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Impact of COVID-19 on DCMS sectors: First Report Contents

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4Tourism

80.Like live performance, tourism was among the first sectors to be hit by the Covid-19 crisis. On 17 March, the Foreign and Commonwealth Office (FCO) advised against all non-essential international travel.235 This guidance was extended “indefinitely” after an initial 30-day period.236 The FCO has now updated its travel guidance; while it still advises against all but essential international travel, it now includes a list of over 60 exempt countries and territories.237 Both domestic and inbound tourism heavily depend on the Easter period and May bank holidays to kick-start the summer season, so when the lockdown initially came into force at the end of March, the tourism industry ground to a halt. In the South West of the UK alone it is estimated that £1.7 billion in turnover was lost between February and April.238

The impact of Covid-19 on inbound tourism

81.Tourism is the UK’s third largest service export.239 Before the pandemic, VisitBritain forecast that the UK would see international visitor numbers totalling 39.7 million in 2020, with visitors spending £26.6 billion—a record high, and an increase of 6.6% from 2019.240 By mid-April, VisitBritain had revised these forecasts down by more than 50%.241 Yet, as acting CEO for VisitBritain/VisitEngland Patricia Yates told us, every time the modelling is updated, “the figures get worse”.242 Indeed, by early June the figures had again been revised downward.243

82.Crucially, these forecasts assume that inbound tourism will start to recover in August 2020, although a number of factors could affect this, including any quarantining requirements. Patricia Yates said that mutual agreements between the UK and countries such as France, Germany, Italy and Spain would be most important to the recovery of the UK’s inbound tourism market.244 Such mutual agreements, commonly referred to as ‘air bridges’, were first mentioned back in April 2020, but there was little communication from the Government regarding its plans and an announcement was not made until 26 June 2020. ABTA, the trade association for tour operators and travel agents, told us that to help to manage the issue of quarantining periods:

it will be important that relevant scientific advice is communicated in an open and transparent manner, to both businesses and travellers, and there should be a clear review process to assess whether the regime is effective, and how it interacts with other control measures such as testing and contact tracing.245

83.The issue of quarantine periods is beyond our remit, so we will limit our comments to saying that the timing and guidance about quarantining have been far from clear. Whilst we understand that there was considerable uncertainty around how the pandemic developed internationally, the tourism sector was in limbo for over two months with no certainty as to whether an international visitor market would exist for the rest of 2020. As of July 2020, the Government has announced a list of ‘low risk’, exempt countries from quarantining on arrival in England. We wholeheartedly support calls for the Department for Culture Media and Sport to work with the Foreign and Commonwealth Office and the Department for Transport to clearly communicate information about international travel agreements to the tourism sector, including the science behind the decisions and the plans for reviewing the effectiveness of the agreements.

The impact on visitor attractions

84.Visitor attractions, defined by VisitBritain as a “permanently established excursion destination” where “it is feasible to charge admission for the sole purpose of sightseeing”, are an important part of the tourism sector.246 Between 2013 and 2018, visitor numbers to English attractions increased by 2% to 5% per year, and many tourist attractions are heavily dependent on footfall from international visitors.247 Bernard Donoghue, Director of the Association of Leading Visitor Attractions (ALVA), told us that in 2017:

more visitors went to the [Victoria and Albert Museum], the Science Museum and the Natural History Museum combined than went to Venice, more people went to the British Museum than to the whole of Belgium, and more people went to the National Theatre, the Southbank Centre and the Royal Festival Hall than to the whole of Hong Kong.248

Yet he also stated that “our international market looks like it has largely stopped for the rest of this year and, for those visitor attractions who are almost entirely dependent on inbound tourists, as opposed to domestic ones, that is extraordinarily concerning”.249

85.Indeed, a joint submission from the museums sector told us that the Covid-19 crisis has resulted in “an immediate cash flow crisis in the museum and heritage sector” because “many organisations were operating with low reserves in advance of anticipated peak season income over the spring and summer” and therefore “some museums are at risk of cash insolvency within a matter of weeks”.250 There are concerns that, if attractions such as museums or galleries go bankrupt as a result of the Covid-19 crisis, collections could be liquidated and sold as financial assets, which would “reverse decades of hard-won development and investment, and the potentially irretrievable loss of public access to much of our nation’s heritage”.251 Raising a concern that the existing systems to manage ‘collections at risk’ could be overwhelmed by a high volume of closures, the Collections Trust proposed:

a swift temporary change in legislation so that, if an Accredited museum were to become insolvent, its accessioned collections could not be liquidated as financial assets for, say, a year. This would allow time for museum sector stakeholders to respond in the way they would in normal times, seeking to work with administrators and creditors in order to transfer, where possible, items of particular significance to other museums or archives, and thus retain them for public benefit.252

86.Many attractions, particularly museums, have diversified their offering during the lockdown period, including the 15 DCMS-sponsored museums and galleries. A joint submission from museums sector bodies observes that “the current crisis has highlighted the importance of museum digital services—both collections digitisations and online outreach”.253 However, these activities have not generated revenue and not all museums have been able to embrace this form of engagement: the Cornwall Museums Partnership told us “remote access to collections’ information is impossible for most museums here due to a lack of IT infrastructure; this undermines museums’ ability to share their collections online”.254

Table 2

Digital provision in DCMS-sponsored museums during Covid-19
British Museum	Increased digital offering
Geffrye Museum	Increased digital offering
Horniman Museum	Collection online
Imperial War Museum	Increased digital offering
National Gallery	Collection online
National Museums Liverpool	Collection online
National Portrait Gallery	Collection online
Natural History Museum	Increased digital offering
Royal Armouries	Increased digital offering
Royal Museums Greenwich	Collection online
Science Museum Group	Increased digital offering
Sir John Soane’s Museum	Increased digital offering
Tate Galleries	Increased digital offering
Victoria and Albert Museum	Increased digital offering
Wallace Collection	Collection online

87.From 4 July, visitor attractions, including heritage sites, museums and galleries started to reopen. However, Bernard Donoghue told us that reopening would not be financially viable for some visitor attractions if they had to operate under-capacity in order to adhere to social distancing measures.255 That said, research conducted by ALVA in early June showed that consumer confidence in visitor attractions was returning, albeit more quickly for outdoor attractions than indoor: 34% said that they would return to country parks and nature reserves “as soon as the opportunity arises” (compared to 26% in May), whereas only 15% said that they would return to museums and art galleries at the same rate (compared to 9% in May).256

88.International tourism to the UK had halved by April 2020 and has continued to decline. Visitor attractions, including museums and galleries, are being hit hard as a result. Not only are these organisations facing an end to the Coronavirus Job Retention Scheme in October, they have also largely depleted their financial reserves and are looking at the prospect of only being able to open at a reduced capacity with social distancing measures in place. Losing these important spaces, and the valuable collections they hold, would be a significant loss to our cultural identity. To secure collections at risk from museum insolvencies, the Department for Digital, Culture, Media and Sport should introduce a temporary change to legislation to ensure that if an accredited museum becomes insolvent as a result of the Covid-19 crisis, the institution’s collections cannot be liquidated for financial assets for the first 12 months.

The impact of Covid-19 on domestic tourism

89.A significant proportion of the UK tourism industry comes from domestic holidaymakers. In 2019, domestic tourists spent £91.6 billion: £24.7 billion on overnight stays and £67 billion on day trips.257 VisitBritain forecasts that the domestic tourism spend will total £69.5 billion in 2020, a drop of around one-quarter on the previous year.258 This is a greater loss than the predicted fall in inbound tourism spending (£22 billion compared to £19.7 billion), but lower in percentage terms.259 These figures have since been revised for England following the re-opening of the hospitality sector on 4 July.260 Although many in the tourism industry hope that domestic tourism may be able to help fill the gap left by the decrease in inbound tourism, public confidence remains relatively low.261 In late May, Patricia Yates from VisitBritain told us that just:

19% of people [in the UK] are thinking about booking a domestic holiday for the summer […] if you ask the same question in Italy, there they are talking about 43% of their domestic audience holidaying domestically.262

90.On 8 July, the Chancellor announced that VAT on hospitality and tourism, including tourist attractions, will be cut from 20% to 5% for six months.263 The Secretary of State for Digital, Culture, Media and Sport then urged people to “get out there and play their part” and “make the most of this summer safely”,264 while the Prime Minister said this will be a “great, great year for people to have a staycation”.265 However, there have still been calls for a Destination Management Organisation- or Government-led ‘staycation’ campaign to help build consumer confidence and encourage the British public to book a domestic holiday.266

91.Coastal communities, in particular, will be hard hit by the decline of the tourism industry. In normal times, coastal tourism in the UK is worth £17.1 billion, but in 2020 this is expected to drop to £10.3 billion.267 Around 15% to 20% of employment in coastal communities is dependent on the tourism industry, although this figure can be over 50% in ‘holiday hotspots’ such as St Ives or Newquay in Cornwall.268 Around 29% of coastal tourism businesses generate more than half their annual turnover in July and August alone, but the earlier market is also significant: by May, 7% of coastal businesses had already been forced to close permanently as a result of the Covid-19 crisis.269 Coastal tourism businesses have also seen a significant reduction in advance bookings, further implying that consumer confidence is much lower than usual.270

92.Domestic tourism businesses face a number of challenges. Many businesses are concerned about cash flow next year as a result of postponed bookings.271 Deferrals will have an adverse impact on cashflow either because part or all of the bookings will have already been paid for and the income therefore spent elsewhere, or because people will be paying for a 2021 holiday at 2020 prices.272

Support for the tourism industry

93.In usual times inbound, outbound and domestic tourism is worth more than £145 billion to the UK economy and employs more than 3.3 million people.273 The Coronavirus Job Retention Scheme (CJRS) was described as “a tremendous help” and “a lifeline” which has “[enabled] many businesses to survive”.274 Even so, the benefits for some parts of the tourism industry have been hampered by the lack of flexibility in the scheme. For example, businesses that needed to keep up with the maintenance of their sites such as caravan sites or listed buildings were unable to furlough 100% of their staff. This means that they have had to continue paying wages despite having no income.275 Although some flexibility has been introduced—such as the ability to bring workers back gradually—there have been calls, particularly from charitable visitor attractions, for furloughed staff to be able to volunteer their time back to the organisation so that they can to help prepare for reopening.276 We are also concerned that some seasonal workers do not qualify for the CJRS: the British Holiday and Home Parks Association told us that seasonal workers who started in late February/early March but had been neither paid, nor reported to HMRC by 17 March, were ineligible for it.277

94.The Covid-19 crisis provides an opportunity to address further the issue of seasonality in the tourism industry.278 While some businesses are looking to extend their opening this year, Sam Richardson, Academy Director of the National Coastal Tourism Academy, told us that support will need to go further. She said:

Many businesses—over 20%—are looking at how they extend their opening this year, so that they can claw back some of the lost revenue. We could really help them, with significant investment in consumer research, product development and training, particularly around digital skills within our sector. But that will take strong leadership, and it will need marketing support.279

Evidence has suggested that programmes such as the Tourism Data Hub, which was proposed under the Tourism Sector Deal, could collect data about visitor intention, analyse it, and share it with the industry to enable businesses and Destination Management Organisations to adapt their marketing and their product offering.280

95.Seasonal workers in the tourism industry are falling between the cracks in the Coronavirus Job Retention Scheme. We recommend that DCMS works with the tourism sector and HM Treasury to review the measures in place to support tourism businesses and seasonal workers to ensure they fully meet the needs of the sector. We repeat the recommendation first made in our report on ‘The Covid-19 crisis and charities’ that the Government revisit the terms of the furlough scheme in its final few months to allow for greater flexibility for staff to volunteer their time back to their organisations.

96.The capacity constraints that arise from the requirements of social distancing make yield management and smoothing out demand more important than ever. The Eat Out to Help Out programme will help shift some demand to trough days. Doubtless attractions, transport providers and lodgings will re-examine their own promotional programmes to maximise yield in these circumstances, and where relevant, attractions will look at their opening hours/days. DCMS needs to go further in supporting work to reduce the seasonality of the UK tourism industry. This will matter next year, as well as in 2020, due to the problem of booking deferrals and concomitant loss of income for a second year in a row. In its response to this report, DCMS should set out its plans for supporting an extension of the holiday season. As a matter of urgency, DCMS should introduce a Tourism Data Hub to assess visitor intention for 2021 so that the industry can plan ahead for next year.

The social and cultural benefits of tourism

97.The impact of reviewing the support on offer to the tourism sector will extend far beyond just supporting businesses. As Bernard Donoghue eloquently put it:

Culture and tourism aren’t just where you grow jobs, although we are very good at that. The sector is also where you grow people, in terms of their intellectual curiosity, their engagement with their locality and their understanding of their place in the world. The social and cultural benefits of tourism are as important as the economics.281

The tourism sector is also responsible for a significant amount of environmental and heritage conservation across the country, and research has shown that visiting British heritage is the primary reason that overseas visitors come to the UK.282 Overseas visitors’ experience of Britain can also be seen as contributing to ‘soft power’; and school trips and exchanges are important to cultural understanding. Though not tourism in the pure sense, inbound business travel also contributes in similar ways, as well as facilitating trade and investment growth. The British Holiday and Home Parks Association told us that site owners across the country have been responsible for a considerable amount of conservation work in their local areas, including footpath conservation and the creation and maintenance of wildflower meadows.283 The National Trust, among its other projects, is heavily involved in flood mitigation work with the Environment Agency in the north of England.284 However, its Director-General Hilary McGrady told us that as a result of the Covid-19 crisis the National Trust has:

had to stop all non-essential projects—absolutely stop them all. The only ones that are continuing to go are those that we are committed to from a contractual point of view, and we are even withdrawing from some of those.285

She told us that the Trust was looking at losses of approximately £200 million in 2020 as result of the COVID-19 crisis.286 The Trust has since announced that over 200 members of staff are at risk of redundancy, thus risking further delays to the Trust’s vital conservation work.287

98.Tourism is an incredibly important force within the UK economy; however, it is more than just the sum of its parts, and it demonstrates vital links to culture, heritage and environmental work. Moreover, tourism is an essential part of many peoples’ lives, and the prospect of some time away from home has, we are sure, been a beacon of hope for many people during the lockdown period. We urge DCMS to launch a national campaign to restore consumer confidence in the domestic UK holiday market. If done quickly, there is still time to boost the end of the summer—plus the autumn and 2021—market. Such a campaign will be hugely beneficial in assisting the tourism industry in clawing back some of the business it has lost during the lockdown period and will help to fill the hole left by the sharp decrease in international visitors to the UK.

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