Tourism Society predicts future

At the annual Prospects meeting organized by the Tourism Society on Thursday, January 8, a panel of industry experts and tourism professionals came together to discuss the prospects for tourism in 200

At the annual Prospects meeting organized by the Tourism Society on Thursday, January 8, a panel of industry experts and tourism professionals came together to discuss the prospects for tourism in 2009. Gloomy predictions included a downturn in global tourism arrivals and in UK outbound travel and spend, reduced budgets from the corporate market, a reduction in hotel occupancy and room rates, and threats from increased APD and VISA costs, which could deter inbound visitors to Britain. However, on a positive note, predictions included an increase in UK domestic tourism (both the Caravan Club and Hoseasons reported substantial increases in bookings to date compared to January 2008), a wake-up call for hoteliers to offer better value for money, new renewable energy technology, and the possibility of more visitors from the USA and China now that the Beijing Olympics and US presidential election are over.

Views from the Panel
Geoffrey Lipman, assistant secretary general for the UNWTO and chairman of the event, stated that actual international arrivals could be even worse than the 0-2 percent global growth predicted for 2009 (based on 6 percent growth last year). In response to this, the UNWTO has created a ‘resilience committee’ to look at the statistics more carefully and hold networking meetings to try to ensure that tourism is included in stimulation programs.

Philip Morrison, insights specialist for VisitBritain, stated that the weak pound against the Euro will put UK residents off visiting the Eurozone but rather than creating the opportunity for domestic tourism, visitors might prefer to visit the emerging destinations of Morroco, Egypt, and Turkey. Tourists will cut back on shopping, eating out, and entertainment, while short breaks abroad were seen to be the most ‘at risk’ market, and tourists are likely to be less spontaneous. The industry needs to respond to this by offering added value to the trip, Philip warned, against price cutting as this can often set a precedent, which is difficult to get out of. Philip went on to suggest that business tourism is likely to experience weak demand in 2009, more airlines are likely to fail as their running costs will increase, and big hotels and marina developments will find problems with funding. The US is looking to increase the number of US residents with passports, which could be an opportunity for inbound visitors to the UK. A possible VISA requirement for inbound visitors from Brazil, Malaysia, and South Africa and increases to APD and VISA costs will make the UK less attractive as a destination.

Philip Green, chairman of UKInbound, stated that the economic environment is likely to lead to cost cutting, which could mean lower service levels and a lack of new investment in hotel buildings, which could be a concern for the 2012 developments. “The lack of a major international sporting event in 2009 could release demand for the UK, but the inbound market in 2009 is likely to be ‘softer’ and hotel occupancy is likely to fall,” commented Green, while emphasizing that international marketing and promotion of the UK as a destination is needed, but with less funds for VisitBritain this activity is under threat. “I hope the UK government will soon realize that higher APD and VISA costs will act as a deterrent to inbound visitors.”

Robert Barnard, sponsor of the event and partner with PKF consultancy, pointed out that in December 2000 and November 2008 hotel occupancy in London was at the same level – approximately 81 percent – which demonstrates the resilience of the market despite fluctuations between the years due to foot and mouth, 9/11, SARS, and the war in Iraq. London has a phenomenal hotel market and can recover quickly from a geopolitical situation; it is, therefore, reassuring to note that history shows recovery is possible. The regional hotel sector is not as volatile as London and the fluctuations are on par with the state of the economy. The mid-market sector is likely to suffer when competing with the budget hotels. “Now is the time to be looking seriously at your business and ensure you are in good shape to weather the storm.”

John Bevan, former vice president for the UK & Ireland for lastminute.com, stated that the big tour operators have been reducing capacity, leaving late availability sites with less to sell. The reduced interest rates are causing retired ex-pats living overseas to return home, possibly stimulating demand for domestic holidays. Those UK residents with tracker mortgages will have more disposable income to spend on trips. Outbound travel interest in all-inclusive breaks is on the increase. Flexible duration is a trend set to grow with operators offering 5-6 nights and 9-10 nights instead of the traditional 7 or 14. In summary, 2009 will be tough for the outbound sector presenting an opportunity for the domestic market to flourish.

Tourism Society Predicts Future

At the annual event ‘Prospects’ eventย in January 2008
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At the annual Prospects meeting organised by the Tourism Society on Thursday 10 January, a panel of industry experts and tourism professionals came together to discuss the prospects for tourism in 2008.
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At the annual event ‘Prospects’ eventย in January 2008
ย 
At the annual Prospects meeting organised by the Tourism Society on Thursday 10 January, a panel of industry experts and tourism professionals came together to discuss the prospects for tourism in 2008.
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Geoffrey Lipman, Assistant Secretary General for the UNWTO and chairman of the event kicked off the proceedings with the positive WTO forecast of a global 5% growth which is likely to continue for 2008. Europe is not likely to grow as much but developing countries will see a higher growth. Factors which might hinder this positive prediction in 2008 include the economy, currency exchanges, natural and man-made disasters and war.
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The Tourism Society conducted a survey of member predictions for 2008 and found the following majority views:

Hotel occupancies will remain the same but London’s revenue will increase
85% of respondents thought that the use of hotel review sites will increase
75% thought that domestic short breaks will increase
69% thought that independently arranged overseas holidays will increase
75% responded that budget airline passenger numbers would increase
73% thought that the use of comparison websites such as Expedia would increase vs individual company websites such as ba.com.
94% thought that the use of the internet to book overseas holidays would increase against 86% who thought the use of the internet to book domestic trips would increase and only 76% who thought the same for business trips.
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Nick Cust, Joint Managing Director of Superbreak predicted that the first half of 2008 will be tough but London is likely to be unaffected due to positive factors such as the new eurostar link from St Pancras, events at the O2 Arena and new shows in London’s theatre land. With a slow-down in the housing market, domestic short breaks might see a slight upturn however the provinces, especially hotels, will suffer against London’s growth and will be lucky to hold the same turnover level of 2007 despite improvements in the second half of 2008.
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Stephen Dowd, CEO of UKinbound explained that the negative issues in 2007 including APD and VISA cost increases, the pound reaching US$2, terrorist activity, airport chaos and flooding, Foot and Mouth, VisitBritain’s budget cuts, and the new biometric VISAS were all barriers to the UK effectively selling its tourism product internationally. Stephen predicted a downturn of visitor numbers by 1-2% to 32 million to the level of 2005 and revenues are expected to decrease by 4-5%. The social impact of this decrease is the potential loss of 8,000 jobs in tourism spread across the UK. British Tourism Week in March will enable the UK tourism industry to promote itself and lobby the government to revoke the APD and VISA charges.
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Tom Jenkins, Executive Director of the European Tour Operators Association (ETOA) explained that the travel industry is changing with budget airlines creating new destinations and customer’s behaviour and travel patterns changing as a result. The main factor to watch in 2008 is the reform process for the Passenger Travel Directive.
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Vanessa Cotton, MD of the Conference and Events Division at the Excel Centre had a positive outlook for the business tourism sector which Vanessa described as an exciting, resilient and growing market sector which is worth ยฃ22.8 billion to UK economy. Business tourism stimulates the economy, encourages future investment and contributes to urban regeneration. Events will be expensive to hold with oil and gas price increases and inflation. Vanessa predicted that a new standard called BS8901 would be very important in the coming year for sustainable event management. 2012 is a huge opportunity but the current lack of cohesion in the UK could hinder the potential. The excel centre is predicting a 20% increase in turnover in 2008 through occupancy and yield.
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Barry Humphreys, Director of External Affairs at Virgin Atlantic predicted that 2008 would be an interesting year; IATA have released a new industry financial forecast estimating a global industry profit of US$5.6 billion in 2007 falling to US$5.0 billion in 2008. (www.iata.org). The environment will continue to be a huge issue and Virgin are part of ‘flyingmatters’; a coalition set up to contribute to a balanced and informed debate on aviation’s contribution to climate change. Virgin will be focussed on new technology in 2008 and are due to fly the first plane on biofuel. The government consultation into the expansion to Heathrow is underway which Barry suggested was vital for the UK economy and tourism industry. The Open Skies agreement will see new and increased services from the EU to the US from Heathrow; stage 1 starts in March and stage 2 in the summer.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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