Holiday spend plans hint that Irish economic climate is still cool for many
21 August 2019
KBC sentiment survey suggests 22% of Irish consumers unable to afford holiday in 2019
Average spend of those going on holiday expected to be largely unchanged from 2018
Significant variations in holiday affordability and spending plans by age, education and gender
Survey hints that domestic tourism market likely to be solid rather than spectacular in 2019
Analysis by Austin Hughes, Chief Economist, KBC Bank Ireland
Although the focus of many Irish consumers has now shifted from Summer to school or possibly even Christmas, it may be useful to assess what holiday spending by Irish consumers in 2019 says about the current state of the Irish economy
Spending on holidays only accounted for about 6% of household spending in 2018 but last year it grew by 10.8%, twice as fast as the overall increase in consumer spending. The discretionary nature of holiday spending means it may provide some useful pointers as to the strength and spread of consumer spending power
in the Irish economy in mid-2019.
As part of the KBC consumer sentiment survey for July, we asked consumers how much they were planning to spending on their ‘main’ holidays this year
compared to a year ago. The responses to this question suggest two significant findings to us:
Some 69% of Irish consumers say they plan to take a significant holiday in 2019
- Some 22% of Irish consumers say they are unable to afford to go on holidays this year, while 69% plan to take a significant holiday and a further 9% are not taking a holiday for reasons other than affordability. With more than one in five consumers saying they are unable to afford a holiday, these results suggest a substantial number of households are still struggling financially in spite of the strong economic upswing of the past five or six years. The responses may also shed a little more light on current income distribution trends in Ireland.
- The Irish consumers going on holiday in 2019 say they are spending on average just 0.6% more than they did in 2018. So, caution rather than carefree spending is the watchword of the Irish consumer in mid-2019. While the survey was undertaken in July when Brexit worries had again become widespread, these responses also hint at notable behavioural changes in Irish spending patterns.
. Of the remaining 31%, the vast majority (22%) say they cannot afford to take a holiday. The remaining 9% cited other unspecified reasons for not going on holiday. As official data indicate that on average Irish people take two holidays per year, the survey suggests that those who take holidays take three holidays each on average while more than one in five Irish people don’t take any holiday because of financial constraints.
The demographic breakdown of those not taking a holiday paints a consistent socioeconomic picture
Of those Irish consumers taking holidays in 2019, most plan to spend around the same as last year
- 28% of those in social grades C2DE’s (typically defined as ‘working class’) say they cannot afford to take a holiday compared to 16% of ABC1’s (typically defined as middle class)
- 30% of those who left education at lower second level say they can’t afford a holiday compared to 14% of those with degree level or higher.
- However, there also appear to be notable gender and age related differences;
- Some 26% of women say they can’t afford a holiday this year compared to 19% of men, an outcome that appears consistent with a range of studies that point to a significant gender income gap.
- Those in middle-aged age groups are much more likely to say they can’t afford a holiday, with such difficulties increasing progressively up to age 65. While just 17% of those aged under 35 say they can’t afford a holiday, this rises to 23% of those aged 35-44, 26% of 45-54 year olds and 28% of those aged between 55 and 64. However, the number of those aged 65 and older who say they can’t afford holidays slips to 20%. These age differences likely reflect a range of pressures from education costs to pension provision falling on middle-aged groups that materially lessen discretionary spending power for many households in this category.
- Some 45% of consumers with definitive spending plans say they are spending the same amount on a holiday as last year, with another 31% saying they are spending more and 24% spending less.
- Averaged across all consumers, holiday spending is set to be just 0.6% higher than in 2018.
- Significant increases in holiday spend are more prevalent among ABC1’s, those with 3rd level education, younger consumers and among men.
As usual, responses to the survey capture the views of a range of consumers. However, overall holiday spend will also be boosted by an increase in the number of consumers. It should also be noted that the survey responses on average holiday spend don’t differentiate between domestic and foreign spend. However, even with those caveats, this survey suggests 2019 may be a steady rather than spectacular year for
those businesses dependent on the domestic tourism market in Ireland
The KBC Bank Ireland Consumer Sentiment Index is a monthly survey is carried out by Core Research on behalf of KBC Bank Ireland.
This non-exhaustive information is based on short-term forecasts for expected developments in the economy and financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalised investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a judgment as of the date of the report and are subject to change without notice.