British Tourist Authority
TOURISM TRENDS October 2008 Purpose To brief the Committee on the latest results of Inbound/Domestic Tourism surveys and market conditions. Key Points The Office for National Statistics has released provisional figures for the number of visits to the UK by overseas residents in July revealing a 1% annual decline. The year-to-date picture is that visit numbers are up 1% for the first eight months of 2008 compared to the same period of 2007. Figures for inbound visitor spending show a 2% decline in July, but in nominal terms the year-to-date picture is for an increase of 3% Visits from the 12 EU Accession countries continue to increase, but visits from the EU15, rest of Europe and North America regions are declining The volume of outbound tourism from the UK increased by 3% during the first seven months of the year UKInbound figures show visitor arrivals in June were 5.5% down on a year ago, with forward bookings 6.4% lower than June 2007 Passenger flow through the seven BAA operated airports in September was xxxxx on a year earlier Travel through the Channel Tunnel has been severely disrupted by a fire on 11 th September; Eurostar is now operating 93% of trains, but journey times will be extended until at least December Industrial action in France resulted in a further annual decline of 4.1% in the number of passengers passing through the Port of Dover in August UK connectivity has seen further capacity reductions announced including; bmi to suspend services from Ekaterinurg and Ankara to Heathrow, bmibaby to axe its Barcelona to Cardiff route and Ryanair dropping its Shannon to East Midlands flights BAA has announced that it plans to sell Gatwick Airport „as soon as possible‟ Hotel occupancy in August was slightly down on last year according to the latest figures from PKF UKTS figures show that in the 12 months to June the number of domestic overnight trips taken by UK residents was 2.6% down on a year earlier, with expenditure (before allowing for inflation) up 2.2% Figures from England‟s Attraction Monitor reveal a 16% annual drop in admissions in the period April to June (in part due to a weak April brought about by the early Easter this year) Revised figures show that there was zero growth in UK Gross Domestic Product between the first and second quarters of 2008, with annual growth in the period April to June standing at 1.4% UK service sector activity shrank at its fastest rate for more than 12 years in September according to the Chartered Institute for Purchasing and Supply and the latest British Chambers of Commerce Survey results are described as „exceptionally bad‟, with unemployment forecast to rise by 350,000 Central banks around the world cut interest rates by 0.5% in response to financial market turmoil TNS research indicates that 60% of UK consumers do not think that the economic slowdown will influence their 2009 holiday plans; two-thirds of those expecting their plans to be influenced mentioned price rises in everyday items such as food and the rising cost of fuel as being critical factors Currency markets remain extremely volatile in-line with turbulence on the world‟s financial markets September was much duller than normal according to the Met Office, but temperatures and rainfall were close to seasonal norms
Overseas Tourism to the UK: JULY
3 MONTHS TO JULY % Visits change
Visits
% change
(000)
08/07
(000)
480
-18
EU15
1,780
A12
YEAR-TO-DATE
TWELVE MONTHS TO JULY % Visits change
Visits
% change
08/07
(000)
08/07
(000)
08/07
1,350
-9
2,470
-5
4,270
-6
2
4,920
-1
10,660
-1
18,650
0
310
14
870
17
2,020
20
3,420
12
Rest of Europe
190
2
490
3
1,136
-3
2,026
-5
Rest of World
570
3
1,360
5
2,600
8
4,690
4
3,320
-1
9,000
0
18,870
1
33,050
0
Spend
% change
Spend
% change
Spend
% change
Spend
% change
(£m)
08/07
(£m)
08/07
(£m)
08/07
(£m)
08/07
1,775
-2
4,565
3
8,970
3
16,255
1
North America
Total Visits
Total Spend
Source: International Passenger Survey, Office for National Statistics Notes: EU15 = Austria, Belgium, Denmark, France, Finland, Germany, Greece, Irish Republic, Italy, Luxembourg, Netherlands, Portugal, Spain and Sweden A12 = Bulgaria, Cyprus (South of), Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia and Slovenia Rest of Europe – European countries outside the European Union (includes Russia)
Inbound Visits to the UK July 2008: Year-to-date and Rolling-12-month change vs. same period of previous year (Provisional Estimates) % change -35
-25
-15
-5
5
15
1
Asia Pacific/MEA 0
Europe
5
1
-6 -5
North America
20
Latin America 7
Australasia Greater China
-1
10
5 5 -18
-14 6
India Iberia
21
-4
-8
-5 -6
Mediterranean
5
Atlantic
9
0
MEA -1
Nordic
10 1
Benelux
4 -14
7
-10 10
Central Europe Russia
26
5
South East Asia
Germany, Austria, Switzerland
35
-5 -4
Americas
North East Asia
25
-12
25
-5
Other
8
Rolling-12-month change
9
Year-to-date change
Americas: North America (USA, Canada) - Latin America (Argentina, Brazil, Mexico) Asia Pacific/MEA: Australasia (Australia, New Zealand) - Greater China (China, Hong Kong) South East Asia (Singapore, Malaysia, Thailand) - North East Asia (Japan, South Korea) - India MEA (UAE, South Africa) Europe: Iberia (Portugal, Spain) - Mediterranean (Italy, Greece) - Atlantic (France, Ireland) Nordic (Denmark, Finland, Norway, Sweden) - Benelux (Belgium, Netherlands, Luxembourg) Germany, Austria, Switzerland - Central Europe (Czech Republic, Hungary, Poland) - Russia
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Apr-06
Jul-06
Oct-06
Jan-07 Oct-06 Jul-06
Jan-06 Oct-05 Jul-05 Apr-05 Jan-05 Oct-04 Jul-04 Apr-04 Jan-04 Oct-03 Jul-03 Apr-03 Jan-03 Oct-02 Jul-02 Apr-02 Jan-02 Oct-01 Jul-01 Apr-01 Jan-01 Oct-00 Jul-00 Apr-00 Jan-00
Rest of World
Rest of Europe
Apr-06 Jan-06 Oct-05 Jul-05 Apr-05 Jan-05 Oct-04 Jul-04 Apr-04 Jan-04 Oct-03 Jul-03 Apr-03 Jan-03
Spend per Visit Total Expenditure Total Visits
A12
EU15
North America
Oct-02 Jul-02 Apr-02 Jan-02 Oct-01 Jul-01 Apr-01 Jan-01 Oct-00 Jul-00 Apr-00
-20%
Jan-00
35%
25%
15% Annual Change
5%
0%
-5%
Annual Change
Longer term trends in inbound tourism:
Trends in inbound tourism 20%
15%
10%
-10%
-15%
Rolling 12 Month Period Ending
Trends in inbound tourism by origin region 65%
55%
45%
5%
-5%
-15%
Rolling 12 Month Period Ending
Comparison with performance of other countries The following chart summarises the latest available figures for inbound tourism to a number of countries, measured as either visitor arrivals or visitor nights, but it should be noted that the time period covered varies from country to country meaning that figures are not strictly comparable.
Current global tourism destination trends USA UK Sweden Note that the period covered varies by country, figures are not necessarily directly comparable
Portugal Norway Malaysia Japan Ireland India Hungary Finland Estonia Denmark Czech Republic China Canada Belgium Austria Australia
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
year-to-date growth (%)
Domestic Tourism: UK Occupancy Survey of Serviced Accommodation Bedspace occupancy Proportion of guests that are UK residents
June 2008 49% 86%
Annual Change -8% +1%
More recent data from consultancy PKF indicates that hotel occupancy remained at levels akin to twelve months earlier during July in the regions, but with strong annual growth in both occupancy and room rates in London, possibly driven in part by the Farnborough Air Show.
United Kingdom Tourism Survey (domestic overnight trips)
JANUARY TO JUNE 2008 Trips Nights Spend (m) yr-on-yr (m) yr-on-yr (£m) yr-on-yr 55.6 0.1% 169.75 5.2% 9,907 7.7% 45.5 0.8% 135.81 8.3% 7,828 9.5%
United Kingdom England
The above table summarises figures for the first six months of this year. It can be seen that despite a decline in the number of overnight trips, both bednights and expenditure have posted increases, however once inflation is taken into consideration „real‟ spending on overnight domestic tourism trips is up by around 3%. The following chart shows, on a twelve-month rolling total basis, the annual change in overnight trip volume and value.
Volume and value of overnight domestic tourism 4.0% 3.0%
annual change
2.0% 1.0% 0.0% -1.0% -2.0% -3.0% Jun-08
May-08
Apr-08
Mar-08
Feb-08
Jan-08
Dec-07
Nov-07
Oct-07
Sep-07
Aug-07
Jul-07
Jun-07
May-07
Apr-07
-4.0%
rolling 12 month period ending Trips
Spend
Quarterly Attractions Monitor for England Findings from the latest wave of „England‟s Attractions Monitor‟ reveal that during the period April to June 2008 there were 16% fewer visits to attractions in England than in the same period of 2007, but it is important to recognise Easter fell in March this year, whereas it was in April in 2007, hence more attractions would have been holding special events during this quarter last year. Indeed, looking at year-on-year changes for the individual months highlights the fact that in April admissions were 29% down, whereas May witnessed a decline of only 1% and June 14%. The 500 responding attractions were also quizzed about their expectations for the period July to September and 37% expected visitor numbers to be higher than over the same period of last year compared with 17% who anticipated fewer visitors (39% expected little change and 7% said the did not know what they expected). In contrast to this rather optimistic outlook for the main summer quarter when asked about the likely impact of the current economic slowdown during the remainder of 2008 42% claimed that it would lead to a decrease in admissions and only 8% forecast an increase in numbers. A third of responding attractions said it was too early to tell what impact the slowing economy would have on admission numbers and 9% felt that there would be no direct impact.
Confidence Monitor Sentiment at the July BTDC meeting was that the trading picture remained fairly buoyant, but that concerns about prospects for 2009 were mounting. The following chart confirms that there was little overall change in either current performance or expectations between April and July, whether this will be true for the period July to October is still to be seen.
British Tourism Development Committee Confidence Monitor 4.0 3.8 3.6 3.4 3.2 3.0 2.8 2.6
1 = well below expectation 2 = Below expectation 3 = About Normal 4 = Above expectation 5 = Well above expectation
2.4 2.2 2.0 1.8 Jul-05
Oct-05
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
number of customers last 3 months earnings performance last 3 months
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
number of customers next 3 months earnings potential next 3 months
Market Conditions The UK economy stood still between the first and second quarters of the year and the exceptional financial market turmoil over the past few weeks will have done little to lessen the chance of a significant and potentially protracted slowdown in the months ahead. To confirm the „contagion‟ between the financial and „real‟ economy, the Chartered Institute for Purchasing and Supply reported that service sector activity in September shrank at its fastest rate for more than 12 years and the British Chambers of Commerce latest survey of some 5,000 UK-wide firms indicates confidence has evaporated, with respondents believing the UK has now entered recession and is likely to see unemployment rise by 350,000 in the next year or so.. Although indicators such as unemployment have seen little in the way of significant increase until now, the following chart delivers a stark message regarding how confident UK consumers feel about the coming months. It is not since the aftermath of „Black Wednesday‟ in 1992, when Britain ignominiously had to withdraw from the Exchange Rate Mechanism, that UK consumers have been so downbeat, and the latest figures are based on survey fieldwork conducted before the nationalisation of Bradford & Bingley and US „bail out‟ Bill dominated media coverage. New car registrations in August were at their lowest since 1966, demonstrating that the dual impacts of tighter credit markets and growing price inflation for everyday goods is resulting in consumers postponing purchases. Quite how this will feed through to tourism activity remains unclear, with the relatively expensive Euro and ongoing publicity about the environmental impact of flying potentially combining to encourage Brits to take more domestic trips at the expensive of foreign holidays.
UK Consumer Confidence 10 5 0
balance
-5 -10 -15 -20 -25
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
Jan-00
Jan-99
Jan-98
Jan-97
Jan-96
Jan-95
Jan-94
Jan-93
Jan-92
Jan-91
Jan-90
Jan-89
Jan-88
Jan-87
Jan-86
Jan-85
-30
The Bush „Bail Out‟ plan may have been passed by Congress, but this will not bring immediate recovery to the wider US economy even if it is successful in stabilising the banking system, and likewise the „recovery package‟ announced for the UK banking sector does not provide any guarantee that a recession will be avoided. In its latest prognosis the International Monetary Fund foresees a sharper slowdown in the UK economy than in most other western countries. The implications of the US bail-out plan will almost certainly lead to a ballooning in the US public sector deficit, which could potentially lead to a weakening of the US dollar. A protracted slowdown in the US is one of the reasons for Asian stock markets being decidedly gloomy at present, with many Asian economies (notably China) highly dependent on US-bound exports for their economic wellbeing. The price of oil has fallen sharply in recent days, falling to below $90 per barrel. The outlook may be for weaker demand which should bring down prices (and airline fuel surcharges) but there is a risk that a declining dollar would result in oil (traded in dollars) gaining in price. The main news in terms of UK connectivity of late has been the fire in the Channel Tunnel which resulted in a complete closure for a few days in September; a full service will not resume until after Christmas. Although Eurostar is now operating 93% of its services journey times have been considerably extended. XL recently collapsed, and although almost exclusively used by Brits travelling abroad it acts as a reminder of the fragility of the aviation sector at the present time, with a number of airlines feeling the need to scale back their operations in order to stay afloat. BAA has responded to the Competition Commission Report by announcing that it plans to sell Gatwick Airport, but has no plans to dispose of Heathrow. A government decision on „mixed mode‟ operation at Heathrow is now expected before the end of the year, as may be a decision on a third runway. The Conservatives recently announced that it now opposed a third runway, and would instead invest in high-speed rail alternatives. Summer has been notable for a lack of sunshine; August being the dullest on record and September having less hours of sunshine than any since 1993, meanwhile rainfall and temperatures were close to average.
Factors contributing to tourism trends in Britain, October 2008 Travel Demand
Domestic Economy
Eurozone Economy
Tourism Industry Current
Conditions
US Economy
News Key to Symbols Very Favourable
Weather
Exchange Rate
Latest changes Favourable
Neutral
Weather
US Economy
Unfavourable
Very Unfavourable
Forecast changes Tourism Industry Eurozone Economy
Method for producing “Weather Symbol Chart” The indicators shown in the following table have been grouped into 8 segments. Each indicator is scored according to whether it is moving in a direction that is favourable, very favourable, unfavourable, very unfavourable or neutral in terms of its impact on tourism trends. The overall performance of each segment is found by taking the average score for each indicator within the segment. By taking the average for each of the segment scores it is possible to provide a flavour for the overall state of current conditions. Health Warning This analysis does not lead to a statistically robust “index” of tourism performance, rather, it gives a flavour for what is happening to those factors that underpin the volume and value of both inbound and domestic tourism within Britain. From this a broad interpretation of “where we are” across a wide range of fronts can be discerned. A key advantage of this approach is that as new information becomes available each segment can be updated, rather than having to wait until information on all indicators becomes available. From time to time it may be appropriate to add extra indicators or drop existing indicators as new sources of information become available.
The Segments and latest value of Indicators Segment Domestic Economy
Eurozone Economy
US Economy
Exchange Rates (% change in the cost of Sterling) UK Weather News Tourism Industry
Travel Demand
Indicators Unemployment rate Employment annual change Interest Rates Consumer credit annual change Earnings annual change Consumer Confidence Index Unemployment rate Employment annual change Interest Rates Borrowing annual change Earnings annual change Consumer Confidence Index Unemployment rate Employment annual change Interest Rates Consumer credit annual change Earnings annual change Consumer Confidence index „Visits Weighted‟ annual change „Nights Weighted‟ annual change „Expenditure Weighted‟ annual change Sunshine Temperature Rainfall News, Shocks and Special Events UKinbound Visitor Arrivals UKinbound Forward Bookings Tax Refunds to inbound visitors BTDC Confidence Monitor last 3 months BTDC Confidence Monitor next 3 months Chain Hotel Occupancy Statistics (regional) Chain Hotel Occupancy Statistics (London) Domestic tourism prices vs Consumer Prices VisitBritain Global Enquiries Domestic Air Passengers International Air Passengers Long Distance Rail Journeys Passengers through Port of Dover Eurostar passenger numbers Car traffic in Great Britain Demand for Visas
Value 5.4% 0.9% 4.5% 6.8% 3.4% -22.6↑ 7.5% 1.3% 3.75% 9.1% 2.7% -18.9↓ 6.1% -0.8% 1.5% 2.1% 1.7% 59.8↑ -13.0% -12.6% -11.0% Below average Close to average Close to average Fire in Channel Tunnel Global financial market turmoil -5.5% -6.4% +60% 2.9↑ 2.6↑ 72.4% 83.2% +2.0% above +10% -4.5% +1.7% +5.6% -4.1% +16% -1.6% -22%
Time Period Apr-Jun 08 Apr-Jun 08 Sep 08 Aug 08 Apr-Jun 08 Sep 08 Aug 08 Apr-Jun 08 Oct 08 Aug 08 Apr-Jun 08 Sep 08 Sep 08 Sep 08 Oct 08 Jul 08 Sep 08 Sep 08 Sep 08 Sep 08 Sep 08 Sep 08 Sep 08 Sep 08 Oct 08 Jun 08 Jun 08 Aug 08 Jul 08 Jul 08 Aug 08 Aug 08 Aug 08 Jul 08 Jul 08 Jul 08 Jan-Mar 08 Aug 08 Apr-Jun 08 Apr-Jun 08 Aug 08
Overseas Tourism to the UK: JULY
3 MONTHS TO JULY % Visits change
Visits
% change
(000)
08/07
(000)
480
-18
EU15
1,780
A12
YEAR-TO-DATE
TWELVE MONTHS TO JULY % Visits change
Visits
% change
08/07
(000)
08/07
(000)
08/07
1,350
-9
2,470
-5
4,270
-6
2
4,920
-1
10,660
-1
18,650
0
310
14
870
17
2,020
20
3,420
12
Rest of Europe
190
2
490
3
1,136
-3
2,026
-5
Rest of World
570
3
1,360
5
2,600
8
4,690
4
3,320
-1
9,000
0
18,870
1
33,050
0
Spend
% change
Spend
% change
Spend
% change
Spend
% change
(£m)
08/07
(£m)
08/07
(£m)
08/07
(£m)
08/07
1,775
-2
4,565
3
8,970
3
16,255
1
North America
Total Visits
Total Spend
Source: International Passenger Survey, Office for National Statistics Notes: EU15 = Austria, Belgium, Denmark, France, Finland, Germany, Greece, Irish Republic, Italy, Luxembourg, Netherlands, Portugal, Spain and Sweden A12 = Bulgaria, Cyprus (South of), Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia and Slovenia Rest of Europe – European countries outside the European Union (includes Russia)
Inbound Visits to the UK July 2008: Year-to-date and Rolling-12-month change vs. same period of previous year (Provisional Estimates) % change -35
-25
-15
-5
5
15
1
Asia Pacific/MEA 0
Europe
5
1
-6 -5
North America
20
Latin America 7
Australasia Greater China
-1
10
5 5 -18
-14 6
India Iberia
21
-4
-8
-5 -6
Mediterranean
5
Atlantic
9
0
MEA -1
Nordic
10 1
Benelux
4 -14
7
-10 10
Central Europe Russia
26
5
South East Asia
Germany, Austria, Switzerland
35
-5 -4
Americas
North East Asia
25
-12
25
-5
Other
8
Rolling-12-month change
9
Year-to-date change
Americas: North America (USA, Canada) - Latin America (Argentina, Brazil, Mexico) Asia Pacific/MEA: Australasia (Australia, New Zealand) - Greater China (China, Hong Kong) South East Asia (Singapore, Malaysia, Thailand) - North East Asia (Japan, South Korea) - India MEA (UAE, South Africa) Europe: Iberia (Portugal, Spain) - Mediterranean (Italy, Greece) - Atlantic (France, Ireland) Nordic (Denmark, Finland, Norway, Sweden) - Benelux (Belgium, Netherlands, Luxembourg) Germany, Austria, Switzerland - Central Europe (Czech Republic, Hungary, Poland) - Russia
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Apr-06
Jul-06
Oct-06
Jan-07 Oct-06 Jul-06
Jan-06 Oct-05 Jul-05 Apr-05 Jan-05 Oct-04 Jul-04 Apr-04 Jan-04 Oct-03 Jul-03 Apr-03 Jan-03 Oct-02 Jul-02 Apr-02 Jan-02 Oct-01 Jul-01 Apr-01 Jan-01 Oct-00 Jul-00 Apr-00 Jan-00
Rest of World
Rest of Europe
Apr-06 Jan-06 Oct-05 Jul-05 Apr-05 Jan-05 Oct-04 Jul-04 Apr-04 Jan-04 Oct-03 Jul-03 Apr-03 Jan-03
Spend per Visit Total Expenditure Total Visits
A12
EU15
North America
Oct-02 Jul-02 Apr-02 Jan-02 Oct-01 Jul-01 Apr-01 Jan-01 Oct-00 Jul-00 Apr-00
-20%
Jan-00
35%
25%
15% Annual Change
5%
0%
-5%
Annual Change
Longer term trends in inbound tourism:
Trends in inbound tourism 20%
15%
10%
-10%
-15%
Rolling 12 Month Period Ending
Trends in inbound tourism by origin region 65%
55%
45%
5%
-5%
-15%
Rolling 12 Month Period Ending
Comparison with performance of other countries The following chart summarises the latest available figures for inbound tourism to a number of countries, measured as either visitor arrivals or visitor nights, but it should be noted that the time period covered varies from country to country meaning that figures are not strictly comparable.
Current global tourism destination trends USA UK Sweden Note that the period covered varies by country, figures are not necessarily directly comparable
Portugal Norway Malaysia Japan Ireland India Hungary Finland Estonia Denmark Czech Republic China Canada Belgium Austria Australia
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
year-to-date growth (%)
Domestic Tourism: UK Occupancy Survey of Serviced Accommodation Bedspace occupancy Proportion of guests that are UK residents
June 2008 49% 86%
Annual Change -8% +1%
More recent data from consultancy PKF indicates that hotel occupancy remained at levels akin to twelve months earlier during July in the regions, but with strong annual growth in both occupancy and room rates in London, possibly driven in part by the Farnborough Air Show.
United Kingdom Tourism Survey (domestic overnight trips)
JANUARY TO JUNE 2008 Trips Nights Spend (m) yr-on-yr (m) yr-on-yr (£m) yr-on-yr 55.6 0.1% 169.75 5.2% 9,907 7.7% 45.5 0.8% 135.81 8.3% 7,828 9.5%
United Kingdom England
The above table summarises figures for the first six months of this year. It can be seen that despite a decline in the number of overnight trips, both bednights and expenditure have posted increases, however once inflation is taken into consideration „real‟ spending on overnight domestic tourism trips is up by around 3%. The following chart shows, on a twelve-month rolling total basis, the annual change in overnight trip volume and value.
Volume and value of overnight domestic tourism 4.0% 3.0%
annual change
2.0% 1.0% 0.0% -1.0% -2.0% -3.0% Jun-08
May-08
Apr-08
Mar-08
Feb-08
Jan-08
Dec-07
Nov-07
Oct-07
Sep-07
Aug-07
Jul-07
Jun-07
May-07
Apr-07
-4.0%
rolling 12 month period ending Trips
Spend
Quarterly Attractions Monitor for England Findings from the latest wave of „England‟s Attractions Monitor‟ reveal that during the period April to June 2008 there were 16% fewer visits to attractions in England than in the same period of 2007, but it is important to recognise Easter fell in March this year, whereas it was in April in 2007, hence more attractions would have been holding special events during this quarter last year. Indeed, looking at year-on-year changes for the individual months highlights the fact that in April admissions were 29% down, whereas May witnessed a decline of only 1% and June 14%. The 500 responding attractions were also quizzed about their expectations for the period July to September and 37% expected visitor numbers to be higher than over the same period of last year compared with 17% who anticipated fewer visitors (39% expected little change and 7% said the did not know what they expected). In contrast to this rather optimistic outlook for the main summer quarter when asked about the likely impact of the current economic slowdown during the remainder of 2008 42% claimed that it would lead to a decrease in admissions and only 8% forecast an increase in numbers. A third of responding attractions said it was too early to tell what impact the slowing economy would have on admission numbers and 9% felt that there would be no direct impact.
Confidence Monitor Sentiment at the July BTDC meeting was that the trading picture remained fairly buoyant, but that concerns about prospects for 2009 were mounting. The following chart confirms that there was little overall change in either current performance or expectations between April and July, whether this will be true for the period July to October is still to be seen.
British Tourism Development Committee Confidence Monitor 4.0 3.8 3.6 3.4 3.2 3.0 2.8 2.6
1 = well below expectation 2 = Below expectation 3 = About Normal 4 = Above expectation 5 = Well above expectation
2.4 2.2 2.0 1.8 Jul-05
Oct-05
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
number of customers last 3 months earnings performance last 3 months
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
number of customers next 3 months earnings potential next 3 months
Market Conditions The UK economy stood still between the first and second quarters of the year and the exceptional financial market turmoil over the past few weeks will have done little to lessen the chance of a significant and potentially protracted slowdown in the months ahead. To confirm the „contagion‟ between the financial and „real‟ economy, the Chartered Institute for Purchasing and Supply reported that service sector activity in September shrank at its fastest rate for more than 12 years and the British Chambers of Commerce latest survey of some 5,000 UK-wide firms indicates confidence has evaporated, with respondents believing the UK has now entered recession and is likely to see unemployment rise by 350,000 in the next year or so.. Although indicators such as unemployment have seen little in the way of significant increase until now, the following chart delivers a stark message regarding how confident UK consumers feel about the coming months. It is not since the aftermath of „Black Wednesday‟ in 1992, when Britain ignominiously had to withdraw from the Exchange Rate Mechanism, that UK consumers have been so downbeat, and the latest figures are based on survey fieldwork conducted before the nationalisation of Bradford & Bingley and US „bail out‟ Bill dominated media coverage. New car registrations in August were at their lowest since 1966, demonstrating that the dual impacts of tighter credit markets and growing price inflation for everyday goods is resulting in consumers postponing purchases. Quite how this will feed through to tourism activity remains unclear, with the relatively expensive Euro and ongoing publicity about the environmental impact of flying potentially combining to encourage Brits to take more domestic trips at the expensive of foreign holidays.
UK Consumer Confidence 10 5 0
balance
-5 -10 -15 -20 -25
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
Jan-00
Jan-99
Jan-98
Jan-97
Jan-96
Jan-95
Jan-94
Jan-93
Jan-92
Jan-91
Jan-90
Jan-89
Jan-88
Jan-87
Jan-86
Jan-85
-30
The Bush „Bail Out‟ plan may have been passed by Congress, but this will not bring immediate recovery to the wider US economy even if it is successful in stabilising the banking system, and likewise the „recovery package‟ announced for the UK banking sector does not provide any guarantee that a recession will be avoided. In its latest prognosis the International Monetary Fund foresees a sharper slowdown in the UK economy than in most other western countries. The implications of the US bail-out plan will almost certainly lead to a ballooning in the US public sector deficit, which could potentially lead to a weakening of the US dollar. A protracted slowdown in the US is one of the reasons for Asian stock markets being decidedly gloomy at present, with many Asian economies (notably China) highly dependent on US-bound exports for their economic wellbeing. The price of oil has fallen sharply in recent days, falling to below $90 per barrel. The outlook may be for weaker demand which should bring down prices (and airline fuel surcharges) but there is a risk that a declining dollar would result in oil (traded in dollars) gaining in price. The main news in terms of UK connectivity of late has been the fire in the Channel Tunnel which resulted in a complete closure for a few days in September; a full service will not resume until after Christmas. Although Eurostar is now operating 93% of its services journey times have been considerably extended. XL recently collapsed, and although almost exclusively used by Brits travelling abroad it acts as a reminder of the fragility of the aviation sector at the present time, with a number of airlines feeling the need to scale back their operations in order to stay afloat. BAA has responded to the Competition Commission Report by announcing that it plans to sell Gatwick Airport, but has no plans to dispose of Heathrow. A government decision on „mixed mode‟ operation at Heathrow is now expected before the end of the year, as may be a decision on a third runway. The Conservatives recently announced that it now opposed a third runway, and would instead invest in high-speed rail alternatives. Summer has been notable for a lack of sunshine; August being the dullest on record and September having less hours of sunshine than any since 1993, meanwhile rainfall and temperatures were close to average.
Factors contributing to tourism trends in Britain, October 2008 Travel Demand
Domestic Economy
Eurozone Economy
Tourism Industry Current
Conditions
US Economy
News Key to Symbols Very Favourable
Weather
Exchange Rate
Latest changes Favourable
Neutral
Weather
US Economy
Unfavourable
Very Unfavourable
Forecast changes Tourism Industry Eurozone Economy
Method for producing “Weather Symbol Chart” The indicators shown in the following table have been grouped into 8 segments. Each indicator is scored according to whether it is moving in a direction that is favourable, very favourable, unfavourable, very unfavourable or neutral in terms of its impact on tourism trends. The overall performance of each segment is found by taking the average score for each indicator within the segment. By taking the average for each of the segment scores it is possible to provide a flavour for the overall state of current conditions. Health Warning This analysis does not lead to a statistically robust “index” of tourism performance, rather, it gives a flavour for what is happening to those factors that underpin the volume and value of both inbound and domestic tourism within Britain. From this a broad interpretation of “where we are” across a wide range of fronts can be discerned. A key advantage of this approach is that as new information becomes available each segment can be updated, rather than having to wait until information on all indicators becomes available. From time to time it may be appropriate to add extra indicators or drop existing indicators as new sources of information become available.
The Segments and latest value of Indicators Segment Domestic Economy
Eurozone Economy
US Economy
Exchange Rates (% change in the cost of Sterling) UK Weather News Tourism Industry
Travel Demand
Indicators Unemployment rate Employment annual change Interest Rates Consumer credit annual change Earnings annual change Consumer Confidence Index Unemployment rate Employment annual change Interest Rates Borrowing annual change Earnings annual change Consumer Confidence Index Unemployment rate Employment annual change Interest Rates Consumer credit annual change Earnings annual change Consumer Confidence index „Visits Weighted‟ annual change „Nights Weighted‟ annual change „Expenditure Weighted‟ annual change Sunshine Temperature Rainfall News, Shocks and Special Events UKinbound Visitor Arrivals UKinbound Forward Bookings Tax Refunds to inbound visitors BTDC Confidence Monitor last 3 months BTDC Confidence Monitor next 3 months Chain Hotel Occupancy Statistics (regional) Chain Hotel Occupancy Statistics (London) Domestic tourism prices vs Consumer Prices VisitBritain Global Enquiries Domestic Air Passengers International Air Passengers Long Distance Rail Journeys Passengers through Port of Dover Eurostar passenger numbers Car traffic in Great Britain Demand for Visas
Value 5.4% 0.9% 4.5% 6.8% 3.4% -22.6↑ 7.5% 1.3% 3.75% 9.1% 2.7% -18.9↓ 6.1% -0.8% 1.5% 2.1% 1.7% 59.8↑ -13.0% -12.6% -11.0% Below average Close to average Close to average Fire in Channel Tunnel Global financial market turmoil -5.5% -6.4% +60% 2.9↑ 2.6↑ 72.4% 83.2% +2.0% above +10% -4.5% +1.7% +5.6% -4.1% +16% -1.6% -22%
Time Period Apr-Jun 08 Apr-Jun 08 Sep 08 Aug 08 Apr-Jun 08 Sep 08 Aug 08 Apr-Jun 08 Oct 08 Aug 08 Apr-Jun 08 Sep 08 Sep 08 Sep 08 Oct 08 Jul 08 Sep 08 Sep 08 Sep 08 Sep 08 Sep 08 Sep 08 Sep 08 Sep 08 Oct 08 Jun 08 Jun 08 Aug 08 Jul 08 Jul 08 Aug 08 Aug 08 Aug 08 Jul 08 Jul 08 Jul 08 Jan-Mar 08 Aug 08 Apr-Jun 08 Apr-Jun 08 Aug 08
