It’s official: Olympics did not bankrupt London tourism

Written by Nell Alcantara

One of the perks of being able to attend the World Travel & Tourism Council’s (WTTC) annual Global Tourism Summit is that it gives me access to the top executives in travel and tourism.

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One of the perks of being able to attend the World Travel & Tourism Council’s (WTTC) annual Global Tourism Summit is that it gives me access to the top executives in travel and tourism. During this year’s edition, held in Abu Dhabi, I seized the opportunity to talk to Christopher Rodrigues, who is the Chairman of VisitBritain. Mr. Rodrigues and I have been in constant contact since 2009, when the discourse on the impact of London hosting the 2012 Olympic Games first appeared into public consciousness. It has been almost a year since the Games’ closing ceremony, so a chat with the VisitBritain Chairman for an update on London tourism is long overdue.

Post-Olympics Britain, what is it like?
The excitement of the Olympics is still there. The British people really came together behind the Games and made it very special. For tourism, it was an opportunity to showcase the country and that is what we set out to do. Latest research on the nation branding shows that the UK moved up a couple of points on nearly all the key measures. On things like welcome, which we were behind our overall position on, [it] closed up fairly considerably. In terms of impressions by the Games, that was good.

In terms of the fear that everyone has that you’re going to have a drop in tourism on a major event like the [Olympic] Games or World Cup in the case of the UK, we had a record [visitor] spend year, our best ever [tourism] spend yet. Numbers were slightly down, but spend was up. Importantly, the Fourth Quarter (FQ) after the Games, we didn’t have a drop, so the bounce was [a] straight bounce up. We had a very strong FQ and 2013 [is] starting well. So far, so good.

To London Olympics naysayers, what have you got to say to them now?
I hope they enjoyed [the Games] as much as everyone else did. Their view was wrong, and people were surprised [by the outcome of the Games]. It’s good that [some] people were skeptical, but I think we’ve demonstrated that the Games will work. The only regret I have is that I said there wouldn’t be any rooms, but we could have done with some more people. The retail business suffered during the Games, but that was predictable, because a lot of people stayed out of London. The Brits didn’t go shopping when there was world-class sport to see every minute of the day. It’s true that some restaurants and retailers had a difficult time during the Games, but that was the investment, that was the pain, and the gain comes now as you can see in the visitor numbers and the buzz and excitement around London.

Negative impact on London travel and tourism?
I don’t think you will find anyone in London & Partners who would say that the Games had any negative effect. There was a reduction of business for some retailers and hoteliers, not all. The bounce back on the Fourth Quarter was fantastic. The visitor spend in January was 11 percent up from the previous year. We are pleased that in the West we’ve moved from 11th to 5th in the competitively survey over the last six years. We are .01 away from being second.

Airport Passenger Duty: A difficult conundrum?
Would I like an Airport Passenger Duty regime? From a tourism perspective, yes; but I am old enough to recognize that the question is not: would I like those tax[es]? The question is: have you some alternatives for the tax revenue? This is what no one has come up with. If someone has an idea on how they can get a US$3.5 billion tax revenue from some other source, please bring it forward. Marthinus van
Schalkwyk [South Africa Minister of Tourism] has always been clear that in the current economic environment, it is highly unlikely not to say and downright impossible to conceive of them substantially reducing the Airport Passenger Duty at this point in time. We have to make this case and we have to look at the trade-offs. We need to look at the full economics of visitors, the marginal elasticity. We need to make people understand that we at the outer limits, the removal is an impossible deal. Revisiting the levels, when the economy is more stable, is to take a reduction especially on long-haul. Value is something that we continually have to fight for – we are not a cheap destination.

Exciting News
I’m excited that the border agency is going to be split into two parts – a security arm and a visa arm, which worries about visa processing. We have made improvements, but there is an opportunity for further considerable improvements if we reframe the visa question to be predominantly driven by security to one which respects the security needs that is guided by best-practice crisis management.

I have no illusion or desire not [to] respect the security requirements of the nation. I like living in a country that has a really good security. I don’t think you will find Her Majesty’s government will back off on that. The chances of the Schengen-UK separation being removed are very, very slim. Our vision of security is embedded in the UK being an island and that we are protecting our borders. That’s the conceptual framework for our security services.

The liberation when you create two separate management bodies is to give a set of security guidelines and require your processing operations to manage those, then ultimately it becomes a processing business. It is one that has to be done to a certain standard. This does allow you to re-examine the economics of visa issuance which is really hard to do with the economics of adding another tourist. So, when you add a Chinese tourist, you just don’t add the revenues and the expenses of processing a visa, you add someone who is going to spend £1500-2000 (that will include the tax revenue on VAT, it will include the APD. There’s quite considerably revenue for the government. Visa processing should be driven in part by a customer-focused objective of getting visas out to [the] maximum number of people.

Meanwhile, London & Partners (L&P), the Mayor of London’s official promotional organization, has hailed 2012 as “one of the most exciting years in London’s history.” According to L&P, the positive figures from the International Passenger Survey (IPS) reveal an increase in both visitor numbers and visitor spend during 2012.

Visitor numbers increased year on year to 15.46 million visitors, “which is a healthy rise of 1.1 percent in comparison to 2011.”

L&P added: “The increase of 1.1 percent is seen as exceptionally positive in light of the current economic downturn in many European markets – two-thirds of London’s visitors audience comes from Europe. The much-anticipated displacement effect, which many other Olympic host cities have experienced during Olympic years, appears to have been mitigated.”

Backing up Mr. Rodrigues’ claim on visitor expenditure with an actual figure, L&P said: “2012 also saw London expenditure rise to £10.08 billion which is an increase of 7.0 percent. This very robust boost in tourism receipts for 2012, almost two-thirds of a billion pound increase, can be linked to the strong Q3 period which includes the popular summer holiday period, but also the Olympic and Paralympic Games. Figures indicate that international visitors took advantage of the spectacle and atmosphere of the Games.”

For his part, London Mayor Boris Johnson said: “2012 was an amazing year in which we had a string of golden opportunities to show the world why London is the best big city on Earth. One of the most successful Olympic & Paralympic Games in living memory, preceded by the fantastic Queen’s Diamond Jubilee celebrations, gave us a platform to shine to an audience of billions.”

He added: “It’s clear that London’s attraction as a global visitor destination remained immensely strong in 2012 and, despite the predictions of the ‘gloomsters’ and the ‘Olymposceptics,’ London was anything but a ghost town. Now the task is to look forward and do everything we can to build on what we achieved last summer and deliver the lasting legacy that was at the heart of our Olympic bid.”

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Nell Alcantara