Annual Prospects Event In UK
Tourism Society predicts future
At the annual Prospects meeting organized by the Tourism Society on Thursday, January 8, a panel of industry experts and tourism professionals came together to discuss the prospects for tourism in 2009. Gloomy predictions included a downturn in global tourism arrivals and in UK outbound travel and spend, reduced budgets from the corporate market, a reduction in hotel occupancy and room rates, and threats from increased APD and VISA costs, which could deter inbound visitors to Britain. However, on a positive note, predictions included an increase in UK domestic tourism (both the Caravan Club and Hoseasons reported substantial increases in bookings to date compared to January 2008), a wake-up call for hoteliers to offer better value for money, new renewable energy technology, and the possibility of more visitors from the USA and China now that the Beijing Olympics and US presidential election are over.
Views from the Panel
Geoffrey Lipman, assistant secretary general for the UNWTO and chairman of the event, stated that actual international arrivals could be even worse than the 0-2 percent global growth predicted for 2009 (based on 6 percent growth last year). In response to this, the UNWTO has created a 'resilience committee' to look at the statistics more carefully and hold networking meetings to try to ensure that tourism is included in stimulation programs.
Philip Morrison, insights specialist for VisitBritain, stated that the weak pound against the Euro will put UK residents off visiting the Eurozone but rather than creating the opportunity for domestic tourism, visitors might prefer to visit the emerging destinations of Morroco, Egypt, and Turkey. Tourists will cut back on shopping, eating out, and entertainment, while short breaks abroad were seen to be the most 'at risk' market, and tourists are likely to be less spontaneous. The industry needs to respond to this by offering added value to the trip, Philip warned, against price cutting as this can often set a precedent, which is difficult to get out of. Philip went on to suggest that business tourism is likely to experience weak demand in 2009, more airlines are likely to fail as their running costs will increase, and big hotels and marina developments will find problems with funding. The US is looking to increase the number of US residents with passports, which could be an opportunity for inbound visitors to the UK. A possible VISA requirement for inbound visitors from Brazil, Malaysia, and South Africa and increases to APD and VISA costs will make the UK less attractive as a destination.
Philip Green, chairman of UKInbound, stated that the economic environment is likely to lead to cost cutting, which could mean lower service levels and a lack of new investment in hotel buildings, which could be a concern for the 2012 developments. "The lack of a major international sporting event in 2009 could release demand for the UK, but the inbound market in 2009 is likely to be 'softer' and hotel occupancy is likely to fall," commented Green, while emphasizing that international marketing and promotion of the UK as a destination is needed, but with less funds for VisitBritain this activity is under threat. "I hope the UK government will soon realize that higher APD and VISA costs will act as a deterrent to inbound visitors."
Robert Barnard, sponsor of the event and partner with PKF consultancy, pointed out that in December 2000 and November 2008 hotel occupancy in London was at the same level - approximately 81 percent - which demonstrates the resilience of the market despite fluctuations between the years due to foot and mouth, 9/11, SARS, and the war in Iraq. London has a phenomenal hotel market and can recover quickly from a geopolitical situation; it is, therefore, reassuring to note that history shows recovery is possible. The regional hotel sector is not as volatile as London and the fluctuations are on par with the state of the economy. The mid-market sector is likely to suffer when competing with the budget hotels. "Now is the time to be looking seriously at your business and ensure you are in good shape to weather the storm."
John Bevan, former vice president for the UK & Ireland for lastminute.com, stated that the big tour operators have been reducing capacity, leaving late availability sites with less to sell. The reduced interest rates are causing retired ex-pats living overseas to return home, possibly stimulating demand for domestic holidays. Those UK residents with tracker mortgages will have more disposable income to spend on trips. Outbound travel interest in all-inclusive breaks is on the increase. Flexible duration is a trend set to grow with operators offering 5-6 nights and 9-10 nights instead of the traditional 7 or 14. In summary, 2009 will be tough for the outbound sector presenting an opportunity for the domestic market to flourish.
Comments
“In your otherwise excellent coverage of the Tourism Society's "Prospects" event, your reporter quotes me as saying that 2009 is expected to show 0 - 2% growth ....in fact I said that was the current expectation for 2008.....(and that was without the last months of the year's actual figures - where results have been worsening significantly from earlier expectations.)...I then said that my personal view - not a UNWTO forecast - is that 2009 will be significantly worse. In response UNWTO is taking 3 initiatives to help support the sector
1) A “Resilience” activity to improve data availability and use; to share best practice response and to initiate a global networking action to build solidarity
2) Encouraging Governments to include tourism as a primary issue in economic stimulation packages – whether it’s through infrastructure, job creation, encouraging domestic demand or promoting exports.
3) Advancing tourism within the context of the new Green Economy – as a sector that can deliver on smart growth and clean energy jobs.
Finally I urged that a major challenge is to take actions that contain a three dimensional vision...dealing with the 2008 economic crisis, while still keeping on track with the 2015 Development challenge and the 2050 Climate imperative. Today’s actions must align all three if we want to maximize the opportunities for the sector and the world economy.
Geoffrey Lipman
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