13 December 2007

Domestic tourism
Almost a fifth (18%) of British adults are planning at least one overnight trip away from home over the coming fortnight, which includes the festive period. Of these, 62% are planning to visit England, 13% Scotland, 3% Wales and 32% are planning to travel overseas.

The Enjoy England team will kick start the year with a campaign encouraging Brits to get out and be part of the cultural events and attractions of England.  The successful City Breaks campaign will continue to run until September 2008, showcasing cities spanning the length and breadth of England.   Meanwhile, Rural Escapes – the Enjoy England campaign celebrating the coast and countryside England is renowned for – will continue to run until May 2008.

Inbound tourism
Overall VisitBritain forecast that the volume of inbound tourism in 2008 will be below that achieved back in 2006, though with some annual growth in visits during the second half of the year.  The value of inbound tourism is forecast to remain static in real terms during 2008.

2008 presents a host of opportunities to grow the inbound visitor market across Britain, ranging from Liverpool being European Capital of Culture, the opening of Terminal 5 at Heathrow airport and the opportunity to showcase London and Britain as host city and nation of the next Olympic and Paralympic Games at the closing ceremony of the 2008 Games in Beijing.  In the first ten months of 2007 the number of inbound visits to Britain from China increased by 27%, and the Beijing Games will help to ensure Britain is firmly on the radar of the ever-increasing number of 'middle class' Chinese citizens able to afford international travel. We also look towards the handover of the Olympic torch to London, kickstarting the four year Cultural Olympiad.

Markets closer to home are set to benefit from improved access to Britain thanks to Eurostar's recent move to St Pancras International.  Visitors from France, Belgium, Netherlands and Germany can now benefit from faster, more reliable, rail travel to Britain and easily transfer on to high-speed domestic rail services to the Midlands, North of England and Scotland. By the end of the year we will start to see the full impact of the EU/US Open Skies Agreement which opens up trans-Atlantic competition into Britain's premier long-haul gateway.

Along with the opportunities come a number of threats to inbound tourism, perhaps the most uncertain of these being the extent to which the 'credit crunch' will lead to a wider economic slowdown, especially in the USA.  Analysts continue to forecast further weakening in the value of the US Dollar, which will make Britain, and the Eurozone, more expensive destinations for Americans.

WHAT THE INDUSTRY HAS TO SAY…

Visit London
Our estimates suggest that the capital’s visitor economy continued to grow during the first half of 2007 and should result in another record year for overseas visitors to London – a predicted 16 million visitors. However, falling visitor numbers in the second half of this year and forecasts for 2008 indicate London can expect lower growth from overseas visitors in 2008 of +2.5%. The weak dollar and deteriorating economic conditions in the US are predominately contributing to this slowdown. Visits from Europe remain generally buoyant with the euro’s recent appreciation against the pound helping to ensure a healthy flow of visitors from the continent.

Domestically, tighter credit standards and the full impact of interest rate rises are expected to affect visitors to the capital next year with visits predicted to rise by just +0.9%. Although London should continue to benefit from hosting two high profile exhibitions – Terracotta Army at the British Museum and Tutankhamun at The O2 as well as major events at Wembley Stadium.

The lead up to the Beijing 2008 Olympic and Paralympic Games and handover to London will be a major focus for the capital next year. The China in London festival will commence in February and culminate with the arrival of the Beijing 2008 Olympic Torch in London on 6 April. 2008 also provides a major opportunity to promote London to a global media audience. An estimated 20,000 journalists are expected to be in Beijing for the Olympic and Paralympic Games and interest in London as a host city will peak at the handover to London on 24 August 2008.

VisitScotland
Tourism in Scotland brings in revenues in excess of £4 billion annually. Looking ahead to 2008, confidence among the majority of Scottish tourism businesses is high. Independent research carried out for VisitScotland in September and October 2007 showed that 50 per cent of businesses surveyed believe that they will see an increase in business in 2008.

VisitScotland’s major campaigns for 2008 will include a partnership with Sony Pictures Entertainment around the new family film Water Horse – Legend of the Deep, which was filmed in the Highlands and Argyll. The annual European Touring Campaign will kick off in January with a focus on seasonality and the aim of increasing visitors to Scotland throughout the year.

In the UK, VisitScotland’s detailed segmentation research will enable the national tourism organisation to run extremely targeted campaigns in 2008, including a major focus on London and the South East. One of the highlights of the year will be VisitScotland expo. Scotland’s only flagship business to business event for the travel trade that is entirely Scottish.  Expo 2008 takes place at the AECC in Aberdeen on 16-17 April 2008.

Visit Wales
Despite appalling weather in the high summer period, feedback from Welsh tourism operators indicates that performance has picked up in the autumn to be on a par with that for the same period last year and that confidence is generally fairly buoyant. The survey also showed that three out of four operators intended investing in maintaining the standard of their product or on upgrading it.

Quality is very much becoming a touchstone in Welsh tourism and will be the hallmark of several new developments for 2008. The International Pool in the Cardiff Sports Village opens in January and the first phase of the Bluestone Eco-Resort, near Narberth in Pembrokeshire, comes on stream in summer. Cardiff Castle’s Interpretation Centre will be operating in the spring as will the magnificent new Arts Centre at Ruthin. Hafod Eryri, the café and retail outlet on Snowdon’s summit, will be opened in July.   

Tourism Alliance
It looks increasingly likely that inbound tourism hit the high water mark in June 2007. Every month since then inbound visitor numbers and spend have been down on 2006 meaning that by year-end total inbound tourism for 2007 will, at best, be static on the preceding year.

And there seems little prospect of the market turning round to any great degree in the first half of 2008. The dollar remains firmly below the 50p mark, the credit crunch caused by the collapse of the American subprime market rolls on threatening to slow down the global economy and oil remains just under the $100/barrel mark due to the market’s nervousness at the US’s relations with the Middle East.

On this basis, the prospects for inbound tourism during 2008 look challenging to say the least. On the domestic front, the credit crunch shows few signs of easing and with that consumer confidence is starting to fall. Most noticeably, house prices look to be easing, affecting people’s perceptions of wealth and the forecasts from the Bank of England are cautionary in the extreme. Any lowering of people’s perceptions of wealth and security will certainly affect spending on discretionary items such as holidays.

Add to this the follow-over effect from poor summer weather and floods in 2007 impacting upon 2008 booking levels and the domestic market will also be under considerable pressure during 2008.

British Hospitality Association
London hotels are on a roll at the moment and enjoying high occupancies mainly from overseas travellers; this looks likely to continue into 2008 though the world economic situation may depress demand somewhat next year.  UK provincial city centre hotels, with much new investment, are enjoying only reasonable occupancies and are much more dependent on domestic demand, which may be significantly affected by the problems with the UK economy, the so called credit crunch, and lower business activity.   These factors also affect rural hotels, which are faring the least well, dependent as they are on leisure travel, consumer spending (which is under increasing threat) and the boom in cheap overseas travel.

Leisure weekend travel within two hours of the south east corner of the UK – for example, Thames Valley, East Anglia, the Cotswolds – remains buoyant but other parts of the country are not performing so well. So we are only cautiously optimistic about 2008, particularly as food inflation is running at between seven and 10 per cent; energy and utility costs are also rising and so are wages.

UKinbound
With still no end in sight to the current turmoil in the global economy the prospects for inbound tourism in 2008 are not looking as good as they should. London continues to outperform the rest of the UK on the back of good business travel figures but concerns about the US and UK economies, particularly how this will affect London’s financial markets, are making everyone more cautious in their projections for the first quarter of 2008 and beyond. Outside London the picture is very patchy, with a number of regional cities performing well but many failing to achieve the expected growth.  However, rural areas have generally had a poor year for inbound business. Leisure travel remains under severe price pressure and has struggled to attract business particularly in the third quarter of 2007.

Long haul traffic continues to be worst affected with North America likely to remain depressed in the short to medium term. Although the high cost of visas and the doubling of APD in early 2007 have had some impact on long haul numbers, it is unfavourable exchange rates that have been most damaging. The BoE quarter point reduction in base rates in December has brought us some temporary relief from a weakening US Dollar but this is likely to be quickly eroded as the credit crunch continues to bite.

Consumer confidence in the USA, our biggest and most influential market, is extremely fragile as homeowners worry about job security and the higher cost of borrowing, despite base rate cuts and market interventions by the Federal Reserve. Further intervention is sure to follow in 2008 but is unlikely to fix some of the inherent weaknesses in the US economy, which are currently undermining their currency and dragging linked currencies down with it. There seems to be general consensus in financial circles that the situation is most likely to get worse in the medium term as central banks seek to replace their depreciating US Dollar reserves with stronger currencies like the Euro. There is also widespread speculation that a number of key countries are considering “depegging” their currencies from the US Dollar. For us this is a double edge sword that would most likely further weaken the US Dollar but could make Sterling exchange rates with those currencies more attractive.  Tactical opportunities may present themselves in some markets if this happens.

European business is performing somewhat better and there is some hope that if the Euro continues to appreciate against Sterling we could see this being sustained through 2008. The downside being that European visitors generally stay for shorter periods and spend much less than long-haul visitors.   After a disappointing 2007 we expect 2008 to be equally challenging. We believe there will be some growth in short haul markets but not enough to offset a further drop in long haul business and we therefore expect a slight fall in the number of visitors of about 1-2% but a much sharper decline, possibly up to 7%, in global revenues.

Association of British Travel Agents (ABTA)
ABTA expects domestic business to improve in 2008 following the washed out summer of 2007. The Channel Islands and Isle of Man have already seen an increase in forward bookings. City breaks are selling well with Liverpool expected to boom as it takes on its role as European city of culture.

British Association of Conference Destinations (BACD)
While 2007 draws to a close with some gloomy predictions for the global economy, activity levels within the conference and business events sector remain healthy. Research carried out by BACD among conference venues confirms that they are optimistic about prospects for their performance in 2007, with 63% stating that they expect business to be up compared with 2006, and only 6% expecting it to be down. In general terms the sector is traditionally quite resilient during downturns in the economy, although some negative impact on corporate sector events can be expected if we do move into recession.

Coach Tourism Council
The coach tourism industry looks forward to 2008 with quiet confidence following a year in which more than five million people took a coach touring holiday in the UK. Coach operators who are members of the Coach Tourism Council are not only investing in new state of the art coaches costing as much as £250,000 expanding their product to offer greater choice with more themed tours such as London Theatre breaks and concerts, heritage and cultural tours, garden shows, horse race meetings and Christmas markets heading the popular choice while traditional seaside holidays have not lost their appeal.

The CTC which promotes travel and tourism by coach on behalf of 300 members believes that other factors will have a positive impact on business in 2008. Two recent reports have revealed that travel by coach is the most environmentally friendly way to travel with the carbon footprint of coaches more than five times less than flying or driving by car and even two times less pollutant than going by train. With continuing delays at airports the CTC expects many more people – including an increasing number of younger people – to opt to take a coach for their short breaks and holidays in the UK.