Memorandum submitted jointly by the Greater
London Authority and London Development Agency
1. INTRODUCTION
The Greater London Authority Act 1999 ("the
Act") makes provision of the Secretary of State for Culture,
Media and Sport (DCMS) to provide a grant to the Greater London
Authority (GLA) though the Mayor, to carry out its tourism functions.
Part of the Act places a duty on the GLA to provide advice to
Ministers, the British Tourist Authority (BTA) and the English
Tourism Council (ETC). Elements of the tourism function have been
delegated by the Mayor to the London Development Agency (LDA),
the Regional Development Agency (RDA) for London.
London is also unique as the only region to
receive its funding direct from DCMS. All the other regions in
England receive their tourism funding via the BTA and ETC.
The GLA and LDA support the response drafted
by the joint grouping of RDAs in England; however under the specific
responsibilities both statutory and devolved that the Mayor of
London holds for tourism we are submitting this as a London specific
joint response from the GLA and LDA.
1.1 Structure in London 2001-02 to 2002-03
The Mayor has a statutory duty for the promotion
of tourism in London, and has received funding to do this direct
from DCMS. The Mayor has delegated elements of his duty and DCMS
funding to the LDA. The LDA in turn have contracted with the London
Tourism Board to deliver tourism services.
Since undertaking this duty in 2001, the Mayor
has undertaken the following:
— A strategic Review of Tourism in
London (the first in over 15 years);
— Public Consultation on key findings;
— Produced a three-Year Plan for Tourism
in London (Visit London) published 20 September 2002.
Visit London includes a new structure
for future delivery that will ensure co-ordination, clear leadership
and a strategic approach to future planning and development.
A detailed action plan for delivery of Visit
London is currently being developed for implementation in
April 2003.
As background to the questions set by the inquiry
it is important to demonstrate the importance of tourism to London's
economy and the benefit of London's tourism to the whole of the
UK, this is addressed under sections two and three of this paper.
2. TOURISM IN
LONDON
London is one of the world's major tourist destinations,
attracting people from all over the globe for business, pleasure
and social reasons. It also hosts large numbers of staying and
day visits from UK residents. As such tourism plays an important
economic role in London.
In total, staying and day visitors injected
a total of £14.9 billion into the London economy in the year
2000[1]
. This expenditure, which is over and above that made by London
residents and people who work in London, helps to support a wide
variety of businesses, creates employment and generates income
for Londoners. Total tourism spending is equivalent to 12% of
London's GDP[2].
Tourism helps sustain a range of other activities
and public infrastructure. For example:
— Overseas visitors account for 30%
of all theatre tickets bought in the West End;
— Visitors account for 25% of all Underground
passengers in the central area;
— Overseas visitors spent £100
million on London's tubes and buses;
— Visitors account for 15% of fare
income for public transport in London;
— Visitors account for 25% of all taxi
fares;
Source: London Tourist Board
The scale and size of the tourism sector is
on a parallel with the other main successful sectors of London's
economy. Tourism spending is on a par with the Gross Domestic
Product (GDP) generated by London's manufacturing and retail sectors.
The benefits of tourism are felt across many
different sectors of the economy. Whilst the accommodation and
attractions sectors' are the obvious beneficiary of tourism, visitor
spending is very important in sectors such as retail, catering,
transport, entertainment and many other sectors.
The tourism facts and figures are significant
and outline the important role the tourism industry plays in the
London economy, however they also demonstrate an issue London
faces in the gathering of data and statistics. The collection
and dissemination of tourism statistics in a timely fashion is
an ongoing problem with reports such as the International Passenger
Survey providing data that can be over a year out of date
by the time figures are confirmed.
Visit London has identified the lack
of data and the action plan will detail plans to develop a economic
modelling system specific to London need. The timely collection
and dissemination of London statistics will benefit not only London
but the rest of the UK during planning processes. The Mayor is
seeking DCMS support on this matter so that we can share experiences,
learn from projects that DCMS are undertaking and ensure compatibility
with other initiatives being developed across the UK.
3. TOURISM IN
LONDON BENEFITS
THE UK ECONOMY
AS A
WHOLE
London is the pre-eminent destination in the
UK for overseas visitors and acts as the main gateway to the rest
of the country. 59% of all overseas visitors arrive in the UK
through one of London's airports, 45% of all overseas visitors
visit only London and a further 11% visit London and then go on
else where. A total of 56% (over half) of all overseas visitors
to the UK spend all or part of their visit in London.
The sheer scale of tourism in London means that
any downturn results in a significant loss of income for the Treasury
in tax revenue. For example, overseas visitors who only visited
London spent some £5.6 billion in 2000 of which £840
million (assuming all expenditure is subject to VAT) is returned
to the national exchequer in VAT payments alone and contributes
to public spending across the UK. A fall in visitor spend of 10%
reduces VAT by £84 million. This ignores the income and corporation
tax and contribution to business rates that visitor spending generates.
This is additional income, which the UK will lose without these
overseas visitors[3].
Without the draw and magnetism of London the
UK would undoubtedly attract fewer overseas visitors. London is
particularly important for new and developing markets and attracting
first time visitors who then go on to explore other parts of the
UK in subsequent visits. Thus London acts both as an icon for
UK tourism on the world stage and is a generator of tourism for
the future. If tourism in London declines then so will tourism
in the UK. The importance of this gateway role has been recognised
under the current DCMS funding programme. It is our intention
to maximise the benefits to London and the rest of the UK under
this programme through developing a structured working relationship
with the key stakeholders across the UK.
The Mayor is seeking DCMS financial assistance
and support on this matter. DCMS are asked to confirm their continued
financial support for the Gateway function and through their agreements
with other key providers require the regions to engage in a structure
working relationship to maximise returns on investment made.
The Mayor is seeking DCMS recognition and confirmation
of London's important role in the long-term success of the UK
tourism industry. This recognition should include an independent
voice and opportunity to attend all meetings/events relevant to
tourism with in the UK, eg Hartwell House.
3.1 Linkage with other sectors
Tourism in London helps to deliver national
tourism objectives and wider economic objectives for London. It
has a good synergy with other areas of activity, so what is good
for tourism is very often good for residents and good for business.
This interdependence is based on complex relationships and has
been recognised by the Mayor. This led in part to the Mayor's
decision to delegate specific elements of his responsibility for
Tourism in London to the LDA.
As the economic development agency for London
the LDA has a clear remit to ensure the sustainable economic growth
and diversity of the capital and its economy. They are therefore
ideally positioned to liaise with other regions and form well-structured
and clear policies for future delivery and working across the
interdependent sectors. The LDA will be required to undertake
further research to build up the knowledge base for future planning
purposes, this work is underway and tourism has been identified
as a one of three priority sectors for development work.
The Mayor welcomes DCMS's announcement of May
2002 that outlined an increased role for all RDA's in the development
and management of regional tourism. London offers an example of
one such relationship already in existence and we are happy to
share experiences of the last two years with other RDA's and DCMS
when invited as London to high-level meetings on the future development
of tourism.
4. FOOT AND
MOUTH (FMD) AND
SEPTEMBER 11
London, although not traditionally associated
with the countryside, was significantly affected by the impact
of FMD as visitor numbers to the UK declined and the negative
image internationally affected London's traditional market of
international tourists. Following the first signs of recovery
in August 2001 tourism in London and the UK was hit again by the
even more damaging events of September 11. London's dependence
on the overseas market and the UK close relationship with the
United States of America led to an over night drop in visitors
with London suffering to a greater extent than the rest of the
UK.
The combined effects of Foot and Mouth and September
11 on overseas visitor spend in the UK resulted in a £1.5
billion drop in overseas visitor spend from 2000-01, £1.1
billion of this being directly absorbed by London[4].
This is clearly illustrated by hotel occupancy figures in London
that dropped from 80% in 2000 to 70% in 2001[5].
5. LONDON TOURISM
ACTION GROUP
(LTAG)
Unlike other parts of the country which suffered
from the effect of FMD, London did not receive any additional
central Government funds to alleviate the effects of September
11 on the tourism sector.
To address the problems experienced the Mayor
established a London Tourism Action Group (LTAG) to; provide a
rapid response and support the tourism sector in the wake of the
terrorist attacks on September 11 and champion the `case for London'.
Co-ordinated by the London Development Agency (LDA), and representing
London's key business stakeholders (including LTB, ETC, CBI, London
First, Business Link), the group met on 16 October to discuss
the needs of the sector and development of initiatives by the
Mayor and the LDA to support the main tourism, leisure, hospitality
and cultural sectors.
The London Tourism Action Group ran from November
2001 to March 2002. Under the Mayor's leadership LTAG championed
the cause for tourism in London providing a clear focus and co-ordination
of effort.
LTAG actions:
— Secured additional public and private
sector funding (including a reallocation of existing DCMS funding
from overseas to a domestic campaign).
— Developed an action plan for support
to the industry that would have short and medium objectives that
would feed into the wider Mayoral review of Tourism in London.
— Created a campaign for a short-term
marketing campaign aimed at targeting the "London to Londoners"
and domestic markets, with a view to emphasising "business
as usual" in London in the run-up to the crucial Christmas
period and then worked with partners to encourage the return of
visitors to the UK through London as a Gateway as the recovery
began.
— A full evaluation of the success
and impact of the LTAG programme is currently being undertaken
and a report will be made available to DCMS at the beginning of
December, a brief outline of key findings could be provided at
the Culture, Media and Sport Select Committee if the Mayor's request
to attend and provide a verbal briefing is granted.
The combined effects of FMD and September 11
have highlighted the need for London to have the ability to respond
rapidly to unforeseen events that impact on the tourism industry.
Visit London outlines a new structure that will enable London
to do just that. The Mayor seeks DCMS commitment to supporting
the development of Visit London financially and practically with
research and seeks a clear voice at all future meetings to ensure
as Visit London develops that we have the opportunity to engage
at the highest level with potential partners.
6. THIS YEAR'S
TOURIST MARKET
London's tourism industry this year has continued
to be adversely affected by the slow-down in global growth, by
the events of September 11, and by the continuing strength of
sterling against the euro (though the latter has been offset to
some extent by a favourable £/$ rate).
The current state of the market is hard to assess
precisely. Indicators such as hotel occupancy suggest that demand
is running at around the same levels as last year but remains
substantially down on 2000. September 11 led to an immediate and
sharp fall in US tourist numbers of around 25% though growth elsewhere—in
part the result of increases in non-US tourists attracted by lower
airfares, cheaper hotel prices and various high profile promotions.
The number of visits has begun to recover but this is through
the replacement of traditional higher spend visitors with lower
spend discounted visitors attracted through promotional work of
LTAG and subsequent campaigns run by LTB and industry to combat
the downturn.
This is highlighted by data for July 2002 on
passenger movements at London's major airports. The data suggests
that long-haul numbers remain sharply lower than last year with
Gatwick and Heathrow down 10% and 5% respectively. Short haul
flights from Stansted are much higher than previous year suggesting
that non-US demand held up well and that low cost flights are
encouraging inward tourism. Overall passenger numbers are 2% down
on 2001at the same time and the mix has clearly changed.
It is important to remember that not only did
London take longer than many other regions to recover from the
impacts of 2001 due to its traditional dependence on the long-haul
overseas market and the perceived threat many visitors associated
with London as a city and the capital of the UK but when it did
many of the replaced visitors attracted a lower return on investment.
Indeed anecdotal evidence still suggests that bookings for concerts,
theatres and other major attractions are still in some cases well
down—suggesting that concerns over safety increased in the
run-up to the anniversary of September 11 and have had a corresponding
impact on visitor numbers and spend.
7. WHY ARE
PUBLIC SECTOR
LEADERSHIP AND
SUPPORT NECESSARY?
The GLA and LDA believe that together with the
Government we have an important role in promoting and supporting
the tourism industry. This role requires a long-term commitment
of funding and research from central Government. The Mayor seeks
a clear commitment from DCMS outlining their support for Visit
London and how they will provide both increased funding and sector
specific expertise to make it a reality.
As part of the LTAG work consultants were commissioned
to evaluate the case for public sector intervention in London's
tourism sector. The key findings are outlined below:[6],
[7],
[8]
The private sector plays the most visible role
in catering for the needs of visitors (from hotels to restaurants
to airlines), and tourism needs to be market driven to be successful.
However, delivering the above objectives and achieving wider regional
and national objectives will only be possible with a strong commitment
and input from the public sector.
Key attractions are in public ownership. To
ensure success the tourism product requires a mixture of private
and public sector provision.
Quality public spaces and infrastructure (accommodation
and attractions included) are key to making destinations work.
Infrastructure is essential, especially transport, but also things
such as signing, information, toilets etc which enable visitors
to make their way easily and safely around the city and make the
most of their visit. This is largely the responsibility of the
public sector.
Destination marketing and creating London brand
awareness is seen as a public responsibility by the industry which
is fragmented and made up of many small businesses and related
activities.
Public sector intervention is necessary to improve
the functioning of the market. The decisions of individual businesses
do not necessarily add up to the long-term interests of London.
This covers a wide range of areas such as research and market
intelligence, training programmes, quality assurance schemes,
and regulation/setting of standards.
Tourism needs to be managed if it is to grow
sustainably. Intervention and management is needed to enable London
to accommodate growth in a sustainable way.
Intervention can help maximise the social benefits
for Londoners and is needed to secure social benefits for Londoners
such as access to employment, better quality of jobs, improved
leisure facilities, dispersal of tourism around London.
Visit London has addressed these and other points
under the four priority work areas.
Four Priority areas and select actions as already
identified are:
— Leadership and promotion.
— Strategic process and clear planning
processes for identification of strategic spending priorities.
— Developing a clear brand for London
Tourism and securing industry support.
— Gateway Role co-ordination of structured
working relationships with other regions and UK as a whole.
— Evidence and intelligence.
— Establishment of an economic modelling
programme through the GLA Economics' Unit to ensure timely data
and statistics for London tourism industry that can be shared
with wider UK.
— Research into and development of
a strategy to tackle quality issues surrounding accommodation
and information provision in particular.
8. WHAT SUPPORT
IS LONDON
SEEKING FROM
CENTRAL GOVERNMENT?
The Mayor of London has responded strategically
to his duty towards tourism under the 1999 GLA Act. The development
of "Visit London"—the Mayor's 3-Year Plan
for Tourism in London is a key step towards ensuring sustainable
development of tourism in London. Visit London identifies four
key priorities areas under which a detailed Action Plan will be
developed by the end of 2002:
— Leadership and promotion.
— Evidence and intelligence.
The Mayor is now seeking continued central Government
support through the Department of Culture, Media and Sport (DCMS)
as he drives forward the delivery of Visit London and the resulting
action plan.
Summary of key points and requests made to DCMS
and Central Government in this paper are:
— The Mayor would like to thank Kim
Howells, Minister for Tourism, for his words of support at the
Launch of Visit London, 20 September 2002.
— Continued recognition of the Mayor's
unique responsibilities, statutory and devolved, for tourism in
London and of the significant role London plays in the success
of the tourism industry within the UK.
— London is seeking to provide a clear
voice on tourism and requests that a Mayoral representative is
invited to attend all meetings/events that discuss tourism with
in the UK, eg Hartwell House.
— The Mayor requests an opportunity
to attend the forth-coming Culture Media and Sport Select Committee
in person and provide a verbal briefing to this paper.
— The Mayor welcomes DCMS's announcement
May 2002 of increased role for all RDA's in the development and
management of regional tourism.
— The Mayor seeks recognition of the
need and commitment to his leadership and vision for London's
tourism development, as outlined in Visit London the Mayor's 3-Year
Plan for Tourism in London through:
— Increased financial commitment.
— DCMS providing industry expertise
and exchange of research and ideas through the development process
for the detailed action plan.
— The Gateway role London provides
can be developed and strengthened by ensuring future agreements
with other key providers require regions to engage in a structure
working relationship in Gateway initiatives to maximise returns
on investment working with DCMS.
9. SUMMARY
Development of London's key role as the Gateway
to the rest of the UK requires central Government support of Visit
London both in terms of financial and practical assistance and
engagement. As the facts under section "Tourism in London
benefits the UK as a whole" highlight the sustainability
and development of the London Tourism product is critical to the
long-term maintenance of the UK tourism market share and profile
on the world stage.
The Mayor has taken responsibility for the long-term
development of London's tourism economy seriously and developed
a clear strategic plan; Visit London, as a first step. Now is
the time for central Government to back this brave move and provide
long-term funding commitment to London's Tourism economy under
Visit London and the Action Plan. The Mayor has challenged industry
to meet the needs of the sector and work to the Action Plan but
to ensure the success we all seek for London's tourism and therefore
the UK industry central Government must also act.
10 October 2002
1 International Passenger Survey, 2000. Back
2
Based on 1999 GDP £122 million, ONS. Back
3
The Case for London, Scoping Study Part A, Tourism Company for
LTAG. Feb 2002. Back
4
British Tourist Authority. Back
5
London Tourist Board. Back
6
UK Occupancy Survey. Back
7
BAA Survey results. Back
8
The Case for Tourism in London, Scoping Study Part B, Prepared
by The Tourism Company for LTAG April 2002. Back
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