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    Fáilte Ireland Annual Review and Forecast

    Fáilte Ireland Annual Review and Forecast

    Sustained Investment in Tourism Brands Key to Realising Longer-Term Growth Potential

    €55m tourism plan to leverage further earnings growth in 2016
    Irish tourism is now well placed to deliver significant employment and foreign earnings growth to 2020 and beyond provided we maintain competitiveness and sustain investment in the new portfolio of tourism brands now coming to market. This was the key message delivered at the Fáilte Ireland’s Annual Tourism Industry Review.
    The recent upturn in tourism fortunes, although very welcome, has been fuelled largely by factors external to the tourism industry. Improving economies of key source markets, favourable exchange rates and increased air access all contributed to making 2015 a record year. To build on this initial success, the next phase of growth must be driven by factors from within the sector including; sustaining better value for money and offering more compelling and authentic branded visitor experiences rather than relying on a hazy green image and warm welcome.
    With recent Fáilte Ireland branding initiatives just entering the market (The Wild Atlantic Way, Ireland’s Ancient East and Dublin - a Breath of fresh Air), it is expected that two key objectives of Fáilte Ireland can be achieved: significant growth in visitors can be secured across all regions with targeted marketing of specific consumer segments; and the tourism season can also be lengthened – significantly boosting visitor numbers and revenue. Optimism for the years ahead, however, needs to be tempered by the fact that challenges remain in the sector.
    Speaking at the briefing, Chairman Michael Cawley emphasised:
    “In 2015, driven by benign external factors and competitiveness at home, we experienced a record year for overseas visitors. However, I believe that further growth is yet to come as we deploy our new brand offerings to greater effect in helping Ireland to become more compelling as a holiday destination within an intensely competitive marketplace.
    “The Wild Atlantic Way has been a great success locally but its impact internationally remains quite modest. If awareness levels across key markets are increased appreciably over the next few years, then the true potential of the Wild Atlantic Way as a driver of tourism growth to the West of Ireland will be realised. Similarly, our Ireland’s Ancient East brand is only taxiing up the runway and it too can, and will, deliver game-changing growth for the East, Midlands and South. Thirdly, in the Capital, there is considerable potential to sustain tourism growth provided we can successfully reposition the city and county as a more vibrant destination with our new Dublin brand.”
    To underscore his point, Mr Cawley highlighted the recent consumer research commissioned by Fáilte Ireland which indicates that, currently, awareness of key Irish visitor attractions is much lower than many commentators might expect. Not surprisingly, this research also confirmed the very low levels of awareness and understanding of Ireland’s experience brands. However, when respondents were made aware of what these brands offered, they reacted very positively.
    Mr Cawley pointed out:
    “We know, for example, that the Wild Atlantic Way is a fantastic tourism proposition but has low international recognition at this point.  When we survey potential overseas visitors, most are unaware of the new initiative. However, when they are told about what is on offer, the response is phenomenal. Clearly, as we build awareness, the Wild Atlantic Way is going to make a significant and transformative impact in the West.”    
    Explaining that success could only be achieved for all Fáilte Ireland’s brands with sustained and focused investment, Mr Cawley added:
    “Fáilte Ireland will strongly support these brands to ensure they are developed and promoted aggressively to deliver growth. Indeed, we will be investing over €100m in capital funding over the next five years to support visitor experiences and services which help bring each of the brands to life for the visitor.  In this context I want to acknowledge the strong support and counsel which we have received from the Government in particular Ministers Donohoe and Ring.”
    Further Growth in 2016

    According to Fáilte Ireland’s latest Barometer Survey business sentiment across the tourism sector is now at levels not seen since the Celtic Tiger and expectations for the 2016 season are very upbeat with strong growth projected across all parts of the industry.
    Tourism Business Sentiment 2007-2015

    % 2007 2008 2009 2010 2011 2012 2013 2014 2015
    Up 45 14 15 28 39 48 68 75 80
    Same 24 18 11 25 31 26 21 17 18
    Down 31 68 74 47 30 26 11 8 4

    The survey also indicates that some 65% of accommodation providers expect their business to further increase in 2016.  One in five businesses spontaneously mentioned the Wild Atlantic Way as a positive boost to their future growth. Hotels in particular are optimistic with 85% anticipating continued improvement into 2016.

    Almost 70% of tourism businesses saw profitability improve in 2015.  Our September barometer indicates that a similar proportion (69%) anticipate turnover and profitability growth over the next few years.

    Critically, with respect to jobs, two in five (41%) respondents plan to increase the number of people they employ in the next two to three years - including four in five (79%) hotels.  About half of the tourism businesses surveyed (48%) expect to employ up to five additional people, 17% will take on 5 to 10 people and 14% of responding hotels will be looking to take up at least ten more members of staff.
    To read the full version of the latest Fáilte Ireland’s Tourism Barometer, click here
    Commenting on the coming season, Mr Cawley said:
    “Assuming no major external shocks, I believe Irish tourism is well placed to grow again in 2016, possibly by as much as 6%. The access capacity to the country is set to increase again this season, economic conditions in key source markets are generally positive and our brand offering is compelling and improving. Continuing favourable exchange rates are also helpful. This all augers well for the wider economy, with total tourism revenues likely to hit €8billion this year with obvious consequences for further job creation.”
    Challenges Remain

    Fáilte Ireland also identified a number of challenges for tourism which the national tourism development authority felt the sector must address. 

    According to feedback from overseas visitors, collected in Fáilte Ireland’s surveys of travellers, Irish tourism businesses are now providing value for money with ratings for the good and fair value steadily increasing since 2009. Of note, the continuing upward trend in value ratings in 2015 would appear to be driven largely by sentiment amongst British and US visitors rather than visitors from Eurozone markets, possibly indicating the impact of favourable exchange rates and masking a growing underlying cost creep.
    Overseas Visitors’ Value for Money Rating 2009-2015
    % Giving Rating: 2011 2012 2013 2014 2015
    -      Good 38 41 44 54 58
    -      Fair 35 40 38 36 34
    -      Poor 37 17 14 10 8
    (Based on January-September)
    Reacting to this, Mr Cawley added:
    “It is very encouraging to see that perceptions of our value for money proposition remain positive but these ratings may require a health warning. I would be concerned to what extent our real value is being masked by the currently favourable exchange rates for British and American travellers. In terms of our continuing competitiveness, we need to avoid complacency and remain vigilant regarding value so we are not suddenly caught out by any rapid movements in the currency markets.” 
    Dublin Hotel Capacity

    There is now an acute shortage of available hotel bedroom stock in Dublin city over much of the year causing room rates to increase markedly year on year and there is a danger of business being lost to Ireland due to supply constraints. Fáilte Ireland currently estimates the additional bedroom stock required to be in the region of 5,000 units. Fortunately, despite substantial increases in 2015, Dublin city room rates still remain good value compared with competitor cities abroad. However, there is a concern that competitiveness may be eroded and if unchecked could undermine prospects for further tourism growth in and beyond the Capital.
    Regionality and Seasonality

    The degree to which tourism growth is distributed across the tourism industry and spread throughout the season is of concern. Fáilte Ireland’s hotspot analysis of visitor flows confirms that the traditional honeypot centres are continuing to dominate the sector. Particular issues relate to the west coast north of Galway and to the East and South which has become something of a ‘transit zone’ accounting for 25% of visitors but only 11% of tourist expenditure. A key objective for the Wild Atlantic Way and Ireland’s Ancient East brands is to secure increased visitor dwell times and expenditure in those areas which are currently underperforming. The current shortage in hotel accommodation in Dublin is likely to stimulate greater regional tourism in the short to medium-term.
    The relatively short tourist season in some locations (as little as six weeks) poses particular challenges for sustaining businesses and employment levels in these destinations. Fáilte Ireland will be introducing a number of initiatives through the 2016 season to encourage the sector to stay open for a period beyond their normal season close to encourage both domestic and international visitors to holiday off-peak.
    Skills Shortages

    Tourism growth inevitably means jobs growth and at present we are witnessing a shortage of staff in some key areas, most notably culinary. The extent of this challenge was well articulated in 2015 by the National Expert Skills Group. Improving chef retention rates within certain sectors is a key part of the overall response. Similarly the speedy introduction of a new accredited apprenticeship programme for chefs by Solas with the hospitality industry is critical. For its part, Failte Ireland has recently begun funding the training of 150 Commis Chefs around the country as a short-term measure to alleviate the current skills shortage and will continue with similar initiatives if required.
    External Shocks

    The prospect of external shocks, over which the industry has no control, has been highlighted by the recent tragic events in Paris and the consequent lock down of Brussels.  Tourism businesses have raised the possibility that this may have a negative impact on tourism from long haul markets and particularly, the United States which has been performing so strongly in the last couple of years.
    Speaking to this, and other challenges, Mr Cawley said:
    “At the end of a very successful tourism year, it would be very tempting to clap ourselves on the back and simply wait for a repeat performance next year. However, Irish tourism is still very much dependent on external events. Fluctuations in currency markets and international incidents can create sudden and significant impacts on world travel and change the narrative very quickly.
    “For that reason, it is essential that we continue to manage those factors within our control. We believe that the tourism outcome for 2016 will depend on maintaining competitiveness and ensuring that the tourism environment remains business friendly – particularly in terms of the regulatory burden and the encouragement of greater air access.
    “The issue of capacity in Dublin is an emerging issue but I expect the market will correct that and additional hotel rooms will inevitably come on stream. In the meantime, Dublin’s short-term challenge may actually be an opportunity for other regions.
    “As a priority in 2016, Fáilte Ireland will engage in a twin track focus on regionality and seasonality. In short, we will be aiming for greater visitor numbers beyond the usual hotspots and throughout every region and we will be seeking to lengthen the tourism season beyond the traditional June-August window”. 
    2016 Priorities
    In 2016 alone, Fáilte Ireland will invest over €55m in developing and promoting its leisure and business tourism brands, of which €20m will be allocated to funding capital projects around the country. The remaining investment will build on the range of business development, sales and marketing supports for tourism enterprises located across the ‘brand territories’.
    Dublin is performing relatively well in tourism terms yet faces two emerging challenges; tired brand image and insufficient bedroom stock, both of which have the potential to severely curtail future tourism growth.
    The task of repositioning the city and county is underway with a new Dublin brand launched in 2015 which was supported by a €1m marketing campaign. Bringing the cities story to life four new Dublin Discovery Trail were also developed along the Dubline.
    For 2016, Fáilte Ireland will be committing €13m to further develop and promote the new Dublin brand. In partnership with industry there will be an emphasis on creating new events, developing new visitor experiences and enhancing existing attractions as well as the introduction of a ‘Dublin Ambassador Programme’ to create a domestic groundswell and pride of place amongst native Dubliners.  International marketing campaigns to firmly establish the brand in key overseas markets will continue and expand.
    Ireland’s Ancient East
    The south and east of the country presents a very different tourism challenge – that of increasing dwell time and effectively transforming the region from a ‘transit zone’ to a ‘touring zone’ in its own right. The ‘Ireland’s Ancient East’ brand, launched by Failte Ireland in 2015, seeks to leverage the unique depth and diversity of heritage assets for tourism gain.
    During 2015, under Fáilte Ireland’s capital programme, €2.3m was allocated to 25 projects across 15 counties to develop the visitor experience on the ground and ‘story telling’ workshops were held with over 300 industry partners around the region. The latter have generated hundreds of stories for use across digital platforms and in marketing. All our research confirms that people and events are a big competitive advantage.
    Furthermore, 105 sites across the region have been identified as locations for brand signage and Fáilte Ireland is now working with site owners and local authorities to address planning requirements and develop plans to install the associated infrastructure in early 2016.
    Fáilte Ireland is committing in excess of €18m to further developing this brand in 2016, including capital investment in visitor experiences, funding festivals and events to support the brand, sales platforms for local businesses, branded orientation signage, a dedicated website as well as marketing at home and abroad.
    Wild Atlantic Way
    Despite its undoubted early success with local industry, the Wild Atlantic Way is an evolving brand with many years of sustained investment lying ahead. During 2015, Fáilte Ireland began a programme of branded interpretation works – including information and photo points - at each of the 188 Discovery Points along the route, including the off shore islands.  These works are intended to help tell the stories of each place and will encourage visitors to increase their dwell time in each locality. Additional capital investments are planned.
    Regionality and seasonality remain particular challenges in the West of Ireland.  From a regional perspective Fáilte Ireland will be focusing on initiatives to encourage more visitors to venture beyond the traditional ‘honeypots’ and, on the seasonality front, it will work closely with businesses with a view to initiatives which will help extend the high season, which can be as short as just six weeks in some locations.
    In total, Fáilte Ireland will commit €19m to developing the Wild Atlantic Way brand in 2016 and, as overseas awareness rises, believes that the already popular initiative’s full potential has yet to be seen. The focus in 2016 will be to work with Tourism Ireland to grow international awareness and develop more compelling and motivating Wild Atlantic Way visitor experiences. Two significant experiences will also open in 2016 - the ‘Connemara Cultural Centre at Pearse’s Cottage’ in the Connemara Gaeltacht and the ‘Derrygimlagh Signature Discovery Point’.
    Business Tourism
    Under its ‘Meet in Ireland’ brand, Fáilte Ireland turned in a particularly strong performance in business tourism in 2015, bidding for and supporting a total of €120m in international conferences and events for Ireland – representing over 91,000 international delegates. Fáilte Ireland is investing €5m for corresponding targets in 2016 of €140m worth of business and an additional 100,000 delegates.   During 2016, given that Dublin is operating at high capacity, there will be a greater focus on winning events for regional conference and business centres and ensuring greater distribution beyond Dublin.
    Business Development
    In 2015 Fáilte Ireland continued to deliver a wide range of business development supports to improve industry sales capability. This included the delivery of significant sales training and the introduction of a new sales academy. More than 16,000 individuals also availed of our suite of online training and mentoring services delivered through webinars and podcasts. Fáilte Ireland identified 150 overseas buyers who were not programming Ireland. These buyers were targeted and almost one third of them (47) will now begin to sell Ireland in 2016. Fáilte Ireland also hosted 961 international buyers and co-hosted 1,122 international media with Tourism Ireland.  A pilot 40 day training programme addressing the need for more commis chefs was also initiated and is due to complete in early 2016.
    During 2016 Fáilte Ireland will continue to work closely with tourism businesses across the country to support them to improve their selling capabilities further through a range of practical supports including the expansion of our Sales Academy. The existing In-Ireland sales platforms will also be further developed and we will continue to showcase Dublin, The Wild Atlantic Way and Ireland’s Ancient East to international media and buyers.
    The CEO of Fáilte Ireland Shaun Quinn, anticipating the year ahead, said:
    “During the downturn, Fáilte Ireland – working with all our partners in the sector – took a long hard look at where Irish tourism needed to position itself with a view to long term sustained growth. The tourism sector really rose to the challenge and tourism businesses were quick to get on board with our initiatives - such as ‘The Gathering 2013’, the Wild Atlantic Way, Ireland’s Ancient East and a new Brand for Dublin. Now, with the right prevailing circumstances, we are properly positioned for accelerated growth – if we maintain our competitiveness and our focus on what works. 
    “Tourism, like other sectors of Irish business, has experienced the extremes of the boom and bust cycle and we are determined not to repeat the mistakes of the past. With an emphasis on competitiveness, compelling experiences on the ground and a greater online impact, Fáilte Ireland will continue to work with our many partners in the sector to ensure growth is sustained and evergreen – in all parts of the country and all year round.”

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