tourism) was also launched and distributed to schools.
 
In 2008, we introduced a number of new innovations to our training courses including a new model of delivery for our Professional Cookery Programme (FETAC Level 6) in collaboration with the French Culinary Institute, New York and a successful implementation of a nine-month “Intensive Learning” chef programme which caters for a new target group - career changers with a passion for food. Also, a new Restaurant and Bar Day Release programme was offered in five institutes of Technology.

Research and Policy Analysis

During 2008, Fáilte Ireland’s Research and Policy Analysis team undertook a variety of research to provide a scientific basis for planning future tourism initiatives.
 
Work in 2008 included:

• Four editions of the Tourism Barometer Survey were carried out measuring industry sentiment, year to date performance and future prospects.
• Continuous measurement of the performance of Hotels and other accommodation sectors.
• Continuous overseas visitor profiling through surveys at the major air and sea ports.
• Continuous profiling of domestic tourists through national surveys.
• Tracking the effectiveness of the domestic holiday advertising campaign.

Environment and Planning

 The overall objective of Fáilte Ireland in relation to the environment is to put the principles of sustainable tourism into practice. The focus of 2008 was to protect environmental resources as key tourism assets, improve the environmental performance of the tourism industry and to prepare the industry for the challenges of climate change.
 

Planning 

Submissions were made to eight County and City Development Plans, 40 planning applications and 30 Environmental Impact Assessment scoping requests. In each of these submissions, Fáilte Ireland promoted an approach to tourism development that seeks to protect the asset upon which the industry depends. 

Environmental Good Practice

In 2008, Fáilte Ireland published its Review of Good Environmental Policy and Practice in the Tourism Industry, containing 16 case studies of good practice from around the country. The report contained recommendations to improve the environmental performance of the tourism industry.  

Climate Change 

• Published Facing the challenges of climate change – Fáilte Ireland’s Carbon Strategy. The strategy contains seven specific actions which are designed to help the tourism industry make the changes which will be necessary to adapt to climate change. 

Visitor attitudes to the environment

Published visitors attitude survey on litter, water quality and wind farms.  

Tourist signage

Published A Guide to Signposting for the Tourism Trade. 
 
Continued to liaise with the National Roads Authority on its €60m, six-year national road signage improvement programme. 
 

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