Belfast Telegraph

Economy Watch: As Northern Ireland tourism enjoys boom, retail close to hitting panic button

 

By Andrew Webb, director at Baker Tilly Mooney Moore

Two important sectors for our city economy - retail and tourism - are experiencing vastly contrasting fortunes at the moment.

These performances are worth highlighting, as both raise crucial questions about what our city centre will be in years to come.

Starting with positive news, the tourism industry is enjoying a bumper period.

Figures just released for 2017 show a record-breaking year of close to £1bn of tourism revenues. All the tourism statistics for 2017 point towards a continuing upward trend.

There were more than 2.1 million hotel rooms sold, giving our hotels an occupancy rate of 73%.

Tourism spend from out of state visitors, which is in effect an export and of real importance in terms of economic growth, and a particular focus for developing the sector, reached £657m in 2017, up 7% from £613m in 2016.

Employment in the sector now accounts for about one in 10 of all jobs in Northern Ireland and employment levels are around 5% higher than during the lowest point (during 2012) of the most recent recession. This buoyant performance has come on the back of a period of heavy government focus, which has supported delivering new or improved tourist attractions and in delivering high profile global events such as the Giro d'Italia and prestige golf tournaments.

This strongly supportive policy environment, and subsequent success has given hoteliers the confidence to invest heavily in new and improved product.

The investment in projects under way, and likely to complete by 2020, is around £0.5bn.

Half of this is in new developments in Belfast - the recent opening of the AC Marriott in Belfast and soon-to-be-opened Grand Central Hotel are just two recent examples we can cite.

So, the good news for our city economy is that we are getting record levels of tourists staying in hotels and spending more money here than ever before.

The bad news is that this tourism spending boost doesn't seem to be buffering the retail sector from one of the worst periods it has endured.

We've reached a point of real concern for retail, and by extension commercial property, I fear.

When even Marks and Spencer and House of Fraser are scaling back their UK property footprint, it could be time to hit the panic button.

We are heading for the worst year in retail since 2008 and the Woolworths collapse in 2009, according to the Centre for Retail Research.

It has tracked that in the first 100 days of this year 18 large and medium-sized retail companies collapsed, six retailers are using Company Voluntary Arrangements to close nearly 300 stores and others are implementing partial retreats. The research estimates that by the end of 2018, 10,000 stores will have closed across the UK.

This is a dire prediction and should strike fear into anyone with an interest in seeing town and city centre success.

To place retail in some context, there are 130,000 retail jobs in Northern Ireland. That is close to one in every five jobs here.

While it may not always gain the attention of the 'high value' sectors such as ICT and cyber security, it is the largest provider of jobs in the NI economy.

In addition to the unfortunate human cost in jobs and wages, recent store closures are prompting a flow of retail units coming onto the market.

With a lot of sites coming to market, owners and agents will have to give serious thought to how best to market them.

This may require bold thinking in seeking and allowing for changes of use - might leisure, office or residential work better in some locations than retail?

Obviously, agents and owners will wish to get their properties let as soon as possible.

This current retail malaise shows no sign of abating.

Policy makers and planners should be deep in thought on what we want our places to be.

Front of mind in those thoughts should be whether there will be sufficient demand for bricks and mortar retail to sustain city centres and out of town, big box format shopping centres.

The shift in retail trends feels seismic and irreversible.

My view is that our town and city centres now need the same level of policy focus and action that the tourism sector has had over the past decade to survive and thrive.

Look what happened in that sector when we pursued success with a coherent strategy.

Policy needs to come out strongly for 'town centre first' and back it up with action.

Belfast Telegraph

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