Outlook for NI tourism
20th March 2015
NIHF Tourism Summit
Helen McDermott
2
Overview
3
Global economic overview
Global tourism performance
Northern Ireland economic outlook
Structure of NI tourism industry
NI tourism outlook & key challenges
Overview
4
Global economic overview
5
Global GDP grew by 2.6% in 2014…
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Advanced Economies
Emerging Markets
World
World: GDP growth Emerging Markets vs Advanced Economies
Source: Oxford Economics
6
…with a weak end to the year…
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
2006 2007 2008 2009 2010 2011 2012 2013 2014
World: Monthly export indicator
Source : Oxford Economics/Haver Analytics
Indicator based on US, German and Chinese export orders surveys
Standardised index
7
…and China slowing markedly…
8
…contributing to drop in oil prices...
Update1985/6: Oil price halved and then remained low as supply was strong
2009: Oil price fell from $147 to $40 but then rose again as capacity was tight
9
…while oil supply remains high...
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
2013 2014
Demand Supply
World: Oil supply and demand% year
Source : IEA/Oxford Economics
10
…there will be winners and losers…
11
…but in net terms this will boost world growth...
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
2014 2015 2016 2017 2018 2019
Global GDP growth, real US$Annual % change
Source: Oxford Economics
12
US$ appreciation will dampen US exports…
0.0
0.5
1.0
1.5
2.0
2.5
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
US dollar exchange rate, vs Euro and British pound
US$ vs Euro
US$ vs GBP
US$ per currency
Source: Oxford Economics
13
…but good news elsewhere
3.1%
0.4%
3.7% 3.8%
2.7%
3.7%3.5%
4.2%
5.7%
3.4%
4.6%
5.3%
4.4%
4.9%
3.7%
0%
1%
2%
3%
4%
5%
6%
7%
US UK Eurozone Germany France
2014 2015 2016
Exports growth across key markets
Source: Oxford Economics
14
Emerging markets showing no signs of improvement
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Brazil China India Russia
GDP growth, real local currency
2014
2015
2016
2017
Annual % change
Source: Oxford Economics
15
Risks to the outlook skewed towards the downside…
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
World GDP growth under 4 scenarios, real local currency
Baseline
Greek exit of Eurozone
Investment stalls in China
World GDP picks as oil prices fallfurther
Annual % change
Source: Oxford Economics
Forecast
16
Greek exit is big threat to Eurozone recovery
17
Global tourism performance
18
Visitor numbers forecast to slow in 2015…
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Overnight visits growth
GDP, real US$ growth
Global overnight visits and GDP (US$, real) growthAnnual % change
Source: Tourism Economics
Forecast
19
…driven by weak growth from Russia and Asia EMs
4.9%
3.6% 3.8%
6.0%
9.2%
4.8%
3.1%
4.5%
0.6%
5.4%
6.1%
3.9%
4.9% 5.1%
3.4%
6.6%6.4%
4.4%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Global Americas Europe Asia Middle East Africa
2014
2015
2016
Outbound overnight visits growthAnnual % change
Source: Tourism Economics
Back to menu
20
…and Ukraine also down, but at a lower volume
-0.3%-0.7%
-2.8%
5.3%
3.9%
-10.7%
-4.0%
-8.7%
1.8%2.7%
1.6%
4.9%
-2.1%
6.4%
3.2%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Russian Federation Poland Ukraine Hungary Czech Republic
2014
2015
2016
Outbound visits growth, Emerging EuropeAnnual % change
Source: Tourism Economics
Back to menu
21
Russian weakness can be seen in sub-region trends…
5.0%
1.7%
3.8%
2.8%
-3.3%
0.6%
3.8%
2.7%
3.4%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
Western Europe Emerging Europe Europe
2014
2015
2016
Outbound visits growth from Europe by sub-region, 2014-16
Source: Tourism Economics
22
Northern Ireland economic outlook
23
Recovery finally picked up in 2014, but lags behind UK…
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
GVA growth, NI vs UK
United Kingdom
Northern Ireland
Annual % change
Source: Oxford Economics
Forecast
24
…however, employment growth expected to stagnate…
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Employment growth, NI vs UK
United Kingdom
Northern Ireland
Annual % change
Source: Oxford Economics
Forecast
25
…with the return to pre-recession peak remaining evasive
760.0
780.0
800.0
820.0
840.0
860.0
880.0
29,000.0
30,000.0
31,000.0
32,000.0
33,000.0
34,000.0
35,000.0
36,000.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Employment (000s), NI vs UK
United Kingdom
Northern Ireland
UK employment (000s)
Source: Oxford Economics
Forecast
NI pre-recession peak
UK pre-recession peak
NI employment (000s)
26
Mixed fortunes for tourism related sectors recently…
76.8%
76.6%
71.4%
29.5%
25.1%
22.7%
20.4%
19.0%
6.0%
-0.2%
-0.7%
-1.5%
-10.8%
-29.2%
-50.6%
-56.3%
-57.9%
-76.0%
-164.3%
-200% -150% -100% -50% 0% 50% 100%
Health & social workManufacturing
Admin & supportInformation & comms
Arts, entertainment, etcOther services
EducationReal estate
Professional servicesElectricity, gas, etc
Mining & quarryingWater supply
Accommodation & FBSFinancial & insurance
Transportation & storagePublic admin
Wholesale & retailAgriculture, forestry, etc
Construction
Net contribution to total jobs growth
Contribution to employment growth by sector, 2010-14
Source: Oxford Economics
-7,000 jobs 2010-14
27
…but more promising outlook
53.3%
33.6%
32.8%
27.2%
24.8%
20.5%
19.4%
18.9%
11.7%
4.6%
-0.1%
-0.2%
-1.2%
-1.3%
-3.3%
-11.4%
-22.3%
-25.5%
-81.5%
-100% -80% -60% -40% -20% 0% 20% 40% 60% 80%
Admin & supportConstruction
Professional servicesTransportation & storage
Information & commsAccommodation & FBS
Other servicesArts, entertainment, etc
Wholesale & retailReal estate
Electricity, gas, etcWater supply
Financial & insuranceMining & quarrying
Agriculture, forestry, etcHealth & social work
EducationManufacturing
Public admin
Net contribution to total jobs growth
Contribution to employment growth by sector, 2014-20
Source: Oxford Economics
+11,000 jobs 2014-20
28
Unemployment remains high but growth to track UK
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Unemployment rate (claimant count), NI vs UK
United Kingdom
Northern Ireland
Unemployment rate (%)
Source: Oxford Economics
Forecast
29
Structure of Northern Ireland tourism
30
Tourism is a key contributor to NI economy…
15.0%13.3%
11.2%10.4%
8.5%8.1%
6.6%5.4%
4.4%4.4%
3.7%3.2%3.2%
2.4%2.4%
2.2%1.3%
1.2%1.0%1.0%
0% 2% 4% 6% 8% 10% 12% 14% 16%
Wholesale & retailManufacturing
Public adminHealth & social work
EducationReal estate
Total TourismConstruction
Financial & insuranceProfessional services
Transportation & storageInformation & comms
Admin & supportAccommodation & FBS
Direct TourismOther services
Arts, entertainment, etcWater supply
Agriculture, forestry, etcElectricity, gas, etc
% share of total economy GVA
Sectoral contribution to total GVA, NI, 2013
Source: Oxford Economics, NITB
UK total tourism contribution = 11.4%World total tourism contribution = 9.5%
31
16.2%16.2%
9.8%9.0%
7.2%7.0%
6.5%5.8%
5.5%4.3%
3.9%3.9%
3.8%2.4%2.4%2.3%2.3%
0.9%0.7%
0.2%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18%
Wholesale & retailHealth & social work
ManufacturingEducation
Public adminConstruction
Total TourismAdmin & support
Accommodation & FBSProfessional services
Direct TourismAgriculture, forestry, etc
Transportation & storageOther services
Arts, entertainment, etcFinancial & insurance
Information & commsReal estate
Water supplyElectricity, gas, etc
% share of total economy GVA
Sectoral contribution to total jobs, NI, 2013
Source: Oxford Economics, NITB
…and supports 1 in every 15 jobs across the region
UK total tourism contribution = 11.7%World total tourism contribution = 8.9%
32
NI tourism dominated by domestic visitors…
48.6%
28.6%
9.8%
3.2%1.3%
1.1% 2.2% 2.9%
% share of visits to/in Northern Ireland, 2013
Northern Ireland domestic
Great Britain
Republic of Ireland
US
Germany
France
Canada
Spain
Italy
Netherlands
Rest of Mainland Europe
Other
33
…which has remained relatively stable in recent years
2,046
4,713
2,018
3,906
1,983
4,584
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Within NI RoI / GB
2011
2012
2013
Trips taken by NI residents in recent years
Source: NISRA
£192mn expenditure by NI residents during trips within NI = 26.6% of total tourism spending
34
However, visitors from outside of NI bring greater return
2.31
2.74
5.21
0
1
2
3
4
5
6
Average stay
NI domestic
RoI
GB & overseas
Average length of stay by origin market
Source: NITB
£97
£143
£280
0
50
100
150
200
250
300
Average spend per trip
NI domestic
RoI
GB & overseas
Average spend per trip by origin market
Source: NITB
35
With total tourism expenditure of £474mn in NI in 2013
Britain58%
Mainland Europe15%
Other areas14%
North America13%
Structure of tourism expenditure by GB & overseas visitors in NI
Source: Tourism Ireland
36
GB the clear leader in visitor arrivals growth since 2000
52%
16%
10%
6%
5%
5%
5%
5%
1%
0%
-2%
-3%
-10% 0% 10% 20% 30% 40% 50% 60%
Britain
Other Europe
Other areas
Spain
Germany
France
Australia
US
Italy
Netherlands
Canada
Nordics
Net contribution to total visitor arrivals growth from overseas
Contribution to overseas visitor arrivals growth by origin, 2000-13
Source: Tourism Ireland
+335 visitors 2000-13
37
NI tourism outlook and key challenges
38
Arrivals exceed peak with continued expected growth…
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
Northern Ireland visitor arrivals from GB and overseas (000s)
Source: Tourism Ireland
+369mn visitors from2014 level(+21.1%)
Forecast
Return to peak by 2015
39
…despite challenge of euro depreciation…
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
Euro / £
Euro / GB pound exchange rate
Source: Oxford Economics
40
…with moderate falls in market share…
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
Northern Ireland visitor arrivals share of Global outbound
Source: Tourism Ireland
Forecast
41
…travel from EZ markets is weaker…
Great Britain
US
CanadaFranceGermany Italy
Spain NetherlandsNordicsOther Europe Australia
0%
10%
20%
30%
40%
50%
60%
70%
80%
0% 1% 2% 3% 4% 5% 6% 7% 8%
Orig
in m
arke
t sha
re 2
014
Average annual growth in visitor arrivals, 2014-20
Origin market share vs average annual growth, 2014-20
Source: Tourism Ireland
42
…but larger markets are the key driver of growth
70.9%
6.5%
4.5%
3.6%
3.6%
2.2%
1.4%
1.0%
0.9%
0.9%
0.1%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Great Britain
US
Canada
France
Australia
Netherlands
Spain
Other Europe
Italy
Germany
Nordics
Net contribution to total visitor arrivals growth from overseas
Contribution to overseas visitor arrivals growth by origin, 2014-20
Source: Tourism Ireland
+369 visitors 2014-20
43
An additional £162mn in revenue expected by 2020
0
100
200
300
400
500
600
700
Revenues from GB and overseas (£m, current prices)
Source: Tourism Ireland
+£162mn from 2014 level(+35.2%)
Forecast
44
Expected arrivals growth to NI, below RoI average
NI RoIGreat Britain 139024 276051 50.4%North America 2030 61892 3.3%Mainland Europe 15593 302226 5.2%Other Areas - - -Source: NITB, Tourism Ireland
NI relative
seat capacity
2014/15 Seat Capacity, NI vs RoI
-20%
-15%
-10%
-5%
0%
5%
10%
15%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
NI
RoI
Visitor arrivals growth, NI vs RoI (% per annum, 2014-20
Source: Tourism Ireland
Forecast
45
VAT reduction could be key to tourism industry
■ VAT in Northern Ireland is currently set at 20% - relatively high we compared to a European average of 10.8% and the Republic of Ireland at 9%. Since the Republic of Ireland reduced their VAT rate on the hotel industry to 9% in 2011, they have seen a surge in visitor numbers and revenue, albeit with a lag period of around 1 year.
■ The reduction in VAT is forecast to lead to record revenue and visitor numbers in 2015 in the Republic of Ireland – A clear indication of the power of tax cuts in the tourism industry
0
1000
2000
3000
4000
5000
6000
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
Overseas visitors and revenue in Republic of Ireland
Overseas visitors
Overseas tourism revenue
Source: Tourism Economics
Visitors (000s) Revenues (€mns)
VAT cut
46
Improving access – particularly air to gain market share from long haul markets where visitors typically stay for longer and spend more
Policy support to the tourism industry via tax cuts (VAT & APD)
Building on recent successes and securing new events that attract international visitors (e.g. World Police and Fire Games, Derry-Londonderry City of Culture, Giro D’Italia, Ryder Cup)
External challenges will prevail in the form of weaker euro
Key challenges to NI tourism
47
Forecast gives cause for optimism and concern
2013 2020Net change 2013-
20 TargetGrowth
requirementContribution to
target
Visitors (000s)Domestic NI 1,983 - - - - -RoI 400 - - - - -GB & Overseas 1,693 2,118 425 - - 100.2%Total 4,076 - - 4,500 424 -
Revenue (£mn)Domestic NI 192 - - - - -RoI 57 - - - - -GB & Overseas 474 622 149 - - 53.6%Total 723 - - 1,000 277 -Source: DETI, NITB, Tourism Economics
2020 Tourism Strategy Targets vs expected performance
48
For more information:
Helen McDermott,
Lead Economist,
Tourism Economics, an Oxford Economics company,
+44 28 92 635 404,
49
Annex
50
…as lower oil price boost incomes…
51
…and pick-up in consumer confidence
-45
-40
-35
-30
-25
-20
-15
-10
-5
0
5
10
0
40
80
120
160
2001 2003 2005 2007 2009 2011 2013 2015
Source: Haver Analytics
Eurozone(RHS)
US(LHS)
Consumer confidence: US, UK and Eurozone1985=100 % Balance
UK(RHS)
52
Few sectors outperforming UK since recession…
1.4%1.3%
0.4%0.1%
-0.2%-0.4%
-0.7%-0.7%
-0.8%-0.8%
-1.0%-1.8%-1.8%
-2.7%-3.2%
-3.6%-4.1%
-4.8%-4.9%
-5.9%
-7% -6% -5% -4% -3% -2% -1% 0% 1% 2%
Public adminManufacturing
Electricity, gas, etcReal estate
Other servicesInformation & comms
Health & social workAdmin & support
EducationArts, entertainment, etc
Wholesale & retailTotal
Mining & quarryingFinancial & insurance
Water supplyAccommodation & FBS
Professional servicesTransportation & storage
ConstructionAgriculture, forestry, etc
NI average annual growth - UK average annual growth
NI sectoral employment growth relative to UK, 2010-14
Source: Oxford Economics
53
…growth sectors have smaller market share
82.3% share of 2014 jobs
17.7% share of 2014 jobs
1.3%0.8%
0.5%0.4%
0.4%0.3%
-0.1%-0.1%
-0.2%-0.2%-0.2%
-0.2%-0.3%
-0.5%-0.5%
-0.5%-0.6%
-0.6%-0.7%
-0.9%
-2% -1% -1% 0% 1% 1% 2%
Agriculture, forestry, etcElectricity, gas, etc
Water supplyMining & quarrying
ManufacturingInformation & comms
Transportation & storageOther services
Health & social workEducation
Financial & insurancePublic admin
Admin & supportArts, entertainment, etc
ConstructionAccommodation & FBS
TotalWholesale & retail
Professional servicesReal estate
NI average annual growth - UK average annual growth
NI sectoral employment growth relative to UK, 2014-19
Source: Oxford Economics
Top Related