Keeping domestic tourism strong a challenge and an opportunity

As domestic tourism in 2022 soared to €2.9bn, the challenge for hospitality firms is to ensure this trend is not short-lived warns Bank of Ireland head of Hospitality Gerardo Larios Rizo.

Ireland’s domestic tourism market is booming. Recent data from the Central Statistics Office showed how domestic tourism in Ireland grew 36% year-on-year to €2.9bn in revenues thanks to more than 6.6m holiday trips in 2022.

The average spend for all trips and holiday trips in 2022 was €221 and €281 respectively with holiday spend increasing 39% versus 2019 to almost €1.9bn.

“The trend could be short lived as the number of overseas trips have been steadily increasing – January and February are in line with pre-pandemic stats”

For bodies like Fáilte Ireland the trend was received as a sure sign that Ireland’s domestic tourism product has never been better.

However, as the pandemic retreats in the rear view mirror and holidaymakers see the world as once again their oyster, tourism and hospitality businesses will need to work hard to maintain these recent growth levels, says Gerardo Larios Rizo, head of Hospitality Sector at Bank of Ireland.

Maintaining growth

Tracking the numbers, Rizo said: “These record numbers were clear since Q2 last year.

“The 13% increase in the number/volume of trips was great as was the 19.5% increase in average spend/value of each trip which supported hotel, bar and restaurant operators last year.

“Irish travellers spend higher than the average traveller in their trips abroad as well so is no surprise that they decided to splurge in the staycations last year.”

But how sustainable is this performance? “The trend could be short lived as the number of overseas trips have been steadily increasing – January and February are in line with pre-pandemic stats,” Rizo said.

To sustain this performance the quality of the offering and value for money will be essential in order to ensure strong domestic demand continues.

“Most of the people in the hospitality industry I have been speaking to, continued to do the right things like focusing on good customer service which was challenging last summer due to the difficulties in securing the extra staff needed to deal with the heightened demand (a large number of people left the sector during the pandemic so very skilled staff were lost to other sectors).

“Crucially, the strong performance experienced last year also allowed many premises to invest in their facilities to improve their guest experience. Painting, decorating, new beds, new bathrooms, as well as additional facilities like gyms and pet friendly rooms could ensure that the ‘stronger’ domestic demand remains a feature of the sector in Ireland like it already is in other countries like Germany.”

Rizo said that air and sea arrivals into the country are also on an encouraging growth path.

“CSO stats to the end of February show numbers are up 3% on the same period in 2019. However the mix has changed, GB visitors are down 8% for the first two months of 2023 vs 2019 while EU  visitors are up 13%. This will present additional opportunities to some locations across the midlands which are favoured by the French or German visitors.

“There are of course challenges ahead including the impending increase in hospitality VAT, the uncertainty about the 30% of tourism accommodation currently used for the housing of displaced Ukrainian citizens and refugees, and the end of the ‘grace’ period regarding the warehoused tax obligations which will start incurring interest at the end of this month.

“However I remain optimistic that operators will be able to face these challenges with the support of their domestic and overseas clientele,” Rizo said.

John Kennedy
Award-winning editor John Kennedy is one of Ireland's most experienced business and technology journalists.