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Prior to 1987 anyone looking at hotel investment in Northern Ireland would have appeared extremely brave or completely foolhardy. Since the beginning of the "troubles"--sectarian violence--in 1969, not only had Northern Ireland lost most if not all of its attraction as a mainstream tourist destination but hotels had become prime terrorist targets. The Europa, for example, endured more than one cycle of bombing, refurbishment, and rebuilding. The Drumkeen still must be rebuilt, and the La Mon experienced so much carnage that it took much time to attract a regular clientele back.
As explained in the accompanying article ("The Challenge of Northern Ireland Tourism"), the volume of tourism in Northern Ireland varied inversely with the level of terrorist incidents, which peaked in 1973, the year of the deepest trough in the number of tourists. Although violence gradually declined during the 20 years since 1973, hoteliers still had to contend with the threat of bombs and violence and an environment of political instability, and their guests faced a heavy army presence, including armored vehicles, road blocks, and barbed wire.
Even in pre-trouble times, Northern Ireland had no special advantage as a tourist destination over the rest of the United Kingdom. In a 1978 study, the Northern Ireland Tourist Board (NITB) demonstrated that even a peaceful Northern Ireland was perceived as having no advantage over the Republic of Ireland as a destination. Against this negative background, the NITB was given the job of increasing tourism to Northern Ireland.
The NITB, in conjunction with the district councils (similar to U.S. municipal governments) and hoteliers, was reasonably successful in stimulating a slow growth in hotel occupancy rates through a concentration on business travelers, encouraging tourists to visit friends or relatives, promoting special-interest holidays such as golfing or fishing, encouraging more people to take holidays at home and (taking advantage of higher prices in the Irish Republic) encouraging shopping trips. One of the most effective campaigns to attract southern visitors was the "Belfast is buzzing" campaign (initiated in 1987), which proved effective in bringing shoppers to Belfast's city center.
Hotels experienced a slow, steady growth in room occupancy from what was at the time an unheard-of low in 1973 of 32 percent (see Exhibit 1) to 47 percent in 1987,...