LONDON, England – ETOA now estimates that the UK’s visitor economy is set to suffer a £50m shortfall this year owing to continuing difficulties in processing visa applications from Russia, compounding current economic uncertainty.
The Home Office has recognised that there have been teething problems. These have continued and, official reassurances notwithstanding, the situation is widely felt to have worsened. Last week’s visa briefings with the outbound industry in Russia, whilst welcome, proved inconclusive and failed to provide confidence in a swift return to normal standards. Initial predictions that the problems would be solved in a matter of weeks have proven unfounded.
The UK is a popular destination for Russian visitors. It welcomed 214,000 visitors in 2013. They each spent an average of £1,205 making a total contribution of £258million. But the UK was one of only two EU states to see Russian inbound volume decline in the last 6 months of 2013 (the other was Croatia, whose accession to the EU in July 2013 affected its freedom to contract bilateral visa-free agreements).
Russia to UK volume had fallen off by 4% to the end of March 2014 against a general growth in UK inbound tourism of 7% and former trend growth from Russia of 10%. Since March, visa processing is widely reported to have deteriorated further when Teleperformance started processing UK visa applications with its partner in the UK, HGS Hinduja Global Solutions.1
Although Teleforformance’s service is currently used globally to process UK visa applications, Russia is the only country which has reported any problems. It is important to note that glitches in Russia affect other countries like Belarus, who normally send their UK visa applications to the Moscow application centre. Reported problems include: lack of application tracking, despite assurances to the contrary; routine delays of over a month (published standard turnaround time is 15 working days); errors in names; operational problems at visa centres and lack of adequate receipts of submission. These in turn led to cancellation and postponement, insurance disputes due to inadequate documentation, deterioration in business relations, reputational damage and general deterrence.
It is not just current business that suffers. As perceptions of bureaucratic inefficiency harden, the market will discourage interest in UK-bound holidays. Much of the goodwill so patiently built up over the years by businesses in the UK and Russia, following the UK’s problematic introduction of biometric visas for Russians in 2007, has been lost. This was entirely avoidable.
In the context of worsening economic conditions following geo-political tension it is essential visa processing does not act as a further disincentive to travel. “The conflict will not affect tourists directly. But it may also affect indirectly due to the deteriorating economic situation and the instability of the national currency. We observe the decline for tours to Europe, about 10-15%,” said Council for Tourism, Deputy General Director Alexei Aleynikov.2
Such are the visa processing problems that the Association of Tour Operators of Russia (ATOR) felt it necessary to write to the UK’s Home Office on 18th April expressing its concerns. The letter said: “The situation is being actively discussed in the press, which certainly has the most negative impact both on the image of the UK as a tourist destination and on the reputation of the companies working for your country. All this may end in failure of the summer tourist season.”
High-end hoteliers in London are already seeing a marked drop in bookings and an increase in late cancellations; some have reported a decline of 40%, with the typically late-booking leisure business particularly hard hit. The related loss of visitor spend is significant and set to grow. Business leaders say, given the importance of early May volume from Russia, it should have been a priority to ensure that the new process was sufficiently robust to cope with the traditional and entirely predictable spike in demand. The true cost of a visa regime is not simply the cost of administrative processing, it includes lost and displaced business; visas are the biggest barriers visitors face. Worryingly, inbound volumes in 2014 have declined despite a buoyant growth in UK visa applications from Russians in 2013 (2013 applications increased by 20% over 2012; numbers of visas issued increased by 21%.3). Routine reports of visas being issued after requested date of travel further damage confidence and damage the UK’s competitive position.
Tom Jenkins, CEO, European Tour Operators Association (ETOA) said: “There has never been a more important time to foster good relations between European destinations and prospective visitors from Russia, a country that shares so much European cultural heritage. We urge national authorities to act with all speed to ensure that visa processes are fit for purpose, that any outsourcing arrangements are subject to the highest possible scrutiny and stress test, and that applicants and their agents are dealt with respectfully and efficiently. Europe in general and the UK in particular, standing as it does outside the Schengen zone, cannot afford to be complacent. Other destinations are appealing and offer a warm welcome; it is no coincidence that some of these do not require visas of Russians.”
The financial impact of the current difficulties will only be apparent months after the damage is done. Given the importance of spring and summer volume, the decline in this volume could easily top 20% for the year, losing the UK over £50million in visitor spend.