Monday 18 March 2019

Tourism sector paying heavy price for Brexit

Concerns rise as number of UK passengers flying to Dublin falls 'like a stone' following sterling slump

Britain’s Queen Elizabeth in the English Market in 2011 — however visitor numbers from that country have declined recently Pic: Maxwells Dublin
Britain’s Queen Elizabeth in the English Market in 2011 — however visitor numbers from that country have declined recently Pic: Maxwells Dublin

Dan White

The Brexit fallout is hitting Irish tourism hard, with UK visitor numbers down 7pc in the first five months of the year. Ireland's largest indigenous employer, which provides almost 230,000 jobs and generates €4.6bn in overseas revenue, finds itself in the frontline as UK visitors stay at home.

Last week Kevin Toland, the outgoing chief executive of the Dublin Airport Authority, sounded the alarm. He told the European Parliament's Tourism and Transport Committee that the number of UK passengers flying through Dublin Airport had been "falling like a stone" in recent months.

With 27.8 million passengers in 2016, almost 85pc of the total, Dublin Airport is a key indicator of the health of the Irish tourist industry. As Toland explained to MEPs last week, Ireland's major airports are heavily reliant on UK business with 39pc of the DAA's passengers originating in the UK - 36pc of Dublin Airport's and 58pc of Cork's.

According to Toland, UK passenger numbers were down 6.8pc at the DAA's airports in the first five months of 2017, almost exactly in line with the overall drop in UK visitor numbers.

A British visitor planning an Irish holiday would have received €1.43 for his or her pound in July 2015. By this week they would have received just €1.12. This means that, for a UK visitor, the price of a €1,000 Irish holiday has risen by 27.5pc, from £700 to €893, in the space of just two years.

Holidaying in Ireland, never particularly cheap, has just got much more expensive for UK visitors. With over 3.9 million British visitors in 2016 - almost 41pc of all overseas visitors to this country - the UK is a key market for Irish tourism.

While other European tourist destinations have also felt the impact of weaker sterling, Ireland's seems to have suffered disproportionately. While overseas trips by UK visitors were up by 3pc in the first four months of 2017, trips to Ireland were down by 8pc.

A report on the impact of Brexit on Irish tourism published earlier this month by the sector's lobby group, the Irish Tourism Industry Confederation (ITIC) observed: "Ireland is losing share of UK outbound travel.

"We are very much of the view that Brexit is the biggest challenge to Irish tourism since the global financial crash of 2008," says ITIC chief executive Eoghan O'Mara Walsh.

While the 7pc drop in UK visitor numbers in the first five months of the year is bad enough, even those who do make the trip from the across the water seem to be spending less. The latest data from the CSO, which covers the first quarter - the quietest quarter of the year - of 2017, shows an 8pc drop in spending by UK visitors.

Since then the drop in spending has gathered pace with many UK visitors either trading down to cheaper accommodation and/or cutting back on the length of their stay in Ireland. This has resulted in downward pressure on yields for both hotels and airlines catering to UK travellers. Dublin restaurants are also feeling the pinch with "early bird" and other cut-price menus making a reappearance in an effort to entice cash-strapped tourists.

Of course, it's not all bad news for Irish tourism. While the number of UK visitors has fallen in the wake of the UK's Brexit vote, traffic from other markets has continued to increase. American business is booming with the number of visitors from North American jumping by 23pc to 663,000 in the first five months of 2017. Other markets also performed strongly with the number of non-UK European visitors up 4pc to 1.26 million and the number of from the rest of the world up nearly 22pc to 213,000.

Non-UK visitors also tend to spend more. While 41pc of our overseas visitors came from the UK in 2016, those visitors generated a far lower proportionate share of overseas tourist revenue, about €1.48bn or about 30pc of the total.

Pat McCann, chief executive of Ireland's largest hotel operator Dalata, points out that while UK visitors account for almost 41pc of all arrivals they make up less than 25pc of hotel guests. This is because many UK visitors either don't stay overnight or else stay with friends and relatives.

The strong growth in visitors from other countries means that the fall-off in UK visitor numbers hasn't resulted in a full-blown crisis for the tourist industry similar to what happened following the 2008 crash, when the number of overseas visitors collapsed from over eight million in 2007 to just six million in 2010, a fall of 25pc in just three years.

In fact the overall number of overseas visitors to Ireland was up another 3pc to 3.57 million in the first five months of 2017. However, overall overseas tourist revenue was down by 1.3pc to €684m in the first quarter of the year.

That's the good news. The bad news is that, with sterling so weak, the UK has been far more successful at attracting overseas visitors with numbers up a massive 11pc in the first four months of 2017.

The UK's success in growing overseas visitor numbers so strongly almost certainly comes partly at Ireland's expense. If sterling weren't so weak would some of these visitors have chosen Ireland instead?

O'Mara Walsh contends that, notwithstanding the continuing growth in visitor numbers from other countries, Irish tourism has a "Brexit problem". And it's not just visitor numbers. What happens to flights between Ireland and the UK after Brexit when Britain will also leave single aviation market? Will the common travel area between the two countries survive?

He estimates that Brexit will cost Irish tourism €100m in 2017 and is calling on the Government to stump up €12m to fund a campaign to raise awareness of Ireland in the UK. While this might help treat the short-term symptoms, coping with a botched Brexit could end up costing Irish tourism far more.

Sunday Indo Business

Also in Business