Memorandum submitted by the English Tourism
Council
1. INQUIRY INTO
TOURISM AFTER
SEPTEMBER 11
1.1 The English Tourism Council (ETC) was
created in 1999 to replace the English Tourist Board (ETB) established
by Parliament under the Development of Tourism Act 1969. ETC exists
to provide strategic advice to Government on tourism policy, to
conduct research, to promote best practice, to improve standards
of quality and to support the development and promotion of tourism
throughout England. The ETC received £11.6 million grant-in-aid
in 2002-03, through the Department for Culture, Media and Sport
(DCMS). In 2002-03 £5.5 million of this was disbursed to
nine of England's Regional Tourist Boards[1].
1.2 The ETC welcomes the inquiry by the
Culture Media and Sport Select Committee and in particular the
opportunity to update Committee members on the current state of
UK tourism with particular reference to England. This submission
follows on from the ETC memorandum of evidence to the 2001 Select
Committee Inquiry "Tourism—The Hidden Giant" in
which we outlined ETC's work to assist the industry during the
outbreak of Foot and Mouth Disease.
2. CURRENT AND
LIKELY FUTURE
PERFORMANCE OF
THE TOURISM
INDUSTRY FOLLOWING
FOOT AND
MOUTH DISEASE
AND THE
TERRORIST ATTACK
ON SEPTEMBER
11 2001
2.1 Research undertaken by the ETC into
the impact of tourism demonstrates that it contributed £75
billion to the UK economy in 2000, employed over 2 million people
and contributed some five per cent of GDP. These earnings came
from three main sources, UK residents taking day trips; UK residents
taking overnight trips; and overseas visitors. Earnings from UK
residents contributed a total of £59 billion in 2000 accounting
for £4 out of every £5 earned (see Figure 1).
2.2 Further research into the way tourism
earnings are currently distributed around the UK indicates that,
with the exception of a number of historic cities, overseas visitors
spend the majority of their time and money in London (see Figure
2).
Consequently the impact of the September 11
terrorist attack had a disproportionate effect on London and the
historic cities, while the outbreak of Foot and Mouth Disease
principally affected domestic rural tourism.
2.3 The combination of both of these factors
created a direct loss of £5 billion to UK tourism and a further
loss of £3 billion in terms of the opportunity cost or around
10 per cent of earnings. The opportunity cost is calculated by
looking at the growth trends, which were evident before the crises
of 2001 (See Figure 3).
2.4 At the start of 2002 the domestic tourism
industry was reasonably optimistic. There was a feeling that UK
residents might be discouraged from flying (and therefore take
their holidays within the UK) and that there was an opportunity
to win back customers who had not been able to visit the countryside
in the early part of 2001. However research by ETC in September
2002 demonstrated that few UK residents changed their plans. Eighty-eight
per cent of people continued to fly and indeed overseas trips
by UK residents were up by one per cent from January to May 2002.
2.5 In order to stimulate the tourism recovery
many businesses and commercial companies, including Visit Scotland
and Wales Tourist Board, switched their marketing budgets from
overseas promotion to focus on domestic promotion. This tactic
was unavailable in England due to the lack of a marketing function
at the national level with Regional Tourist Board funding for
such activity relatively limited. This was not possible at the
national level in England, because there is no national body funded
to perform the national marketing function.
2.6 The latest position for the domestic
industry shows a "fragile" recovery. An ETC survey of
businesses (July 2002) indicates that although most businesses
are well up on 2001, 25 per cent of businesses are not yet back
to 2000 levels and business confidence remains weak. Figures to
the end of June 2002 show that domestic business is still three
per cent down compared to 2000 (see Annex 3). In the international
market place there is similar caution. Annex 3 shows that although
business is starting to come back. The mix of business has changed,
with most of the recovery coming from Europe. This means that
the numbers of visitors is up but earnings are not yet back to
2000 levels (The US and other long-haul markets spend more than
European visitors).
2.7 In the short term ETC is expecting that
domestic business in 2002 will be back to the levels experienced
in 2000. However strong consumer confidence and expenditure would
have led the industry to considerably expect higher levels of
trade and profit. Business costs have risen in the last two years
and many businesses have postponed investment and/or reduced employment
as a result of a fall in profits. Much of this loss goes largely
"unseen" in official figures. For 2002, ETC forecasts
that the number of trips will rise over 2001 by 6.4 per cent,
the number of overnight stays will rise by 4.8 per cent and expenditure
will rise by 9.1 per cent. ETC is working with the other national
tourism organisations to produce forecasts for the period 2003
to 2005.
2.8 Perhaps the key economic measure of
how well UK tourism is doing, is the tourism balance of payments.
Over the last five years, the position has deteriorated to the
point that in 2001, the tourism deficit for England had reached
minus £13.6 billion (see figure 4 below). Until 1995 it had
been consistently positive except for the Gulf War year. £45
billion is now spent by British residents overseas.
NET DOMESTIC TOURISM SPEND
Spending by UK and overseas tourists in England,
less the spending by English tourists overseas
2.9 Clearly there were challenges for tourism
before the crises of 2001. To reduce the deficit requires further
action both to encourage overseas visitors to return (the job
of the British Tourist Authority) and to encourage UK residents
to take more holidays in the UK. The dramatic rise in low cost
carriers, the advent of the euro and high UK exchange rates clearly
contribute to current trends. A central aim should be to encourage
more English people to explore their own country. Short breaks
offer England a good opportunity to change attitudes in a competitive
environment. If just one in a hundred UK residents took a short
break in England rather than overseas, the balance of payments
deficit would be reduced by around £1 billion.
2.10 In conclusion, tourism is a growth
industry, the events of 2001 led to losses in the short term and
have harmed growth in the medium term. The industry has worked
hard to recover and has demonstrated imagination and resilience.
Visitors are returning but clearly more can still be done to speed
that return and to ameliorate the tourism balance of payments
deficit. Government commitment and investment would provide an
important boost to recovery.
3. THE ROLE
OF THE
GOVERNMENT IN
PROMOTING AND/OR
SUPPORTING THE
INDUSTRY
3.1 Tourism is ideally placed to help deliver
much of the Government's agenda, particularly in boosting employment
and economic prosperity. Tourism is already England's fifth largest
industry. It is a labour intensive, growth industry providing
some 10 per cent of all new jobs—and creates sizeable tax
revenues of £12.6 billion per year (see Annex 2). With the
right government support, it offers very real potential for further
growth.
3.2 Tourism is a fragmented sector made
up of many small and micro-businesses that require support to
ensure that they remain competitive and who find it difficult
to work together collectively for the wider good. They are so
varied and diffuse that there is no trade association that can
speak for them all, although the ETC welcomes the formation of
the Tourism Alliance as a response to this. They therefore do
not have one voice in the same way which, for example, farmers
have through the NFU. This inability to speak should not mean
that their problems go unheard. Their combined efforts are too
valuable to the economy.
3.3 Tourism can be the catalyst that drives
regeneration projects in urban, rural and peripheral regions.
The Eden Project for example in Cornwall has attracted well over
two million visitors over the last year, injected more that £113
million into Cornwall's economy in the first six months of 2002
and has created 680 full time jobs. The relationship between tourism
and regeneration activity has already been recognised in many
instances but more could be done to harness tourism's regenerative
power—in market towns for example.
3.4 The ETC believes that Government should
now:
3.4.1 Draw up a small number of clear and
focused tourism objectives and realign the delivery structures
to enable them to meet these objectives. ETC welcomes the proposed
realignment of tourism delivery structures in England to recognise
the regional economic role of the RDAs and the emerging sub-regional
policies of RTBs. Tourist Boards need adequate funding to deliver
change of this kind, and in England resources have previously
been at a woeful level. The current Ministerial review is an encouraging
start but needs to be radical to maximise value for public investment
in the longer term;
3.4.2 Create the right cross-Whitehall framework
to allow the industry to flourish. This includes a supportive
legislative environment in relation, for example, to planning
and enterprise policy. The Ministerial Summit is a good starting
point and needs further focus on specific issues, such as transport,
with lead Government Departments pursuing key areas of tourism
related work with budget and resources attached;
3.4.3 Give parliamentary time to legislation
(such as reformed licencing laws) which will make a rapid difference
to tourism and bring us in line with our continental competitors.
3.4.4 Stimulate others to recognise the
potential of tourism by encouraging "tourism proofing"
in related agencies, such as the SBS, so that tourism businesses
are supported in key areas of weakness, such as ITC and skills,
and can compete against international competition. This will take
ministerial commitment as well as active delivery by the national
tourism body and the various agencies concerned;
3.4.5 Build on the already favourable climate
of investment in new products through new channels of lottery
funding, regeneration schemes and investment to support the business
of tourism.
3.4.6 Support the re-introduction of domestic
marketing at a national level in England. Resource the national
tourist body so that it can maximise value for money by leveraging
private sector investment in jointly funding campaigns that convert
the home market potential.
4. DO CURRENT
STRUCTURAL ARRANGEMENTS
MEET THE
NEED?
4.1 It is widely accepted that current arrangements
are not sufficient to serve the best interests of tourism and
the wider UK economy. Current tourism structures are rooted in
the past when the political and administrative landscape were
significantly different. There are threats and opportunities brought
about by both emerging national and regional policies. Tourism
needs to be properly considered within this evolving context.
5. DO CURRENT
ARRANGEMENTS REFLECT
THE DEVOLUTION
SETTLEMENT APPROPRIATELY?
5.1 Devolution has accelerated the disparity
of public funding levels for tourism between each country. In
2001-02 England received a core grant of £11.6 million, while
Scotland received around £40 million and Wales received £20
million. This equates to Scotland and Wales receiving £7.93
and £6.84 per head respectively and England only £0.19.
5.2 The establishment of Regional Development
Agencies (RDAs)—and the prospect of Regional Assemblies—will
significantly affect the delivery of regional tourism in the regions
of England. This regional focus is to be welcomed but successful
decentralisation requires a degree of central or national co-ordination.
There is, for example, a significant danger of duplication and
uncoordinated activity in consumer research, data collection and
tourism promotion.
6. DO CURRENT
ARRANGEMENTS PROMOTE
THE QUALITY
OF PROVISION
EFFECTIVELY AND
ENCOURAGE PRODUCTIVITY
WITHIN THE
INDUSTRY?
6.1 In general terms current arrangements
strive to tackle the issues of quality and productivity but structural
limitations, a lack of primary investment in tourism and few co-ordinating
mechanisms all serve to constrain the activities and effectiveness
of the agencies concerned. For example a key strategic role for
ETC is quality improvement. It oversees a national star-rating
scheme, (harmonised with AA and RAC ratings) which has over 22,000
participating businesses all focused on providing high standards
of quality. These schemes however need promotion to customers
if full benefits are to be achieved in terms of driving up quality
standards.
6.2 Accommodation however is but one part
of a wide ranging tourism "experience" which incorporates
many other services offered by both private and public sectors,
ranging from transport provision through retailing, tourism attractions,
the management of destinations and the provision of information.
All these areas are best planned for with a strategic oversight
and often best co-ordinated via a national framework.
6.3 Equally as part of the Government's
social policies, national bodies like the ETC, guided by Departments,
play a major strategic role in supporting work concerned with
accessibility, sustainability, social inclusion, training etc.
with associated delivery by others closer to the customer. Other
areas, such as rural policy, are recognised as being strategically
important and have national agencies looking after their interests.
6.4 Tourism is usually best delivered at
a regional and sub-regional level but there is a strong case for
national and strategic intervention to set and collectively agree
frameworks which can then be delivered at the required level.
The current EnglandNet Project, funded by Government and run by
ETC is a good example. The project will join up a vast array of
tourism suppliers and products via the Internet.Without a national
and strategic perspective this project would not be possible.
[2]
6.5 Other examples of this type of national
strategic leadership intervention have been successfully developed
over ETC's short lifetime. In the field of accessibility for example
the UK wide National Accessible Scheme has been developed to assist
businesses to comply with new legislation. Activity across the
country on Sustainable tourism has been underpinned by ETC's national
strategy "Time for Action" which fits wider DEFRA policy
and is measured against a set of groundbreaking indicators. In
the rural context ETC has produced a rural tourism strategy with
the Countryside Agency to provide a clear focus for national,
regional and local action.
6.6 The ETC firmly believes that the current
ministerial review threatens this important strategic role which
cannot always be successfully delivered regionally. Some issues
can be undertaken regionally but duplication is likely to be inevitable
and other areas, such as the provision of a quality grading system,
have to be developed within a national framework. of domestic
marketing. However a focus on marketing without national action
on other key issues will not well serve the interests of the industry
in the longer term.
6.7 Reform of the English Tourism Council
is a welcome chance to address the current weaknesses in the provision
of tourism support. Any reform however must be clear about the
overall objectives, redesign the structure to deliver those objectives
and provide the resources to implement the actions required.
6.8 The role of the Department for Culture,
Media and Sport (DCMS) in co-ordinating the Government's role
in tourism cannot be underestimated. With almost every Department
sharing an interest in tourism, the role of DCMS in ensuring the
success of the Tourism Summit and brokering strong cross-Whitehall
partnerships is vital. Various interests have questioned the position
of tourism within government. While DTI is a favoured home for
some commentators it is ETC's view that tourism is too cross-cutting
to fit comfortably in any Department. Rather it is more important
to have a high level of senior ministerial commitment, engagement
and action to drive the modernisation agenda forward. Without
this commitment, and the related resources, the industry will
not contribute to the economy in the way that it could. Committee
members may like to examine recent policy development in Ireland
to see an example of such commitment.
7. MARKETING
7.1 There is a clear consensus from across
industry that the current marketing arrangements in England are
not adequate. Serious flaws were revealed during the crises of
2001, in particular the lack of a national marketing role within
England. Future arrangements need to ensure that the marketing
remit is sufficiently broad to include a logical array of marketing
functions including consumer research, product development, branding,
consumer promotion and trade support.
7.2 Any England marketing must be adequately
resourced[3],
and Government should be realistic about the nature and extent
of private sector support available. The aim should be to fill
the following gaps:
— Crisis—when a fast national
response is needed, such as the Foot and Mouth outbreak and September
11;
— Opportunity—when there
is an event or development that affects the whole country, such
as the Jubilee or Commonwealth Games;
— Themes—where a customer
wants a type of holiday, such as a health break, walking holiday,
cathedral tour, or country house hotel short break;
— Common interest—where
there are product providers that want to work together to maximise
their spend—such as historic cities, visitor attraction
or farm holidays.
8. CONCLUSION
AND KEY
POINTS
8.1 To summarise, the key points that the
English Tourism Council would like Committee members to bear in
mind are as follows:
— Tourism was worth £74 billion
to the UK economy in 2001; and
— £4 out of every £5 spent
on tourism is generated by domestic tourists;
— The deficit in the tourism balance
of payments has deteriorated each year since 1995—currently
standing at minus £13.6 billion;
— £45 billion per annum is spent
overseas by British tourists;
— Recapturing one per cent of the money
currently spent abroad would improve the balance of payment by
almost £1 billion per year;
— Tourism plays a major role in social
as well as economic policy. Accessibility, sustainability and
the rural agenda require national co-ordination;
— Tourism is a labour intensive growth
industry. One in ten new jobs is created by tourism.
Annex 1
TOURISM AND LEISURE DEVELOPMENT SURVEY RESULTS
Although Tourism and Leisure firms are still
on balance more optimistic than pessimistic about the general
business situation in their respective sectors, there has been
a sharp decline in confidence since last quarter. There has also
been a drop, but less severe, in optimism for their own business
outlook.
Table 1
ARE YOU MORE OR LESS OPTIMISTIC ABOUT THE
GENERAL BUSINESS SITUATION?
| | In Your Sector
| For Your Company
|
| Q1
| Q2
| Q1
| Q2
|
| More Optimistic | 66%
| 49% | 65% | 59%
|
| Less optimistic | 5% |
18% | 6% | 11%
|
| Balance* | 61% | 31%
| 59% | 48% |
| *The proportion of firms reporting that they are more optimistic minus those reporting that they are less optimistic.
| | | |
|
The loss in confidence is across all sectors, but particularly
Food & Beverages and Sports & Entertainment:
Table 2
ARE YOU MORE OR LESS OPTIMISTIC ABOUT THE GENERAL BUSINESS
SITUATION?
| | In Your Sector
| For Your Company
|
| | Q1
Balance*
| Q2
Balance* | Q1
Balance*
| Q2
Balance* |
| All Firms | 61% | 31%
| 59% | 48% |
| Accommodation | 69% | 62%
| 63% | 57% |
| Food & Beverage | 47% |
-10% | 58% | 39%
|
| Sports & Entertainment | 44%
| -5% | 50% | 37 %
|
| Travel & Tourism | 88% |
27% | 63% | 47%
|
| Visitor Attractions | 48% |
31% | 48% | 43%
|
| Event Venues | 51% | 44%
| 69% | 53% |
| *The proportion of firms reporting that they are more minus those reporting that they are less optimistic.
| | | |
|
Tourism recovery
The proportion saying their business has already recovered
from both this and foot and mouth has risen a little from 59 per
cent in Q1 to 68 per cent in Q2, but the number who do not expect
to recover until 2003 has also increased from 10 per cent to 23
per cent.
— Private sector tourism enterprises are willing
to support national marketing initiatives, given the lead by public
money.
— To grow tourism and to reach its full potential
action is required from Government. This includes clear focused
objectives, a review of structures and adequate resources for
marketing and other strategic functions.
4 October 2002
Annex 2
TAX REVENUES FROM TOURISM
In 2000, tourism-related tax contributions to the Exchequer
amounted to £12.6 billion:
| Business Taxes within tourism-related businesses:
|
| £2.0 billion VAT |
| £2.3 billion Employers' social contributions
|
| £1.3 billion Corporation Tax
|
| £1.8bn Business Rates
|
| Personal Taxes on those that work in tourism:
|
| £3.4 billion Income Tax
|
| £1.8 billion Employees' social contributions
|
| Total Contribution to the Exchequer
|
| £12.6 billion |
Annex 3
1
The nine Regional Tourist Boards are Cumbria, East of England,
Heart of England, Northumbria, North West, South East England,
Southern, South West, and Yorkshire. London is now funded separately
by DCMS via the Greater London Authority. Back
2
England will enable the latest local tourism information to be
made available anywhere-helping people to access quality-assured
information on the full range of tourism products and experiences
available across England. Access can be from home or in public
places using devices such as touch screen kiosks or mobile phones.
Linking with the Government's broader UK Online initiative, and
delivered by regional tourist boards and other partners EnglandNet
will transform the distribution and sale of tourism in England. Back
3
Adequate seed funding should be provided by the public sector,
to lever contributions from the larger tourism businesses. As
the domestic tourism sector is primarily made up of small businesses
the scope for raising funding is significantly less than with
the in-bound sector. Back
| 
