Memorandum submitted by the Tourism Alliance
1. INTRODUCTION
The Tourism Alliance was established in 2001
with the support of the Secretary of State for Culture, Media
and Sport as the voice of the UK tourism industry and now comprises
almost 50 Tourism Industry Associations that together represent
almost 200,000 business of all sizes throughout the UK (See Appendix
1 for a full list of member organisations). The Tourism Alliance's
mandate is to work with Government on issues relevant to the growth
and development of tourism and its contribution to the economy
and it is therefore responding to this Select Committee Inquiry
in that capacity.
2. PUTTING THE
OLYMPICS INTO
CONTEXT
Before addressing the questions posed by the
Committee in this inquiry, it would be worthwhile putting the
impact of the 2012 Olympics on the UK tourism industry into some
perspective.
Tourism is one of the UK's largest industries,
employing 2.1 million people and generating some £74 billion
per annum for the UK economy. On a global level, the UK's inbound
tourism industry is the fifth largest in the world and, within
that, London is one of the top destination cities receiving 13.9
million overseas visitors in 2005 who spent £6.9 billion
in the city.
It is predicted that the total number of overseas
(inbound) tourist visitors who will visit London in relation to
the Olympic and Paralympic Games in 2012 (including competitors,
officials, media and spectators) could be up to 300,000 (three
times the number of people who visited the 2000 Olympics in Sydney).
There will, of course, be an unknown number of domestic tourists.
It is anticipated that around 90% of all tickets will be sold
to UK residents. The pattern of event attendance has not yet been
estimated, so the actual number of visits, or length of stay profiles
are not known.
At 300,000 visitors, the number of overseas
tourists who will visit London for the Olympics will represent
just over 2% of the total number of overseas tourists who currently
visit London and just 1% of the 30 million who currently visit
the UK. In, fact, if UK inbound tourism grows at the world average
of 4% between now and 2012, the 300,000 visitors will represent
just 1.6% of all visitors to London and 0.8% of all visitors to
the UK.
London is a large city, and a global tourism
destination. The resident population is about twice that of Sydney
and ten times the size of Athens. London has a large tourism capacity.
In fact, on normal day at the time of year when the Games will
be held, there would be 425,000 overseas tourists in London anyway.
Most inbound Olympics-related tourism will be in substitution
for leisure and business tourism that would otherwise occur. Indeed,
even domestic Olympics-related tourism is likely to be displacement
from normal domestic tourism, rather than additional as, at the
time of the Games, regular leisure visitors are deterred and many
residents choose to go away. LOCOG and TfL have estimated the
maximum daytime traveller requirements during the Games will very
well within normal daily capacities, especially as the Games will
be held during a school holiday period.
More importantly, the experience of previous
Games is that potential leisure and business visitors will perceive
that London and the UK will be "overrun" with Olympic-related
visitors in 2012 and will choose to visit another destination
that year.
If only 5% of "normal" visitors were
to stay away in 2012, overall tourism expenditure in London and
the UK would fall by, respectively, £300 million and £800
million (in 2005 terms). In addition, if a further 5% of UK domestic
visitors decided to avoid a holiday in the UK that year, this
would reduce tourism expenditure by a further £1.35 billion
(again in 2005 terms).
This means that, in addition to considering
how the nations and regions of the UK can derive lasting benefit
from staging the Games, the Committee should give consideration
to ways of ensuring that the Olympics do not impact upon "normal"
tourism. Britain should be the first Olympic host to comprehensively
plan to mitigate the potential negative effects on regular tourism.
3. MAXIMISING
THE VALUE
OF THE
OLYMPIC LEGACY
As seen in the previous section, the additional
tourism volume and value directly related to the Olympic Games
is relatively low. Indeed, Price Waterhouse Cooper's Olympic Games
Impact Study that was commissioned for DCMS in 2005 predicts that
this benefit will be just £66 million.
The main tourism-related benefit on hosting
the Olympic Games is, therefore, associated with the media coverage
that the Olympics will receive. VisitBritain and Visit London,
in their publication, Tourism Opportunities and Objectives, predict
that there will be up to 20,000 press and media representatives
attending the Games and that the global TV viewing audience for
the 2012 Olympics will top four billion people. Most of the press
and media will be "non-accredited" with LOCOG/IOC and
will be here to experience and report on London and the UK.
Indeed, DCMS consider that up to 80% of the
legacy benefit to be derived from hosting the Olympic Games (£2
billion) will be as a result of increased tourism generated as
a result of this high degree of international media exposure.
This, therefore, is the main way that the nations
and regions of the UK will derive the maximum lasting benefits
from staging the 2012 Olympic Games—by the Government investing
in a tourism strategy that utilises the media exposure to generate
a step-change in inbound and longer term improvement in domestic
tourism. The Olympics represents a truly once in a lifetime opportunity
to showcase London and the UK to the world. If we are able to
develop and implement a marketing strategy that successfully leverages-off
this coverage, the long-term benefits to the UK tourism industry
will be considerable.
To help realise the target of generating an
additional £2 billion in tourism revenue as a result of hosting
the Olympics, DCMS has launched the consultation document, Welcome
Legacy: Tourism Strategy for the 2012 Games.
While there is much in the document that, correctly,
looks at improving the quality of tourism products and services
and improving skills in the sector, the Tourism Alliance has concerns
that if the resultant Strategy reflects just these topics, there
will be no chance of it achieving the potential tourism legacy
from hosting the Olympics.
The concerns that the Tourism Alliance has relate
to:
1. Funding of the strategy.
2. Ownership of the strategy.
3. Timing of the strategy.
4. Co-ordinating tourism activities nationwide.
1. Funding of the Strategy
While the Welcome Legacy consultation document
emphasises the need for new initiatives to be developed to improve
quality and skills within the sector and the need for marketing
to be targeted and well resourced, there is no mention in the
document of any funding being set-aside to actually implement
the resultant strategy.
Indeed, there seems to be a lack of realisation
within DCMS that additional funds need to be committed, particularly
to international marketing and media support, if the £2 billion
target in additional expenditure is to be achieved.
Despite DCMS's claims that tourism is both essential
to the national economy and an important component of their remit,
the Department's funding of the sector over the past nine years
has been inadequate. The following table shows that although total
DCMS funding has increased by 61% over the last nine years, the
amount of funding that has been allocated to VisitBritain has
only increased by 9% and even then, there has been no increase
whatsoever in the funds (£35.5 million) allocated to VisitBritain
to market the UK overseas.
|
| £000
| £000 |
|
|
| Sport England | 36,925
| 78,963 | 11.8
|
| Arts Council | 194,171
| 409,178 | 110.7
|
| Museums, Libraries and Archives Council |
9,721 | 14,174
| 45.8 |
| Royal Parks | 21,871
| 30,989 | 41.7
|
| British Museum | 31,850
| 39,794 | 24.9
|
| Film Council | 20,850
| 24,110 | 15.6
|
| British Library | 87,200
| 97,562 | 11.9
|
| English Heritage | 116,256
| 129,136 | 11.1
|
| VisitBritain | 44,866
| 48,900 | 9.0
|
| DCMS (admin and research) | 21,168
| 49,329 | 133.0
|
| Overall DCMS Budget(1) | 904,790
| 1,458,228 | 61.2
|
|
(1) Does not include a second request for resources of
£2.6 billion in 2005-06 for BBC Home Broadcasting.
The tourism industry is, therefore, highly sceptical that
there will be any change in DCMS's ongoing position of not increasing
funding for marketing Britain overseas. Indeed, as part of the
current Comprehensive Spending Review, VisitBritain has been asked
to prepare budgets based on a 7% reduction in funding.
As the Comprehensive Spending Review will apply to GIA allocations
from 2008-09 through to 2010-11, a cut in funding will make it
almost impossible for VisitBritain to even maintain routine overseas
marketing activity in the lead-up to the 2012 Olympic Games, let
alone undertake the additional marketing activity required to
achieve the Government's £2 billion target.
DCMS therefore needs to ensure that the CSR includes an increase
in funding for VisitBritain so that it can undertake effective
overseas and domestic marketing campaigns in the lead-up to the
Olympic Games.
Indeed, a funding commitment is needed from DCMS before the
outcome of the 2007 CSR as funds will be needed to undertake initiatives
prior to 2008-09.
2. Ownership of the Strategy
Since DCMS was formed in 1997, it has developed two nation
tourism strategies—Tomorrow's Tourism and Tomorrow's Tourism
Today. Neither of these strategies has been particularly effective
in developing and growing the tourism industry in the UK. In fact,
rather than revenue from the tourism industry growing to £100
billion by 2010 as envisaged in the Tomorrow's Tourism Today strategy,
the latest UK Tourism Survey Figures suggest that the revenue
generated by tourism in the UK is actually decreasing.
While the decline in tourism revenue can not be blamed on
DCMS, the situation has not been helped by the fact that the Department
has failed to take ownership of the previous strategies and many
initiatives that they contained have not been implemented.
The failure of these strategies to achieve their aims shows
that a strong degree of ownership and leadership is required to
ensure that the recommendations contained in the 2012 strategy
are implemented successfully. This is exacerbated, not helped,
by the organisational aspects of the Olympics (IOC, LOCOG), its
facilitation (ie, ODA, TfL, Mayor, DCMS, BOA) and the complex
and diffuse situation of devolved tourism responsibility to the
home nations, London, the English RDAs, Local Authorities, and
the industry—especially since the abolition of the English
Tourist Board and the cohesive network that existed previously.
If DCMS is serious about the £2 billion target, then either
it, or any structure that it develops to implement the strategy,
needs to truly take ownership of the strategy and have sufficient
resources allocated to make sure that it is successful.
Combined with being responsible for implementing the strategy,
there is a requirement to monitor its effectiveness, both in implementing
the strategy's initiatives and in those initiatives delivering
the expected benefits. Again, it needs to be clear who is responsible
for this monitoring and sufficient resources need to be allocated
to this task.
3. Timing of the Strategy
It needs to be recognised that none of the components of
the Olympic Games delivery structure (ie, LOCOG, the ODA and the
Nations and Regions Working Group) have tourism development as
part of their remit, nor do they have the authority to create
and deliver the legacy benefits. Therefore, the ability of the
nations and regions to achieve the potential tourism legacy from
hosting the Games is dependent upon the Welcome Legacy strategy
and the arrangements that are put in place to implement the strategy.
However, the timing of the development of the Welcome Legacy
strategy is such that it will probably be mid 2007 before it is
finalised and the agreed structure for implementing the strategy
can be established. With the build-up to the 2012 Olympics starting
the moment the Beijing Olympic finish in 2008, there is a concern
within the tourism industry that there are a number of decisions
that need to be taken now if the tourism benefits associated with
hosting the Olympic games are to be maximised.
4. Co-ordinating Tourism Activities Nationwide
The Alliance believes that there must be a cohesive arrangement,
that will stand the increasing pressures as the Games approach,
and can ensure the optimum co-ordination of programmes and clarity
of communications through the UK's tourism entities. The two key
players are Visit London and VisitBritain. They, jointly, must
be central to the achievement of co-ordinating the marketing and
industry actions around the Olympics both domestically and overseas.
We suggest that Visit London and VisitBritain should form
a joint "unit" to fulfil these tasks, and take ownership
of the strategy, reporting primarily to DCMS' Tourism 2012 group.
This unit needs to be in place, fully resourced, with linkages
through to Visit Scotland, Visit Wales, the RDAs and RDPs and
with a clear and agreed marketing strategy well before the Beijing
Games finish.
We envisage that a mutual unit could achieve this efficiently,
with seconded staff from both parent organisations and others,
probably reporting primarily to DCMS's Tourism 2012 group. This
unit would initiate such industry partnerships and working groups
as are necessary and establish an overall Olympics Tourism Forum,
and complement LOCOG's Nations and Regions Group in its general
liaison role. It would not be a separate NDPB, but could be governed
by a Memorandum of Agreement between its partners. It would not
be an executive agency, all programmes being carried out by its
constituent, and other, entities.
While the Olympic Games are predominantly London-centric,
the greater long term benefit from Olympics-motivated Tourism
will be Britain-wide. The media and word-of-mouth opportunities
presented by the Games will to a great extent only reflect the
experiences and information that are conveyed to the media. This
requires a comprehensive co-ordinated programme of overseas promotion
and PR support, providing media with collateral material that
reflects the diverse and very attractive tourism products of all
the home nations and regions. Programmes of media hosting must
be developed, to take them to appropriate destinations and give
them experiences that correlate with the media that they are working
for, to ensure the most effective response, that will play to
the interests of their diverse audiences.
Much more collaborative work is required to develop regionally
differentiated images, itineraries and products that are adapted
to the audience profiles in each source market. This must be baked
up by direct marketing and advertising in which VisitBritain,
Visit London and others enlist maximum participation from industry
partners, but it must have adequate public funds, to create strong
images and market presence, for at least five years, from 2010
to 2015. During this time programmes should be monitored to demonstrate
and improve the return on investment and determine refinements.
In the run up to, and during, the Olympics the approach to
benefiting the whole of Britain is rather different. Whilst the
Torch Relay and Training Camps attract a lot of interest they
are unlikely to create much net tourism benefit. Furthermore,
there are negative impacts on inbound tourism and Domestic tourism
to London, as a result of wishing to avoid perceived overcrowding
and this is where there is some scope to draw attention to the
fact that most of the country will be open for business and pleasantly
free of Olympic crowds and pressures.
So far as Olympics-related tourists are concerned, the profile
is very specific, based on the evidence of past Games: namely
they come for a fixed purpose and time (eg., officials, guests
hosted by sponsors, families of competitors) and most will not
have the time in their itinerary for add-on stays, or day trips
away from their Olympic accommodation base. The programme of media
awareness and promotion mentioned above will however also impact
on Olympic-related tourists, and the availability of good value,
easily booked and purchased, add-on opportunities and outings
will have some success.
Once potential visitors become more aware of out-of-London
trip opportunities, the long term demand will rise. This could
be greatly assisted by the proposed new Olympics "unit"
developing in partnership with regional tourism authorities and
destinations, a comprehensive range of easily purchased themed
routes, trips and features, as the basis of gateway demand-management
in the future. In the past, London has wanted to keep and hold
inbound visitors for as long as possible. However, London's accommodation
and services are and will remain comparatively expensive, and
at times at full capacity. Moving people out of London to spend
some time less expensively around Britain, frees the bedspace
for another visitor to London. This should be the basis for pro-active
participation by London in gateway collaborative activities, beyond
their formalised, co-operative, role.
4. RECOMMENDATIONS
The Tourism Alliance recommends that:
(1) DCMS, as part of the development of the Welcome Legacy
strategy, include initiatives designed to ensure that there is
no downturn on "normal" inbound and domestic tourism
during 2012.
(2) DCMS and HM Treasury make a commitment, as an outcome
of the 2007 Comprehensive Spending Review, to allocate funding
to fully implementing the Welcome Legacy strategy, recognising
that to optimise Olympics-related tourism and to achieve the potential
targeted £2 billion increase in tourism revenue from Olympics-motivated
tourism, adequate public funding must be invested, especially
(but not exclusively) in marketing and media support in source
markets.
(3) DCMS must allocate sufficient additional funding
to VisiitBritain to allow the organisation to prepare effective
overseas and domestic activity to commence immediately after the
2008 Beijing Games, before the CSR funds Welcome Legacy funds
become available in 2008-09.
(4) One organisation take ownership of the Welcome Legacy
strategy, co-ordinate communication and marketing/branding, with
sufficient resources and authority to be able to implement the
strategy and monitoring its effectiveness. The two key partners
must be Visit London and VisitBritain.
(5) The unit responsible to co-ordinating the marketing
to London and the UK in relation to the 2012 Games be established
as soon as possible.
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