Letter to MPs - How to Support Tourism
Friday 28 November 2008, 10:23 AM
A letter to MPs from Bob Cotton OBE, Chairman, Tourism Alliance
Latest ONS figures have reinforced my concerns about the deterioration of the UK tourism market. Visitor numbers from the USA were down by 27 per cent in September compared with a year earlier – this was despite the decrease in the value of the pound against the dollar. Even the decrease in the value of the pound against the Euro couldn’t prevent an eight per cent dip in the number of visitors from Western Europe. Combined with a nine per cent overall decrease in inbound tourism expenditure for the month, the British economy would lose over £2bn in foreign revenue, if these figures are replicated for the year.
With worse figures to come for October to December, and great uncertainty about 2009, such a fall is quite possible and its impact on employment would be significant.
A recent study by Deloitte and Oxford Economics, commissioned by the Tourism Alliance and VisitBritain – The Economic Case for the Visitor Economy – suggests that inbound and domestic tourism supports over 1.36m jobs and is worth £52bn, or 3.7 per cent of GDP, taking into account value added generated by the provision of tourism-related goods and services. Total spending in nominal terms is £86bn.
Given that the marginal cost of each new job in tourism is estimated to be around £45,000, a £2bn decline in overseas earning will put over 40,000 jobs at risk. If domestic tourism, which represents over three-quarters of total tourism expenditure, decreases by a similar amount due to a reduction in consumer expenditure, then the total number of people who could become unemployed in tourism rises to over 160,000.
With this number of jobs at risk, the Tourism Alliance believes that the government should introduce two key measures of support:
1. New legislation continues to be introduced in spite of its increasing financial burden on businesses. New regulations in such areas as employment, food labelling, service charges and tipping, licensing and the environment lead to additional costs which businesses can now ill afford. And costs specifically related to tourism, such as increase in Air Passenger Duty announced in the pre-budget report and visa fees, act as a deterrent just at a time when there is a powerful economic case to encourage more travel.
2. Instead of cutting back funding for tourism promotion, there is a strong case for increasing it. At the time of the foot-and-mouth outbreak and the 9/11 attacks in 2001, the Treasury granted an additional £20m, match funded by the industry, to kick start a recovery in UK tourism. That campaign generated an additional £500m in visitor expenditure in 2002. The present situation is at least as serious as that of 2001.
January-March is the critical booking period for travel to the UK. Implementing these two measures would go a long way to maximising our competitiveness in a highly competitive international market. Without them, tourism revenue will fall and job losses will multiply.
Bob Cotton OBE