Hospitality Exchange
Business Breakfast 
Northern Ireland’s Economic Recovery &
Challenges for the Hospitality Sector
Rama...
The hills are alive with the sound of recovery

Slide 2
A recovery is well underway in terms of output…
Business Activity - PMIs
NI

UK

RoI

60
Expansion

50
Contraction

40

So...
…and in terms of employment

Y/Y

Full-Time Annual Employment Growth
Employee Jobs

10%
UK

NI

RoI

5%
0%
-5%
-10%
-15%
J...
NI Recovery Checklist
•

New Car Sales Up

•

Unemployment
falling

•

Business activity up

• Mortgage activity up
Employ...
Recovery Checklist
• Insolvencies rising
•

Retail vacancies

•

Disposable income

•

Construction jobs

•

Housing start...
Consumers are experiencing ‘spreadsheet recovery’

Computer says Yes.  But consumer says No!
Source: 
The Economist
Slide ...
But no sign of a recovery with household incomes
UK Average Weekly Earnings & CPI Inflation

%

6
Ave Weekly Earnings 3m Y...
If consumer says ‘No’, profitability says ‘Oh No!’ too
NI Private Sector Profit Squeeze
3 Month Moving Average
Output Pric...
What has happened to revenue & cost base 
since August 2007?
+47%

+46%

Average Room Rate / Rec Par
2007-2012

-14%
+83%
The boom in tourism since the Good Friday Agreement 
(GFA) has been matched by a boom in the cost base too
% Change in Cos...
What has happened to food prices over the last 6 years*?

+68%

+23%

+33%

+84%

+41%

+42%

* % change between August 20...
How do you deal with falling revenue & rising costs?

Slide 13
NI enjoyed Southern Comfort in the Celtic Tiger era

Trade

Tourism

Investment

Wealth

Slide 14
Tourism
Trade

Investment

Wealth

Slide 15
VAT

V

VAT
N/S Tourism Performance influenced by more than VAT

CPI

IMF
APD

NAMA

£/€
Slide 17
Inflation – a tale of two economies
UK v RoI Cumulative % Change in Consumer Prices
since 'Credit Crunch' began (Aug 2007 ...
Ireland is the poster child of low inflation since the
credit crunch began
EU-28 Cumulative % Rise in Food & Drink Prices
...
Economic Growth will be an uphill challenge…

?

Source: 
The Economist
Slide 20
Disclaimer
This document is issued for information purposes only for clients of Ulster Bank Group who are eligible counter...
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NI's economic recovery and challenges for the hospitality sector

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A presentation by Ulster Bank Chief Economist Richard Ramsey which was delivered to the Hospitality Exchange business breakfast on October 16, 2013

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NI's economic recovery and challenges for the hospitality sector

  1. 1. Hospitality Exchange Business Breakfast  Northern Ireland’s Economic Recovery & Challenges for the Hospitality Sector Ramada Plaza Hotel, Belfast 16th October 2013 Richard Ramsey Chief Economist Northern Ireland richard.ramsey@ulsterbankcm.com
  2. 2. The hills are alive with the sound of recovery Slide 2
  3. 3. A recovery is well underway in terms of output… Business Activity - PMIs NI UK RoI 60 Expansion 50 Contraction 40 Source: Markit & Ulster Bank NI PMI 30 Sep-04 Mar-06 Sep-07 Mar-09 Sep-10 Mar-12 Sep-13 Slide 3
  4. 4. …and in terms of employment Y/Y Full-Time Annual Employment Growth Employee Jobs 10% UK NI RoI 5% 0% -5% -10% -15% Jun-93 Dec-95 Jun-98 Dec-00 Jun-03 Dec-05 Jun-08 Dec-10 Jun-13 Slide 4
  5. 5. NI Recovery Checklist • New Car Sales Up • Unemployment falling • Business activity up • Mortgage activity up Employment up  • Slide 5
  6. 6. Recovery Checklist • Insolvencies rising • Retail vacancies • Disposable income • Construction jobs • Housing starts • Inward migration           
  7. 7. Consumers are experiencing ‘spreadsheet recovery’ Computer says Yes.  But consumer says No! Source:  The Economist Slide 7
  8. 8. But no sign of a recovery with household incomes UK Average Weekly Earnings & CPI Inflation % 6 Ave Weekly Earnings 3m Y/Y % (Excl. Bonuses) CPI Y/Y 5 4 3 Income squeeze NICE Decade 2.7% 2 1 Does not include taxes or changes to benefits Source: ONS 1.0% 0 Aug-01 Aug-03 Aug-05 Aug-07 Aug-09 Aug-11 Aug-13 Slide 8
  9. 9. If consumer says ‘No’, profitability says ‘Oh No!’ too NI Private Sector Profit Squeeze 3 Month Moving Average Output Prices Input Prices No Change 80 Profits squeeze 70 Inflation 60 50 Deflation 40 Source: Markit Economics & Ulster Bank NI Price of goods & services falling 30 Sep-04 Mar-06 Sep-07 Mar-09 Sep-10 Mar-12 Sep-13 Slide 9
  10. 10. What has happened to revenue & cost base  since August 2007? +47% +46% Average Room Rate / Rec Par 2007-2012 -14% +83%
  11. 11. The boom in tourism since the Good Friday Agreement  (GFA) has been matched by a boom in the cost base too % Change in Cost Base Change since GFA (Apr-98 to Aug-2013) 10yr (Aug-03 to Aug-13) 6yr (Aug-07 to Aug-13) Heating Oil Electricity Gas Source: ONS RPI & UB Calculations 0% 50% 100% 150% 200% 250% 300% 350% 400% Slide 11
  12. 12. What has happened to food prices over the last 6 years*? +68% +23% +33% +84% +41% +42% * % change between August 2007 – August 2013
  13. 13. How do you deal with falling revenue & rising costs? Slide 13
  14. 14. NI enjoyed Southern Comfort in the Celtic Tiger era Trade Tourism Investment Wealth Slide 14
  15. 15. Tourism Trade Investment Wealth Slide 15
  16. 16. VAT V VAT
  17. 17. N/S Tourism Performance influenced by more than VAT CPI IMF APD NAMA £/€ Slide 17
  18. 18. Inflation – a tale of two economies UK v RoI Cumulative % Change in Consumer Prices since 'Credit Crunch' began (Aug 2007 to Aug 2013) 70% UK RoI 60% 50% 40% 30% 20.7% 20% 10% 3.2% 0% Food & NonAlcoholic Beverages Food Electricity Gas & Other Fuels Transport Fuels & Lubricants Transport Services All CPI Slide 18
  19. 19. Ireland is the poster child of low inflation since the credit crunch began EU-28 Cumulative % Rise in Food & Drink Prices August 2007 to August 2013 (HICP) Ireland Portugal Greece France Spain Netherlands EZ Italy Germany Sweden Luxembourg Denmark Austria EU 28 Cyprus Belgium Bulgaria Slovakia Croatia Czech Republic Finland Slovenia Romania Poland Latvia Lithuania Malta UK Estonia Hungary 0% 1% Source: ONS & Eurostat € 15% 19% 36% 5% 10% 15% 20% 25% 30% 35% 40% 45% Slide 19
  20. 20. Economic Growth will be an uphill challenge… ? Source:  The Economist Slide 20
  21. 21. Disclaimer This document is issued for information purposes only for clients of Ulster Bank Group who are eligible counterparties or professional customers, and does not constitute an offer or invitation to purchase or sell any instrument or to provide any service in any jurisdiction where the required authorisation is not held. Ulster Bank and/or its associates and/or its employees may have a position or engage in transactions in any of the instruments mentioned. The information including any opinions expressed and the pricing given, is indicative, and constitute our judgement at time of publication and are subject to change without notice. The information contained herein should not be construed as advice, and is not intended to be construed as such. This publication provides only a brief review of the complex issues discussed and readers should not rely on information contained here without seeking specific advice on matters that concern them. Ulster Bank make no representations or warranties with respect to the information and disclaim all liability for use the recipient or their advisors make of the information. Over-the-counter (OTC) derivates can involve a number of significant and complex risks which are dependent on the terms of the particular transaction and your circumstances. In the event the market has moved against the transaction you have undertaken, you may incur substantial costs if you wish to close out your position. Ulster Bank Limited Registered Number R733 Northern Ireland. Registered Office 11-16 Donegal Square East, Belfast, BT1 5UB. Authorised and regulated by the Financial Services Authority. Member of The Royal Bank of Scotland Group. Ulster Bank Ireland Limited, a private company limited by shares, trading as Ulster Bank, Ulster Bank Group and Bank Uladh. Registered No. 25766. Registered Office Ulster Bank Group Centre, George’s Quay, Dublin 2. Ulster Bank Ireland Limited is regulated by the Financial Regulator. Member of The Royal Bank of Scotland Group. Calls may be recorded. Slide 21

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