1. Outlook for NI tourism 20 th March 2015 NIHF Tourism Summit Helen McDermott

2. 2 Overview

3. 3 Global economic overview Global tourism performance Northern Ireland economic outlook Structure of NI tourism industry NI tourism outlook & key challenges Overview

4. 4 Global economic overview

5. 5 Global GDP grew by 2.6% in 2014…

6. 6 …with a weak end to the year…

7. 7 …and China slowing markedly…

8. 8 …contributing to drop in oil prices... Update 1985/6: Oil price halved and then remained low as supply was strong 2009: Oil price fell from $147 to $40 but then rose again as capacity was tight

9. 9 …while oil supply remains high...

10. 10 …there will be winners and losers…

11. 11 …but in net terms this will boost world growth...

12. 12 US$ appreciation will dampen US exports…

13. 13 …but good news elsewhere

14. 14 Emerging markets showing no signs of improvement

15. 15 Risks to the outlook skewed towards the downside…

16. 16 Greek exit is big threat to Eurozone recovery

17. 17 Global tourism performance

18. 18 Visitor numbers forecast to slow in 2015…

19. 19 …driven by weak growth from Russia and Asia EMs

20. 20 …and Ukraine also down, but at a lower volume

21. 21 Russian weakness can be seen in sub-region trends…

22. 22 Northern Ireland economic outlook

23. 23 Recovery finally picked up in 2014, but lags behind UK…

24. 24 …however, employment growth expected to stagnate…

25. 25 …with the return to pre-recession peak remaining evasive

26. 26 Mixed fortunes for tourism related sectors recently… -7,000 jobs 2010-14

27. 27 …but more promising outlook +11,000 jobs 2014-20

28. 28 Unemployment remains high but growth to track UK

29. 29 Structure of Northern Ireland tourism

30. 30 Tourism is a key contributor to NI economy… UK total tourism contribution = 11.4% World total tourism contribution = 9.5%

31. 31 …and supports 1 in every 15 jobs across the region UK total tourism contribution = 11.7% World total tourism contribution = 8.9%

32. 32 NI tourism dominated by domestic visitors…

33. 33 …which has remained relatively stable in recent years £192mn expenditure by NI residents during trips within NI = 26.6% of total tourism spending

34. 34 However, visitors from outside of NI bring greater return

35. 35 With total tourism expenditure of £474mn in NI in 2013

36. 36 GB the clear leader in visitor arrivals growth since 2000 +335 visitors 2000-13

37. 37 NI tourism outlook and key challenges

38. 38 Arrivals exceed peak with continued expected growth…

39. 39 …despite challenge of euro depreciation…

40. 40 …with moderate falls in market share…

41. 41 …travel from EZ markets is weaker…

42. 42 …but larger markets are the key driver of growth +369 visitors 2014-20

43. 43 An additional £162mn in revenue expected by 2020

44. 44 Expected arrivals growth to NI, below RoI average

45. 45 VAT reduction could be key to tourism industry ■VAT in Northern Ireland is currently set at 20% - relatively high we compared to a European average of 10.8% and the Republic of Ireland at 9%. Since the Republic of Ireland reduced their VAT rate on the hotel industry to 9% in 2011, they have seen a surge in visitor numbers and revenue, albeit with a lag period of around 1 year. ■The reduction in VAT is forecast to lead to record revenue and visitor numbers in 2015 in the Republic of Ireland – A clear indication of the power of tax cuts in the tourism industry

46. 46 Improving access – particularly air to gain market share from long haul markets where visitors typically stay for longer and spend more Policy support to the tourism industry via tax cuts (VAT & APD) Building on recent successes and securing new events that attract international visitors (e.g. World Police and Fire Games, Derry-Londonderry City of Culture, Giro D’Italia, Ryder Cup) External challenges will prevail in the form of weaker euro Key challenges to NI tourism

47. 47 Forecast gives cause for optimism and concern

48. 48 For more information: Helen McDermott, Lead Economist, Tourism Economics, an Oxford Economics company, +44 28 92 635 404, hmcdermott@oxfordeconomics.com

49. 49 Annex

50. 50 …as lower oil price boost incomes…

51. 51 …and pick-up in consumer confidence

52. 52 Few sectors outperforming UK since recession…

53. 53 …growth sectors have smaller market share 82.3% share of 2014 jobs 17.7% share of 2014 jobs