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There's reason for cheer in the outlook for Northern Ireland tourism

 

By Conor Lambe, Danske Bank economist

At the start of this year, the Department for the Economy published a draft Industrial Strategy for Northern Ireland. One of the targets contained in this document is to double the amount spent here by tourists from outside Northern Ireland by 2025. The draft publication also discusses attracting more visitors from North America, Australia, Europe and the Republic of Ireland, mentions a new Tourism Strategy, and refers to building our reputation by hosting large-scale events.

Tourism in Northern Ireland has undoubtedly received a boost in recent years from people wanting to visit the sites from the likes of Game of Thrones, or tee off on the same golf courses as their sporting heroes.

So it is encouraging to see that local policymakers want to build on this and make Northern Ireland a place that people around the world want to visit. But what does the latest data tell us about the performance of the local tourism industry?

The Northern Ireland Statistics and Research Agency (Nisra), estimates that there were around 4.6 million overnight trips in Northern Ireland last year.

This included about 2.6 million trips by external visitors and 2 million trips by local residents. Spending associated with the total number of trips was just over £850m, with the majority of this spending coming from the trips of external visitors.

Nisra points out that there was no statistically significant change in the total number of trips and spending between 2015 and 2016. However, looking back over a few years, the data suggests that external tourism activity expanded between 2011 and 2016, while over the same time period the number of domestic trips has not seen the same increase.

Looking forward, there are a number of reasons to be positive about the prospects for Northern Irish tourism. One is the investment being put into the local hotels sector. CBRE reports that there are currently 27 Belfast-based hotel projects in the pipeline, including those for which construction is already underway, as well as those still in the pre-planning stage. If all these projects are delivered, it would approximately double the number of hotel rooms in Belfast.

And while activity seems to be concentrated in the capital, there are also examples of planned hotel investment in other parts of the country, including in Ballymena, Derry/Londonderry and close to the Mourne Mountains. All of these projects show that investors are optimistic that Northern Ireland can become an even more attractive destination for tourists to visit, and that profitable opportunities exist within the local tourism industry.

Another reason for positivity is the attractions and upcoming events that will help bring in more visitors. The success of attractions and experiences based around Game of Thrones is well known and with the new series set to start in the UK this summer, opportunities exist to bring in more people over the coming weeks and months. In 2019, Royal Portrush will host The Open golf championship.

It must be hoped that local businesses, such as hotels, retailers, restaurants, bars and travel companies, can build on the opportunities that the next few years will bring to enhance their reputations and potentially expand their existing customer base. In the short-term, the fall in the value of the pound following the EU referendum could also provide a boost to Northern Irish tourism. The depreciation in sterling means it is now relatively cheaper for overseas visitors to holiday in the UK and so demand from foreign tourists to visit Northern Ireland could increase.

However, currency movements can be quite volatile and are difficult to predict, so the value of the pound can't be relied on to drive visits to Northern Ireland over a long time period.

Looking towards the longer-term prospects for tourism in Northern Ireland, there are a number of things that could provide a boost. One example is improvements to transport infrastructure. This could include a faster and more frequent rail service between Belfast and Dublin, which would make it easier to attract residents from the Republic of Ireland, as well as to bring overseas tourists north of the border during visits to Dublin. Improvements in transport infrastructure could also incorporate a train service between Belfast International Airport and the city centre. Perhaps the main argument in favour of infrastructure improvements like these would be the positive impacts on productivity - the low levels of which are one of the biggest challenges facing the local economy - they could deliver. But investment of this nature would also have beneficial effects on local tourism.

Attracting more global businesses to Northern Ireland would also be beneficial, as business travel would likely receive a boost. This could come through more people visiting Northern Ireland for internal and external business meetings. It would also be welcome news if Northern Ireland was able to host more international business conferences, particularly given the amount of investment currently underway in hotels, as they are often used as a venue for these events. While not always the first thing that comes to mind when people typically think about tourism, business travel can also deliver benefits to city and regional economies.

Another option worth considering is building deeper links between tourism in Northern Ireland and tourism in the rest of the UK, with the aim of persuading international visitors to popular destinations like London and Edinburgh to also spend some time in Northern Ireland during their trip. This could help attract visitors all year round and provide some of the demand for accommodation that the new hotels will need to succeed.

Boosting tourism in Northern Ireland is a goal of local policymakers, and short-term opportunities exist for businesses in the tourism industry.

But in the longer-term there are initiatives that government and businesses should consider to help drive this part of the economy to even greater heights.

  • In next week's Economy Watch, we hear from Ulster Bank chief economist Richard Ramsey

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