Tourism to turn the corner in 2010?

Another tough year but business sentiment more optimistic

As less fly abroad, Fáilte Ireland to launch new Home Holiday campaign

Following a very difficult season in 2009, the Irish tourism industry is relatively more optimistic about its prospects for this year, with almost two thirds of operators expecting that business in 2010 will be similar or better than in 2009 according to the latest Failte Ireland Tourism Barometer.

Tourism revenue declined by almost 17% in 2009 to €5.2 billion - its lowest level since 2004, reflecting difficult trading conditions in key overseas markets, most notably Britain and the United States and intense price competition within the accommodation sector, particularly hotels. The number of overseas visitors travelling to Ireland fell by 12% and as expected, domestic trips within Ireland are estimated to have declined by about 5%. (More details of the 2009 tourism performance are available in the note for editors and illustrative charts below.).

Introducing Fáilte Ireland’s End of Season Review and Outlook, Mr Redmond O’Donoghue, Chairman of Failte Ireland emphasised –

“The downturn in international tourism witnessed over the second half of 2008, accelerated during 2009 and made for an ugly year of trading for many businesses.  

“That said, it is hoped that 2010 will be ‘the last tough year’ in what has been the most challenging cycle that Irish tourism has experienced.  Businesses successfully trading through 2010 will have proved themselves resilient and capable of taking full advantage of the inevitable global economic upturn. 

“We, in Fáilte Ireland, have already refocused much of our investment towards supporting businesses and employment through the next 12 months and positioning the industry best for a recovery which we believe will begin in some markets from the second half of the coming season.”

Prospects for 2010

The current indications are that 2010 will be another tough year for Irish tourism as many key markets continue to battle adverse economic conditions.  The prospects for some markets, such as Germany and other key Continental European markets appear relatively favourable and growth is expected in 2010.  Larger traditional markets including Britain and the United States will remain challenging, regardless of exchange rates.  Home market prospects remain unclear although consumer research indicates further potential as Irish people cut back on foreign trips.

Overall, tourism operators are more optimistic about the coming season than they were a year ago. Heading into last year, only 20% of tourism operators expected business to either hold or improve.  This year, 63% expect 2010 to be on a par or better than 2009.  A majority expect employment levels in 2010 to be the same as 2009, while less than one in twenty acknowledge the prospect of any increase.

Successful steps taken by individual businesses in 2009 to cut costs substantially paid off and have put the industry on a stronger footing than a year ago.  However, many businesses are now expressing deep concern about the continuing high cost of Local Authority charges, energy and insurance. 

Fáilte Ireland’s CEO, Shaun Quinn, drawing on these indicators, pointed out -

“This time last year, as we surveyed the tourism landscape, the outlook amongst tourism operators was universally bleak, prompting a widespread belief that 2009 was all about survival. This year the tectonic plates of business sentiment are shifting somewhat. Now operators are expressing greater confidence about the immediate future and at the very least are  expecting greater  stability upon which to begin recovering market share.

“That said, 2010 will still be a year of tough trading. Pressure on revenues remains intense and while many operators have taken tough steps to reduce those costs within their control, the continuing high level of local authority charges, energy costs and to a lesser extent restrictive pay  structures are collectively placing an undue burden on the industry.

“Hopefully, this year will be the one where we turn the corner. However, there is no room for complacency and Fáilte Ireland will be stepping up its efforts – from helping to sustain individual businesses to stimulating consumer demand – to develop Irish tourism to reach its full potential”.

Priorities for 2010

This year Fáilte Ireland will focus its investment support on three core areas:

• Supporting key tourism businesses to increase their international customer base, better manage their cost base, improving overall performance and sustaining employment levels.
• Investing over €20 million under its capital investment programme to improve and broaden the appeal Ireland’s portfolio of tourist attractions, activities and tourism related infrastructure. Investment in business, sporting and cultural events will also be increased as all offer good prospects for tourism growth in 2010.
• Launch its biggest ever home holiday marketing programme,,as a central plank in its strategy to increase the home market share of the overall Irish leisure break market. The domestic market now accounts for 65% of  business in the intensely competitive hotel sector.  Research indicates that Irish people are less likely to travel abroad in the current climate, presenting an opportunity for the home breaks market this year.  A particularly notable issue which has come through strongly in Fáilte Ireland research is that Irish people now see Ireland as a good value destination, and consumers are acknowledging the excellent offers and value for money now available in the market.

Mr Quinn welcomed this development:

“The aggressive pricing and greater value in Irish tourism has percolated through to the home audience.  Irish people are now seeing the home holiday and, particularly, the domestic short break as an attractive alternative to the hassle of travelling abroad.”

The Year Ahead

Summing up, the Chairman of Fáilte Ireland, Mr O’Donoghue emphasised that –

“Although the year ahead will be tough, there are some comforting signs.  I am particularly encouraged by the signals from the front lines of tourism where business sentiment is now tilting towards the current downturn levelling off in 2010.

“Furthermore, recent research is indicating that more and more Irish people will be staying at home this year – providing greater potential for the home holiday market.

“This puts it up to us in Fáilte Ireland and the tourism industry to fulfil that potential.  There is no guarantee that those who stay at home will holiday at home and it is up to ourselves and the industry to provide the necessary incentives.  In 2010, we will be exploiting every opportunity to showcase all that Ireland has to offer and highlighting the great value out there. ”

ENDS

For further information please contact:

Alex Connolly
Head of Communications – 086 7966320/01 8847884

Louise Tolerton
PR Officer - 086 6086578/01 8847135

Note for Editors

Tourism Performance Charts (pdf)

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