Break for the border

With figures for the first five months of 2017 showing that the number of visitors from the UK to Ireland fell 6.8% from 1.54 million in the 2016 five-month period to 1.44 million, could post-Brexit decision Sterling’s fall possibly spell more trouble for the fortunes of licensees around the border?

Just after the Brexit vote the number of British visitors to the Guinness Storehouse fell away 12% (although Storehouse Managing Director Paul Carty told Drinks Industry Ireland more recently that this drop had recovered to the point where January to June figures this year showed such visitors to be down just 3%).

CSO tourism figures for the first five months of this year indicate that overall visitor numbers here were up 3.1% but there was a 6.8% decrease in visitors from Britain compared to the same period last year. That’s 105,100 less British tourists.


Brexit and border towns

British visitors comprise 40% of our tourist total but the 15% decline in Sterling’s fortunes since the vote might not only constrict the number of visitors from the UK coming to Ireland, it’s also likely to further afflict the fortunes of towns along the border.

This was referred to recently by the Drinks Industry Group of Ireland’s Secretary Donall O’Keeffe in his call to government for a ‘Brexit Budget’. He pointed to the increase in cross-border shopping.

It’s now clear that in the wake of Britain’s decision to Brexit, the subsequent devaluation of Sterling led to significant growth in cross-border shopping last year, as evidenced by the dramatic increase in the number of Irish-registered cars in Northern Irish shopping centres during 2016.

Intertrade Ireland’s cross-border retailing research indicates that the share of Irish-registered cars in Northern Irish shopping centre car parks rose from 33% in the first three months of 2016, to 43% in Q2. Post the Brexit referendum, a subsequent rise of 10-12% in the value of the €uro against Sterling led to a further increase to 56% in flows of North-bound cross-border shoppers in Q3 last year.

This represents an alarming 73% increase in Irish-registered cars parked in Northern Irish border shopping centres in September last year, compared to January.

Intertrade Ireland did not publish any data for Q4 2016 but it has just published figures for Q1 2017 which show the percentage of southern-registered cars in NI shopping centres at 33.6% – a slight rise on Q1 2016.

But it’s the last quarter of this year that’s likely to concern retailers along the border.

Late last year the Belfast Telegraph reported that cross-border shopping was at a six-year high with some NI retailers reporting an annual sales increase of over 60%.

“Post-Brexit, business is booming for traders in Belfast, Newry, Enniskillen, Armagh, Strabane and Londonderry, while hotels, pubs and restaurants in border towns have also seen a significant surge in profits,” stated the newspaper, adding that Hospitality Ulster’s Colin Neill had said that hotels, pubs and restaurants across the province are seeing “significant numbers” of southern visitors.

“We’ve seen a definite uplift in trade over the past few weeks, which is helping to offset the VAT difference between the north and south in the short term,” he stated.

A further increase to 56% in flows of North-bound cross-border shoppers took place in Q3 last year.

A further increase to 56% in flows of North-bound cross-border shoppers took place in Q3 last year.




Brexit and border trade

Few independent off-licences exist across the border in NI, as the supermarkets there tend to gobble up this sales channel.

Even so, NOffLA members operating along border counties are in danger of going out of business, a scenario that’s been exacerbated by the likely impact of Brexit and the “debilitating impact cross-border trade will have on Irish SMEs,” pointed out NOffLA’s Government Affairs Director Evelyn Jones recently.

At present John Byrne of Hill Street Bar in Dundalk doesn’t believe that the Sterling difference is having as big an impact as one might think.

“In my case, my off-licence business would certainly have slowed down but the biggest reason for this is more likely to be the Tesco store just 200 yards away where they can sell at below-cost,” he explained, “I generally find that Sterling would have a bigger effect around Christmas when people tend to go for a monthly shop on a Saturday and take in other things like alcohol too – wines in particular would still be a lot cheaper North than South.”

John can remember that it wasn’t unusual 15 to 20 years ago to see 100 Southern buses bumper-to-bumper going into Newry, “… and with the Sterling drop I’d expect without a shadow of a doubt for this to once again be most prominent around Xmas.

“The Christmas period will be the big one” he said, “but with online shopping it’s happening without us even noticing it.”

And from an on-trade point-of-view he pointed out that, “People are not going to go north to drink even if it is cheaper due to the drink-driving legislation”.

But Sterling’s fate has had no impact at all on business levels at the Slieve Russel Hotel in Ballyconnell, County Cavan.

The Slieve Russel’s Tony Walker had just come back from attending a tourism meeting in London with Tourism Ireland and other UK tourism bodies and when contacted, he reported that “interest from the UK remains very high”.

The consensus at the meeting seems to have been that last Summer’s tourist numbers should remain pretty much the same this Summer.

“There may have been some slippage in Q1 but we’re not expecting any in Q2 and Q3,” said Tony, “But it’s very hard to call it as there’s so much uncertainty putting Sterling under pressure.

“Our traffic from NI is as it always was; there’s been no major decrease.”

Situated where it is, the hotel is used to currency fluctuations. “People from NI still have to travel and have weekend breaks,” he believes, “50% of our confirmed bookings from February to May this year for weddings in 2018/2019 were booked from NI.”

But other hospitality outlets have seen the threat to their business from Brexit and a devalued Sterling.

Ronnie McBride’s pub in Castlefinn between Lifford and Strabane sits at the border. Nearly a third to a half of his customers emanate from across the border and he prices his pints at €3.90, one of the cheapest in the country, to compete with the £3.30 price of a pint in nearby Clady.

Elsewhere, John McGuinness has had to offer favourable Sterling exchange rates in his bar in Culdaff, Co Donegal.

Much of this wet-house’s business is dependent on tourism with many holiday homes nearby owned by people from Derry and Belfast, “… So we can’t not offer favourable rates,” says John.

But he points out that while these people have their holiday homes in the vicinity and are not going to stop coming to the Inishowen Peninsula location, the Sterling difference can certainly stop them from going out once here.

“They tend to arrive with all their groceries and more or less camp in their own homes with their cars fully-loaded to the extent of a full drinks cabinet. They might only avail of the pub for WiFi.”

His father, Brendan, has run the pub since taking over from his own father 50 years ago. He believes that overall, the holiday homes have been good for business.

“We’re rural Ireland,” points out Brendan, “We give a good Sterling rate which may cost us a percentage at times but it’s important that we do this for business.”

As for the future, the pair remain optimistic.

“Some 800,000 people applied for Irish passports of which around 103,000 were from the North,” said John.

That must be a good omen, one would imagine.

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