Written evidence from the Tourism Alliance
(TE 95)
The Tourism Alliance was established in 2001 as the
voice of the UK tourism industry. It comprises 50 Tourism Industry
Associations that together represent some 200,000 business of
all sizes throughout the UK. 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 inquiry in this capacity.
1. THE IMPORTANCE
OF TOURISM
TO THE
UK ECONOMY
Tourism, by its very definition, involves the transportation
of people from one destination to another. For the UK tourism
industry to grow, the UK transport system needs to be effective
and efficient.
The importance of the UK tourism industry to the
UK economy is often overlooked, yet it is the UK's fifth largest
industry and contributes £115 billion to the UK economy
(Deloitte, 2010). It has also been one of the fastest growing
sectors of the British economy over the past 20 years and employs
around 2.6 million people - around 8% of the total UK workforce.
Moreover, tourism is the UK's third largest export
industry, with the inbound tourism sector contributing just under
£20 billion per annum to the UK economy - over twice
the amount that the UK earns from North Sea oil.
The importance of tourism to the national economy
in generating the economic and employment related growth that
the country needs to recover from the recent recession was emphasised
by the Prime Minister's speech on 12 August 2010 when he stated
that:
Tourism is a fiercely competitive market, requiring
skills, talent, enterprise and a government that backs Britain.
It's fundamental to the rebuilding and rebalancing of our economy.
It's one of the best and fastest ways of generating the jobs we
need so badly in this country. - David
Cameron, 2010.
This importance of the tourism industry in rebuilding
and rebalancing the UK economy was emphasised in the Government's
coalition programme, which specifically states that:
We will take steps to improve the competitiveness
of the UK tourism industry, recognising the important part it
plays in our national economy. - The
Coalition: our programme for government.
This commitment to the growth of the UK tourism industry
has recently seen the Government set three goals for the industry:
1. To increase the expenditure of UK residents
on domestic tourism to 50% of their total expenditure on tourism
(at present UK residents spend £10 billion more on overseas
travel that on domestic travel).
2. To regain the UK's position as the 5th most
visited destination in the world.
3. To generate £1 billion in overseas
marketing from hosting the 2012 Olympics.
This submission, therefore, looks at the improvements
to the UK's transport infrastructure that are required in order
for tourism industry to deliver on its growth targets.
As there are two distinct components to the UK tourism
Industry - domestic tourism and international tourism, comments
on the UK's transport system have been divided into two sections.
2. INBOUND TOURISM
Being an island nation, over two-thirds of people
arrive or depart the UK by air. These travellers account for around
80% of total inbound tourism expenditure. The availability and
ease of flights to and from the UK is the foundation on which
the country's travel industry is built. The Tourism Alliance provided
a submission to the Eddington Transport Review in 2006 stating
that, in order for the UK to retain its status as the fifth most
popular global tourism destination, the Government needed to undertake
steps to increase aviation capacity, especially in the South East
of England.
The Tourism Alliance also stated that it was very
supportive of the expansion of regional airports as they provide
a very important mechanism for spreading the benefits of tourism
throughout the UK and diversifying the UK's tourism product range.
However, this did not detract from the fact that London is the
world's favourite international tourism destination and will remain
pivotal to the tourism industry achieving the growth targets set
by Government.
Since the Eddington Review, the new Government has
cancelled the planned third runway at Heathrow and stated that
it will refuse permission for additional runways at Gatwick and
Stansted. Instead, the Government is committed to the development
of a high-speed rail network within the UK and linking to similar
networks in other European countries. While the development of
such a network would be beneficial, this is not a viable alternative
to increasing aviation capacity as the UK's most profitable source
destinations for tourism are countries such as the USA and Japan
while the global growth markets for inbound tourism in future
are China, India and Brazil.
The Tourism Alliance therefore remains of the same
view that it had in 2006: that the Government needs to ensure
that adequate additional aviation capacity is developed both in
the South East and throughout the rest of the UK to ease congestion
and ensure that the UK tourism industry is able to grow and provide
the economic and employment benefits that the country needs and
that this additional capacity is delivered in a timely manner.
The economic implications of not providing this additional
capacity are significant. The Department for Transport has estimated
that, if the recommendations in the aviation white paper were
not delivered, by 2030 demand for air travel will exceed supply
by 73 million passenger movements per annum and the average cost
of airfares will increase by £100. Using data from VisitBritain's
econometric modelling of the price sensitivity of tourism, it
is possible to calculate economic impact that this would have
on the travel industry:
(a) Some 10 million overseas visitors who wish
to travel to the UK will not be able to book flights and will
visit other destinations instead. The average expenditure by overseas
visitors to the UK is currently £500 per trip. Therefore,
the loss of 10 million visitors per annum would equate to £5
billion per annum in foreign revenue (in current terms) being
lost. In addition, with the average airfare to the UK being approximately
£400, British airlines will also lose an estimated £4
billion per annum in foreign revenue.
(b) The loss of £5 billion in overseas visitor
expenditure underestimates the true impact that restricting capacity
will have on the UK's inbound tourism earnings. The £100
increase in the cost of visiting the UK amounts to 11% of the
total cost. With tourism price elasticity of -1.3, this will cause
a 14.4% decrease in the amount of revenue that the UK economy
gains from visitors that still travel into the country. This equates
to a further loss to the UK economy of £4.3 billion per annum.
Taken together, these two effects mean that, by not
increasing airport capacity, the UK will forego £9.3 billion
per year (in 2002 terms) from overseas visitors by 2030. This
equates to forgoing over 200,000 FTE jobs in the sector.
There is a counter argument that, although aviation
capacity constraints will result in lower revenue and fewer jobs
from inbound tourism than would otherwise be expected, this will
be more than compensated for by the rise in domestic tourism that
results from people who would otherwise travel overseas being
forced to take holidays at home. The problem with this argument
is that, if capacity is constrained, outbound travellers from
Britain will out-compete inbound travellers for the available
seats as potential overseas visitors will simply switch to alternative
destinations as the price increases. The net result being that
a greater percentage of the people on the available flights will
be British outbound travellers. As a result, Britain's tourism
trade deficit will continue to worsen, rather than improve if
aviation capacity is restricted.
3. DOMESTIC TOURISM
Domestic tourism is one of the England's largest
and most successful industries. It increased by 4% in 2009, with
residents taking 103 million trips and spending £22 billion
on goods and services. In addition, these residents also undertook
around 900 million day trips, spending a further £46 billion.
Together, this expenditure supports around 1.3 million full
time jobs in the UK economy.
The Government's target is to increase the expenditure
by UK residents from 30% of their total expenditure to 50%. If
this is achieved, and assuming outbound tourism remains static,
domestic tourism will generate an additional £10 billion
and 200,000 jobs for the UK economy.
The UK Tourism Survey shows that around 70% of tourism
travel is from urban to rural and seaside destinations. Due to
the nature of this travel, private vehicles account for 74% of
all tourism trips, with only 21% of trips being undertaken using
public transport (4% of which is by air). The figures are very
similar for day visitor travel, with 68% of trips being undertaken
using private vehicles and only 15% being undertaken using public
transport other than aviation.
The reason for the high usage of private transport
for tourism travel within the UK is that it provides a number
of core benefits over using public transport. These benefits include:
1. Cost effective (especially for families).
2. Ability to transport loads (essential for
family holidays).
3. Door-to-door transport (no need to interchange
with children and luggage).
4. Travel at the destination (transport around
the destination is as important for tourists as transport to
it).
The principal disadvantages of private transport
are that it adds to the already overly high levels of traffic
congestion and damages the environment in comparison to the much
greener public transport option. These disadvantages - largely
intangible to the individual - are not, on their own, sufficient
to outweigh the more immediate tangible benefits to the 74% of
car users. Indeed, we are realistic in understanding the importance
and convenience a large percentage of our population place on
traveling by car and do not seek to dramatically impinge on that.
However, simply maintaining the status quo will not enable the
growth in domestic tourism that we all seek to happen.
Despite the fact that Britons undertake around one
billion tourism-related trips each year and the tremendous benefits
that are to be had by promoting a switch from private to public
transport, it is commuter and intercity travel that dominant the
Government's transport strategy, Delivering a Sustainable Transport
System. This strategy targets improving the reliability of
the transport system and reducing congestion and crowding problems
in "key urban areas, on inter-urban corridors and at international
gateways, for which we pay an economic price".
One of the rationales for the strategy concentrating
on commuter and intercity travel is that tourism accounts for
only 6% of all journeys undertaken in the UK. However, there is
a fundamental economic reason why tourism-related transport needs
to be better incorporated into the Government's transport planning
strategy. This being that, increasingly, alternatives to commuter
and business travel are being developed that reduce the need to
travel without reducing economic productivity (e.g., remote working
and teleconferencing). By contrast, there is not ability to substitute
a tourism journey - a destination can only receive the economic
and employment benefits associated with tourism if the visitor
travels to the destination. If this journey cannot be made, the
host community receives no benefit.
Despite these differences between commuter and tourism
travel, the needs of both travellers are the same. The number
one issue for any person using public transport, for whatever
reason, is: how punctual is the service. To provide punctual services,
public transport needs to be afforded priority on the roads. People
will not be enticed out of their cars if the option is simply
to sit stationery in the bus or coach in the next lane to them
on the motorway.
The maths is simple. Two people in a car verses (an
average load of) 26 people in a coach or bus. Whether travelling
for reasons of tourism or commuting, the private vehicles is the
least efficient use of road space and causes the greatest damage
to the environment.
4. CONCLUSION
Tourism is one of the UK's largest industries in
terms of earnings, employment and the generation of export earnings.
The coalition Government has recognised that the industry is integral
to the rebalancing of the UK economy, generating growth and increasing
employment, and is in the process of setting ambitious targets
and developing a new national tourism strategy to achieve this.
The provision of an effective and efficient transport
infrastructure is fundamental to the delivery of this strategy
and its associated targets. This requires there to be adequate
capacity at all entry-points to the UK, especially in the South
East, and for the national transport strategy to recognise and
incorporate the needs of tourism travel for the domestic tourism
industry.
The government must take a strong lead in promoting
modal shift and find ways to encourage local authorities not to
take the simple, short sighted political option of doing nothing.
September 2010
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