It has been a stellar year for the tourism industry in Ireland. According to Tourism Ireland, the marketing organization charged with enticing travellers to choose Ireland as their destination, overseas visitors between January and October of 2018 increased by 7.1% over the same timeframe last year. This is fantastic news since 4% of the Republic of Ireland’s GNP is attributable to tourism, the single largest native industry on the island.
A good portion of those additional tourists came from nearby European countries; there were 11% more from Italy this year and almost 20% more from Germany. But Britain’s increase was a mere 1%. So far in 2018, Great Britain accounts for a whopping 35% of travel to Ireland; any possible stagnation or decline in future tourists from Britain would be very worrisome indeed. Uncertainty surrounding Brexit, therefore, accounts for a great deal of anxiety about the outlook for Ireland’s tourism industry. Hospitality and tourism providers are also concerned about the impact that the recent VAT increase in Ireland will have; raising the VAT from 9% to 13.5% is going to make travel in Ireland more costly.
Essentially, despite healthy performance this year, the outlook for Ireland’s tourism industry in 2019 and beyond remains uncertain. Tourism, as opposed to business travel, is highly dependent on household discretionary income. The availability of discretionary income depends on, of course, employment and income levels. And if people decide to spend, rather than save, that discretionary income, the chances are good they will spend a lot of it on travel.
However, that decision to spend or save discretionary income cannot be taken for granted; it’s very subjective and heavily reliant on FEELINGS about the future. People only decide to spend their discretionary income if they feel they can depend on continued employment, steady or increasing income levels, and continued stability in the economic environment of their country. And there we find the rub for Ireland’s tourism industry. Brexit has dropped a bombshell of uncertainty on the citizens of the UK.
Niall Gibbons, the head of Tourism Ireland, told the BBC this week that he was especially concerned for the industry should Brexit happen without a deal in place. There may be criticism for the deal currently on the table, but no deal at all would have a much bigger impact on consumer confidence. And a decrease in consumer confidence means a decrease in discretionary spending, especially on such luxuries as travel. Niall is especially concerned for Northern Ireland’s tourism industry because it is more difficult, and expensive, to get to from mainland Europe.
Not only might UK consumers start behaving more frugally when it comes to travel, but Brexit will also simply make it harder for UK citizens to get around. Right now, UK citizens enjoy an arrangement with Ireland and other EU members that allows for travelling freely between countries without going through customs and immigration formalities. All that ends with a no-deal Brexit. The airlines themselves would also find it extremely difficult to conduct business. With no Brexit deal in place, UK and EU airlines would have to work out their own deals to fly between countries, and flights would likely be grounded at least for the short term. On top of all that – UK consumers spending less on travel, UK tourists that do wish to travel facing more difficulties, and UK airlines not flying freely – Brexit with no deal in place would surely mean the value of sterling will decline further, making it more expensive for UK citizens to travel anywhere else, including Ireland.
But all optimism is not dead. Tourism Ireland is banking on a continued boost to tourism driven by fans of the television phenomena, Game of Thrones, especially as the last season airs in 2019. Hotels don’t plan to hold back on their plans to continue increasing room capacity. And of course, Tourism Ireland, like so many organizations in so many industries in so many countries around the world today, also plans to increase promotion efforts in the booming market that is China.
The UK does not exist in a bubble. Brexit was not a decision that would affect only the UK’s own citizens. In the global economy, we find ourselves in today, the politics and economy of almost any individual country will have rippling effects across the globe. Ireland, UK’s close neighbour, will surely feel the blow, and its tourism industry is bracing for impact.
At the moment though Industry leaders are rejoicing at Ireland continued economic upturn and one can only hope that it continues into the future. Only time will tell how Brexit will ultimately affect the economy of Ireland.