Domestic holidays hit by recession

THE RECESSION has seen a sharp fall-off in demand for domestic holidays by Irish residents, which is unlikely to be reversed until 2012, according to a report by the Irish Tourist Industry Confederation (ITIC).

Despite its bleak outlook, the confederation said demand for home holidays was “holding up better” than demand for trips abroad and would be “vital” for the survival of many tourism businesses and the recovery of the sector as a whole.

The Review and Outlook for Ireland's Domestic Travel Marketreport, published yesterday by ITIC, is one of the first comprehensive pieces of research conducted on the domestic holiday market.

The study estimated the market to be worth €1.5 billion annually to the economy, accounting for a 38 per cent share of all holiday bednights, and generating almost one-third of the economy’s total receipts from tourism.

The boom has seen a surge in demand for domestic holidays, with the sector more than doubling in size since 2000, largely on the back of a dramatic growth in short breaks by Irish residents.

Between 2004 and 2008, domestic holiday nights increased at a faster rate than holiday nights from overseas visitors, growing by 7 per cent per annum compared to 5 per cent from overseas.

Domestic market demand now accounts for more than 90 per cent of new business for Irish hotels, the report said.

However, the first six months of 2009 has seen a drop of 10 per cent in home holiday trips by Irish residents, and a 15 per cent decline in expenditure on domestic trips.

Nevertheless, the report said demand for home holidays was proving more resilient than demand for trips abroad, which fell 19 per cent during the period, and saw a 21 per cent drop in its value.

In its report, the confederation sets out possible scenarios for domestic market performance over the next three years, favouring what it described as a “battered but resilient outcome”.

This would see a further 10 per cent fall-off in demand for domestic trips next year, with the market stabilising in 2011, and returning to growth of 5 per cent in 2012.

The report said the sector’s recovery was strongly dependent on a restoration of the public finances, competitiveness and consumer confidence through “appropriate Government policies”.

ITIC chairman Tom Haughey said the importance of the domestic market cannot be overstated as “it underpins the overseas visitor market, sustains most tourism businesses on a year-round basis and, most critically of all, supports employment in the sector.