NI tourism has wind at its back, even if it can be hard to predict
My last article focused on the commercial office market and the positive mood among developers, as displayed by a broad range of new build and renovation projects across the city. Given that we are well and truly into our holiday season, I thought it would be worth focusing on another sector that is showing similar levels of ambition and impressive performance - tourism.
The recent Irish Open golf tournament and launch of the new season of Game of Thrones has really turned media attention to our tourism sector and the increased levels of exposure Northern Ireland gets as a tourist destination.
These events coincided with the release of new tourism statistics which show year on year improvements.
All the clichés about NI being on a crest of a wave were duly trotted out, and with good reason. Against an ambitious target of a tourism industry that generates £1bn in revenues by 2020, 2016 figures hit some unprecedented levels.
Tourism NI tells us that during 2016, 4.6 million overnight trips were taken in NI by visitors and NI residents. They stayed for more than 15 million nights, generating over £850m (£87m or 11% more than in 2015).
This equates to some £2.3m spent by tourists every day during 2016. Declines in domestic tourists were off-set by growth in GB and overseas as well as ROI visitors, with NI welcoming record levels of 2.6m visitors from outside NI in 2016, 12% more than in 2015. Positively, increases in spend were evident for all main market areas, with the GB market accounting for almost half of the additional spend in 2016.
Belfast remains the main draw for tourists. All the key indicators improved again in 2016. There were around 1.5m trips to the city, up 7% on the 2015 numbers. Perhaps more importantly, spend was up by 20% to £334m. Four in every ten pounds spend by tourists in NI is spent in Belfast. Within the city, occupancy levels for hotel rooms were 79%. Again, this is up on the 2015 figure of 77%. The latest Northern Ireland Hotels Federation (NIHF) Hotel Expansion Report provides a very comprehensive assessment of where the hotel sector is headed. Providing an update on the first half of this year, the NIHF shows strong performance. Trading in the first six months of 2017 in Belfast 2017 has been strong with all KPIs rising - Occupancy is up to 78.7% YTD, with June sitting at a level of 92.2%. The average daily rate rose to £75.70, up 14.8%. Forecasts indicate a busy Q3 with reports of good forward booking though to October. Business in most locations remains leisure dominated with a strong weekend performance. All of this supports employment across close to 20,000 jobs - just under one in ten of all jobs in Belfast.
These occupancy levels appear to be sufficient to be driving some significant plans for growth in the number of hotel rooms across Belfast in the coming years. As it stands, there are approximately 4,000 hotel rooms in the city.
By the end of 2018, NIHF estimate that there will be a further 1,578 hotel rooms across Belfast, with new developments such as the Grand Central (which will bring around 300 new rooms to the heart of the city) and extensions such as Bullitt's or Ten Square's next phases. All in all, the number of additional rooms that are public knowledge now totals 3,800. If all this development were to come to fruition the number of hotel rooms in Belfast would double. As NIHF note in their report on future development, the consensus is that performance will influence some of this further growth so decisions on developing additional rooms beyond the current 1,600 planned for 2018 opening may be less 'firm'.
There is no doubt that the tourism sector is buoyant, with further reasons to look towards the future with confidence. The number of cruise ships coming into Belfast has grown remarkably over the past number of years, the new Waterfront Hall Conference Centre is reporting many impressive conference bookings well into the next 18 months/two years, and Titanic Visitor Centre continues to attract a multitude of awards and visitors. Positivity is one thing, but can NI and Belfast achieve the ambitious targets for tourism between now and 2020. NIHF identifies a range of important issues that do pose challenges for the sector. The challenges include:
• Skills: NIHF report a broad-brush metric that each additional hotel room requires one additional staff member. The sector is already experiencing recruitment challenges. The numbers presented to date suggest an additional 1,500 staff will be needed by the end of next year. Is that doable?
• Brexit: Estimates suggest that close to one in four hospitality staff are non-nationals. The outworkings of the Brexit negotiations could impact on a hotelier's ability to recruit. Also, with GB as a key market, any downturn in consumer confidence there could impact on visits to NI
• Visitor attractions: The success of the Titanic Visitor Centre has been a remarkable achievement. Tourism is a constantly evolving market and visitors need a reason to come here. There is an increasing consensus that Belfast requires another 'signature' tourism attraction.
Tourism is a hard sector to predict; the collapse of Sterling following the vote to leave the EU has arguably done as much as any marketing plan or major event to boost the number of visitors coming here but it would be churlish to only chalk recent successes up to a weak currency. The strong performance across several years certainly backs up the view that the sector is capable of delivering considerable economic success - it strikes me that this is a sector that has the wind at its back.
In next week's Economy Watch, we hear from Dr Esmond Birnie of the Northern Ireland economic policy centre