New report reveals £2.3billion economic impact boost from Northern Ireland tourism

A new report has found that Northern Ireland’s tourism sector made an economic impact of £2.3bn accounting for 5.1% of the local economy (Gross Value Add) in 2021.

The sector also supported 65,000 jobs, 7% of all employment in the region. Commissioned by the Northern Ireland Tourism Alliance (NITA), the report by Grant Thornton is the first time a complete measure of tourism’s local economic impact has been made.

Traditionally the sector has been assessed using indicators such as visitor spend, but this doesn’t account for supply chain benefits or the number of jobs in other sectors, such as retail, which benefit significantly from tourism.

Due to Covid-19 restrictions which halted tourism activity for three months in 2021 the report covers a nine-month period. Grant Thornton also reviewed the sector’s pre-pandemic performance and concluded that GVA in 2019 was £3bn, 6.8% of the Northern Ireland economy. The report surveyed 200 tourism firms and based on these responses NITA estimates that by 2023 much of the sector had largely returned to pre-pandemic levels of activity.

Additionally, the survey found that while optimism overall is positive, a significant number of firms reported that their finances are fragile and that Covid-19 restrictions have caused long-lasting scarring on cash flows.

Launching the report to the 175 attendees at its annual conference in Titanic Belfast today, Dr. Joanne Stuart OBE, NITA CEO, said:

“Tourism is a major part of Northern Ireland’s economy but until now we have undervalued the scale of its impact. For the first time we have a clearer picture of the sector’s worth, supporting 5% of the economy and 7% of total employment.

“The sector has been more narrowly defined previously, but this comprehensive economic assessment demonstrates the far-reaching benefits of tourism. In retail, for example, it’s estimated that 27% of activity is reliant on tourism.

“Tourism provides jobs right across Northern Ireland, in rural and urban areas and for every qualification level. There is opportunity to further grow the sector if we continue to promote Northern Ireland overseas and address issues such as the availability of talent, the VAT differential across the island of Ireland and the new UK ETA travel permit scheme which could deter international visitors.”

The survey, conducted during the summer, found that the key challenge facing the sector is the cost-of-living crisis (49%) followed by increased energy costs (45%) and a lack of disposable income among consumers (43%).

Almost half of respondents reported that their business was ‘stable’, but nearly a quarter were in ‘consolidation mode’ and 17% were ‘financially fragile’. Just over 10% were performing ahead of plan or expanding. Almost a third said that staff shortages were restricting their operational effectiveness.

Judith Owens MBE, NITA’s chair and CEO of Titanic Belfast, added: “While there are challenges impeding the growth of the sector, I am encouraged by how resilient Northern Ireland tourism is. According to the survey 62% of firms are optimistic about the future.

“This positivity suggests that businesses are keen to grow. Converting this into real jobs requires continued investment by the industry in products and people and addressing strategic challenges such as skills availability. The sector also needs ongoing support from Government to build upon the marketing successes of the past 20-years – if we don’t continue to actively promote the region visitor numbers will not be sustained.”

With international travel still down 10% on pre-Covid-19 levels and ongoing financial pressures on domestic consumers, the report suggests that increasing the number of overseas visitors will be critical for growth. More firms reported a larger increase in international bookings (30%) compared to domestic bookings (17%) over the past year.

Andrew Park, Economist from Grant Thornton, added: “Our work with clients in tourism and hospitality always shows us that the sector is a vital part of the NI economy. It has been a concern of ours that the sector is undervalued. Our analysis addresses this issue, building a far broader picture of tourism’s value to NI than is usually understood.”

Further analysis will be undertaken when economic tourism data for 2022 is published later this year.