Visit Britain report on the economic crisis and tourism

You can view this report by clicking here. Key findings include the view that tourism has become so much a part of our way of life that holidaying as a practice will be little affected – only those most paranoid and / or impacted upon by the crisis are planning to change their holiday plans for the coming year.  Worryingly, the research seems to suggest that the ground on which the UK’s tourism industry can compete against overseas destinations is on price, by attracting increased domestic tourist numbers to UK destinations and attractions.  The report proposes a number of pricing promotions (2 for 1, tokens, loyalty schemes etc), based on survey questions that suggested a number of ‘offers’ and asked respondents to rate them.  Although at the end of the presentation we briefly hear that tourists travel for non-economic reasons, this is not the report’s main focus.

Concentrating on price promotions runs the risk of initiating a ‘race to the bottom’ in domestic tourism, a deflationary pressure that may, in the medium to long term, reduce the resources available to tourism businesses, especially SMEs, the tourism sector who were the most damaged following the last major recession.  The lack of investment in domestic tourism in this period significantly affected product quality in the sector, as well as having a structural impact – removing diversity of supply from the market and further affecting perceptions of quality in the face of homogenization.

Introducing new competitive pressures in times of recession may help to ensure the survival of the best resourced, but I hope that our state tourism bodies will also be promoting new forms of partnership and supporting product innovation in the domestic tourism sector.  The economic pendulum will swing back eventually, probably some time around or after the 2012 Olympics in London, and if the UK tourism industry is to be able to capitalise on the promotional benefits of this event it will need to maintain its diversity and the huge improvements in quality and destination image made over the last fifteen years.

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3 comments

  1. Although it’s in no way within my sphere of expertise, I would have assumed that holidays in the UK have always been so expensive (the high cost of accomodation usually outweighing any savings made on reduced travel costs compared to overseas destinations), that the credit crunch would have little effect on British holiday makers, who will either continue to go on cheap package deals abroad, or stay at home if times are hard. As the pound weakens, Britain will become a more attractive prospect for foreign tourists, so if anything won’t our tourism revenue increase? I admit this is probably an oversimplification!

  2. Holidays in the UK haven’t always been expensive – but the popular perception over the last few years has been that they are. One of the main factors affecting this has been a drop in quality compared to overseas destinations, impacting on the perceptions of ‘value for money’ in British destinations. Cost is only one part of the value equation, but one that will become a bigger factor as the economic situation worsens. The real question is what will happen to quality? The British tourist product has hugely improved over the last ten years, but can those improvements continue and also offer improved ‘value for money’? In non-cash terms, we should also include sustainabilty measures in our value decisions like carbon costs and labour relations – a move that was starting to happen and that I hope won’t be completely marginalised by the credit crunch.

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