Tourism: Research Paper

RESEARCH PAPER 03/73
23 SEPTEMBER 2003
Tourism
Tourism is a dynamic and growing worldwide industry, but 2001 saw a drop in worldwide tourism arrivals for only the second time since records began. Recovery has been dented by the Gulf conflict and the SARS outbreak in 2003. This paper describes the importance of tourism to the UK, government initiatives, trends, and provides a brief world overview. It replaces Library research paper 00/66.
Patsy Richards ECONOMIC POLICY & STATISTICS

HOUSE OF COMMONS LIBRARY
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ISSN 1368-8456
Summary of main points

Globally and domestically, the tourism industry is an important source of revenue and livelihoods. However, in 2001 the devastating effects of foot and mouth disease (FMD) in several parts of the UK were followed by the terrorist attacks of 11 September, leading to a fall in overseas visitors. 2001 suffered the first reduction in world tourism arrivals since 1982, and only the second since records began. A recovery in 2002 was followed by effects arising from the Gulf conflict and SARS in 2003. The characteristics of the industry, along with its significance to the economy, have led successive UK governments to undertake a number of initiatives and restructurings. The present Governments first review resulted in the February 1999 strategy document Tomorrows Tourism which called for a more joined-up government approach. This has been followed by a number of annual tourism summits designed to bring together pan-Government Ministers and the industry. Recently, a new voice for the industry, the Tourism Alliance, was formed under the auspices of the CBI, and the English Tourism Council and British Tourist Authority were merged in April 2003 to form VisitBritain. However, some, including the Culture, Media and Sport Committee in its 2003 report The Structure and Strategy for Supporting Tourism, remain critical of low levels of government funding for tourism especially in England, and feel that the industry might sit better with the Department for Trade and Industry, were that department not so large, than its current home, the Department for Culture, Media and Sport. Figures for 2002 suggest spending by overseas tourists of some 12 billion in the UK, while expenditure by domestic tourists (who spent at least a night away from home) is estimated at 27 billion. Total tourism revenue including spending on daytrips amounted to some 76 billion, a gross contribution of 4.9% to GDP in 2002. However, UK residents are spending an increasing amount of money on visits abroad, leading to a negative travel account. UK residents made almost 60 million trips abroad in 2002, a record number. Growth in holidays abroad has eclipsed growth in domestic tourism. Tourism is of vital importance to the global economy. The World Tourism Organisation (WTO) estimates that in 2000 travel and tourism were directly and indirectly responsible for generating up to 10% of world GDP and 100 million jobs. The European Commission says that the 8 million people directly employed in the EU tourism sector may be increased by an extra 2 million travel and tourism jobs during the next 10 years. In the UK, total direct employment in tourism-related industries in 2002 was nearly 2.1 million people, or 7% of those in employment. For a global, enormous industry, tourism is highly fragmented and dominated by small and medium sized enterprises. The Government estimates that there are around 127,000 businesses in the UK industry, 80% of which have a turnover of less than 250,000 per annum.
CONTENTS
Value of tourism to the UK A. B. C. D. Defining the industry Employment Contribution to GDP Balance of payments the travel account
7 7 7 9 11 13 13 15 17 20 20 23 25 26
26 29 31 32 33
II
Visitor numbers A. B. C. Overseas visitors to the UK Domestic tourism UK residents visits abroad
III
Factors affecting UK tourism A. B. C. 2001 2003 - The Iraq conflict and SARS Other issues
IV
UK tourism support structures

1. Reorganisation in England 2. Funding 3. Wales 4. Scotland 5. Northern Ireland
World tourism A. B. C. Events of 2001 2002 2003
34 36 38 39
I
A.
Value of tourism to the UK

Defining the industry
The defining feature of the tourism industry is not the product but the consumer the tourist. Such a demand side definition obscures the collection of official statistics. Tourism is not grouped into a single heading within the Standard Industrial Classification (SIC) for instance, which is normally used to define industry categories. This is all the more remarkable given the range of statistics that are nevertheless collected from a variety of surveys, and the importance of the industry. This means that tourism statistics, which are many and varied, should be treated with some caution and may be estimations or approximations. The business generated by tourists is crucial to many hotels, restaurants, travel services and entertainment facilities, but it does not account for all the business of these sectors. For this reason it is difficult to measure the exact number of jobs or amount of income that are either directly or indirectly dependent on tourism. In some parts of the country it will account for very little of such activities. Generally, the most commonly cited data ignore these problems and provide information for sectors that depend on tourism for some of their business: Hotels & other tourist accommodation (SIC 551, 552) Restaurants, cafes etc (SIC 553) Bars, public houses and night-clubs (SIC 554) Travel agencies and tour operators (SIC 633) Libraries, museums & other cultural activities (SIC 925) Sports & other recreation activities (SIC 926, 927)
On the other hand, clearly such businesses are by no means entirely dependent on tourism, and will be used by tourists and non-tourists alike. This method is sometimes justified on the grounds that while it includes a certain amount of non-tourism related employment, it also excludes some which ought to be included, such as employment in transport services. In any case, it is the best proxy available.
B.
Employment
Bearing in mind the problems outlined, it is possible to provide figures for those employed in tourism-related industries. Indeed, a regular run of data which is available from 1996 is published quarterly in Labour Market Trends and this provides the best estimation of trends over time in tourism-related employment. Table 1 overleaf shows employee jobs and self employed jobs in tourism related industries over time.
Table 1
Employment in tourism related industries in Great Britian

('000s, not seasonally adjusted) Bars, public Hotels & other tourist Restaurants houses and accomodation cafes etc nightclubs 551/552 553 554 Travel agencies/ tour operators 633 Libraries/ museums and other cultural activities 925 Sport and other recreation activities 926/927
SIC 1992
All tourism-related industries All of which: employee jobs selfemployed jobs
Employee jobs and self- employment jobs (a,b) 1996 Mar 340.7 462.4 Jun 399.1 487.9 Sep 381.5 493.8 Dec 355.8 481.5 1997 Mar 353.3 478.5 Jun 371.0 505.1 Sep 371.0 511.4 Dec 351.7 516.1 1998 Mar 360.3 519.7 Jun 385.0 520.8 Sep 396.8 523.5 Dec 372.3 516.8 1999 Mar 373.4 522.0 Jun 409.9 535.1 Sep 403.8 536.8 Dec 379.5 537.2 2000 Mar 379.3 540.5 Jun 406.2 555.2 Sep 406.3 548.5 Dec 383.9 553.6 2001 Mar 383.6 539.1 Jun 410.2 550.8 Sept 411.1 556.8 Dec 387.3 542.9 2002 Mar 388.7 533.8 Jun 418.0 545.4 Changes: Jun 2001-02 7.8 -5.4 % 1.9 -1.0
482.1 506.4 511.5 535.6 530.7 553.9 572.5 576.0 549.8 555.3 558.3 547.6 542.8 555.6 558.9 573.3 552.8 576.1 567.6 538.8 520.3 533.0 528.2 523.5 518.0 535.9 2.9 0.5
94.2 104.0 100.5 106.2 108.3 115.8 112.7 106.2 104.1 111.0 115.6 115.1 119.2 123.2 129.0 125.3 125.1 131.4 133.9 137.2 137.7 141.7 141.3 133.0 128.8 133.6 -8.1 -5.7
71.0 73.9 73.9 73.0 70.1 75.4 76.8 72.2 67.7 74.8 74.1 69.0 69.6 76.2 82.1 82.2 82.0 88.9 87.7 78.0 78.4 80.0 81.8 79.6 78.7 81.4 1.4 1.7
348.8 352.1 366.7 360.9 346.5 359.2 364.3 361.8 354.2 347.1 353.4 343.4 349.7 367.3 377.7 380.0 384.2 385.6 389.0 409.2 409.1 406.7 414.8 415.1 408.2 412.9 6.2 1.5
1,799.2 1,923.4 1,928.0 1,912.9 1,887.4 1,980.3 2,008.6 1,983.9 1,955.8 1,994.0 2,021.7 1,964.2 1,976.8 2,067.3 2,088.3 2,077.4 2,063.9 2,143.5 2,132.9 2,100.7 2,068.1 2,122.5 2,134.0 2,081.4 2,056.2 2,127.2 4.7 0.2
1,584.1 1,706.3 1,696.2 1,696.7 1,672.8 1,762.1 1,780.5 1,771.7 1,762.5 1,809.0 1,843.0 1,811.4 1,826.2 1,906.7 1,938.9 1,913.1 1,898.4 1,971.6 1,964.4 1,927.7 1,900.9 1,962.5 1,955.8 1,924.1 1,908.2 1,964.0 1.5 0.1
215.1 217.0 231.8 216.3 214.6 218.2 228.1 212.1 193.3 185.0 178.7 152.8 150.5 160.6 149.4 164.3 165.5 171.9 168.5 173.0 167.2 160.0 178.2 157.4 148.0 163.2 3.2 2.0
Notes a The figures above are calculated by summing employee jobs and self-employment jobs (including self-employed as second job). b Estimates of self-employment jobs are based on the results of the Labour Force Survey. Employee jobs revised due to introduction of the Annual Business Inquiry. Revised estimates for tourism-related industries are not available before 1996. Source Labour Market Trends August 2003 table B.17
On this basis, total direct employment in tourism-related industries in the UK is some 2.1 million people. The long term trend is a gradually increasing number of jobs, and the majority are employee jobs. The chart also illustrates the seasonal nature of tourism employment (over):
Total employment in tourism related industries, GB

2,500
Employee jobs and self employed jobs (thousands)
2,000
1,500
All jobs
1,000
employee jobs
self-employed jobs
500
C.
Contribution to GDP
Spending by both domestic and overseas tourists is one measure of the tourism industrys contribution to GDP. Using a wide definition, gross spending in 2002 was some 76 billion, comprising (table 2):
Table 2
Tourism expenditure in the UK, 2002

billion Spending by Overseas Residents (provisional) Visits to the UK Fares to UK carriers Spending by Domestic Tourists Trips of 1+ nights Day Trips (est.) 11.7 3.2
Total 75.8 Excluding day trips 41.6 Source: VisitBritain and Overseas Travel and Tourism July 2003, National Statistics 5 September 2003
Spending on domestic day trips has been over 30 billion for each of the past five years1, but this figure is usually excluded from considerations of expenditure. Instead, tourism spending is taken to comprise only overseas residents spending, the fares they paid to UK carriers, and domestic tourists spending. The smaller 41.6 billion total represented
VisitBritain Industry website, http://www.visitbritain.com/corporate/links/visitbritain/tips.htm
Se p9 D 6 ec -9 M 6 ar -9 7 Ju n97 Se p9 D 7 ec -9 M 7 ar -9 8 Ju n98 Se p9 D 8 ec -9 M 8 ar -9 9 Ju n99 Se p9 D 9 ec -9 M 9 ar -0 0 Ju n00 Se p0 D 0 ec -0 M 0 ar -0 1 Ju n01 Se p0 D 1 ec -0 M 1 ar -0 2 Ju n02
6 ar -9 Ju
n-
96
26.7 34.2
a gross contribution to GDP of 4.0% (including day trips would bring this to 4.9%). However, according to the International Passenger Survey, UK residents in turn spent some 27.0 billion overseas in the same year, and this can be thought of as an import of goods and services. The difference between spending by overseas visitors in the UK and UK residents abroad is a deficit of some 15.2 billion.2 Spending by UK tourists abroad has been growing at a greater rate than overseas tourists spending in the UK, and so the deficit has been growing (see also the next section). Subtracting the 27.0 billion spent abroad from all other tourism spending in the UK gives a net contribution to GDP of 1.4% in 2002, without taking into account fare payments by UK residents to overseas carriers - the true net contribution would be even lower. Table 3 shows the full run of figures.
Table 3
Tourism's contribution to GDP

million Overseas Domestic Total tourists tourists' tourists' Gross UK residents' Net Net expenditure in expenditure in expenditure contribution expenditure expenditure contribution UK (a) the UK (b) in UK to GDP overseas (c) on tourism to GDP 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 7,737 7,686 8,700 9,753 9,179 9,998 11,869 12,328 14,587 15,366 15,296 15,879 15,693 16,255 14,434 14,937 6,775 7,850 10,865 10,460 10,470 10,665 12,430 13,215 20,070 22,040 24,135 22,815 25,635 26,130 26,095 26,700 14,512 15,536 19,565 20,213 19,649 20,663 24,299 25,543 34,657 37,406 39,431 38,694 41,328 42,385 40,529 41,637 3.5% 3.3% 3.8% 3.6% 3.4% 3.4% 3.8% 3.7% 4.8% 4.9% 4.9% 4.5% 4.6% 4.5% 4.1% 4.0% 7,280 8,215 9,357 9,884 9,951 11,243 12,972 14,365 15,386 16,223 16,931 19,489 22,020 24,251 25,332 26,962 7,232 7,321 10,208 10,329 9,698 9,420 11,327 11,178 19,271 21,183 22,500 19,205 19,308 18,134 15,197 14,675 1.7% 1.6% 2.0% 1.9% 1.7% 1.5% 1.8% 1.6% 2.7% 2.8% 2.8% 2.2% 2.1% 1.9% 1.5% 1.4%
a Includes fares paid by overseas visitors to UK carriers b Excludes spending on day trips, from 1989 UK Tourism Survey, new series from 1995 c Excludes fares paid by UK visitors to overseas carriers
Sources: National Statistics database, series YBHA, GMAK, GMAM VisitBritain UK Industry website http://www.visitbritain.com/corporate/links/visitbritain/tips.htm
National Statistics Overseas Travel and Tourism July 2003, 5 September 2003 table 4
10
In 2001, the total tourism spending in the UK by both domestic and overseas tourists was split by sector as follows:3
Overseas and domestic tourism spending by category, 2001
Eating out 21%
Shopping 18%
Travel within UK 16%
Accomodation 34%
Entertainment 6% Services etc 2% Other 3%
D.
Balance of payments the travel account
The travel account- the flows of tourism expenditure in and out of the UK- forms a significant part of the UK balance of payments. Anyone who intends to stay for less than twelve months is treated as a visitor, so the travel account includes business, education and family trips as well as leisure visitors. The provision of UK goods and services to overseas visitors is treated as a balance of payments credit (an export) while the purchase of goods and services abroad by UK residents counts as a balance of payments debit (an import). So every pound spent by visitors to the UK on, for instance, hotel accommodation, souvenirs and domestic travel makes a positive contribution to the UK balance of payments, and vice versa.4 Expenditure by UK residents abroad accounts for around 40% of total imports of services.5 The travel account moved from surplus in the late 1970s to deficit from the mid 1980s onwards, and since the late 1980s the travel deficit has grown significantly. Since 1999 there have been two visits by UK residents abroad for every visit made by overseas
3 4
Tourism Intelligence Quarterly March 2003 BTA table 13 Expenditure financed from money earned or provided locally is deducted. Spending on travel to and from the UK is not included in the travel account but in the civil aviation and sea transport accounts as appropriate. 5 UK Balance of Payments The Pink Book 2002 National Statistics p.39
11
residents to the UK. The record deficit of 2002 (13.9 billion) resulted from increasing numbers of UK residents travelling abroad combined with overseas visitors to the UK falling sharply (down 9% to 23 million in 2001, due to foot and mouth disease (FMD), 11 September, and other factors - see section III). Much of the deficit in the travel account is attributable to tourism patterns within Europe. In 2001 UK residents made a record 32.7 million more visits to Europe than European residents made to the UK. This difference accounted for 92% of the total gap in visits made by overseas residents to the UK and UK residents abroad. UK residents visiting Europe in 2001 spent 16.2 billion on their visits, compared with 5.1 billion spent by European residents visiting the UK. The difference (11.1 billion) accounted for 79% of the total deficit in the balance of payments travel account.6 The travel account is summarised below in table 4 and the chart following:
Table 4
UK trade in services - the travel account balance of payments

million, cash Business travel Credits Debits 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1,657 1,866 2,047 2,190 2,142 2,211 2,489 2,633 3,292 3,306 3,586 3,989 4,112 4,231 3,778 3,883 1,394 1,519 1,687 1,907 1,885 2,000 2,364 2,657 3,115 3,490 3,507 4,349 4,549 5,003 4,694 4,461 Balance 263 347 360 283 257 211 125 -24 177 -184 79 -360 -437 -772 -916 -578 Leisure travel Credits Debits 5,300 5,070 5,736 6,469 6,188 6,630 8,020 8,249 9,698 10,385 10,219 10,313 9,948 10,215 9,332 10,112 5,990 6,864 7,917 8,317 8,370 9,557 10,955 12,071 12,678 13,152 13,936 15,852 18,381 20,382 21,687 23,386 Balance -690 -1,794 -2,181 -1,848 -2,182 -2,927 -2,935 -3,822 -2,980 -2,767 -3,717 -5,539 -8,433 -10,167 -12,350 -13,274 Credits 6,957 6,936 7,783 8,659 8,330 8,841 10,509 10,882 12,990 13,691 13,805 14,302 14,060 14,446 13,110 13,995 All travel Debits (a) 7,384 8,383 9,604 10,224 10,255 11,557 13,319 14,728 15,793 16,642 17,443 20,201 22,930 25,385 26,376 27,847 Balance -427 -1,447 -1,821 -1,565 -1,925 -2,716 -2,810 -3,846 -2,803 -2,951 -3,638 -5,899 -8,870 -10,939 -13,266 -13,852
(a) Including personal imports of cars Source: National Statistics database series FJPG, FJQY, FJSS, FJTU, APQW, FJTW, FJPF, APQA, FJSR
This differs from tables 2 and 3 in that it includes all imports and exports of travel services included in the travel account so for instance, personal imports of cars are included.
Travel Trends 2002 A report on the 2001 International Passenger Survey National Statistics 2002
12
Spending by overseas residents in UK, and by UK residents abroad

30,000
25,000 Overseas residents in UK 20,000 millions UK residents abroad
15,000
10,000
5,000
0 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
The British Tourist Authoritys latest forecasts are that, in 2003, inbound spending will fall by around 15% compared with 2002, which on the basis of provisional results for 2002 would represent a fall of between 1.5bn and 2.0bn. These figures are for inbound tourism only; there are as yet no forecasts for domestic tourism.7
II
A.
Visitor numbers
Overseas visitors to the UK
In 2002 there were a total of 24.2 million overseas visitors to the UK, compared to a peak of 25.7 million in 1998. However, the 2002 figure was an increase of 6% on 22.8 million in 2001.8 72% of visitors to the UK arrive by air, compared to 17% by sea and 11% via the Channel Tunnel.9 The growth in visitor numbers to the UK over the past 20 years or so has been largely fuelled by an increasing number of visitors from Western Europe. They accounted for 64% of visitors in 2002 while visitors from North America have remained stable at around or under a fifth of total visitors. The chart below10 shows the drop in 2001, and how the recovery is due to returning visitors from Western Europe:
7 8
http://www.visitbritain.org/ukindustry/ as of 16 September 2003 National Statistics database series GMAA, GMAE, GMAD, GMAC 9 Star UK website, www.staruk.org 10 National Statistics database series GMAA, GMAE, GMAD, GMAC
13
Overseas visitors to the UK by country of residence ('000s)

30,000
Other
25,000
N America
W Europe
Total
20,000
15,000
10,000
5,000
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
The next chart shows the purpose of overseas visitors trips to the UK. The number of holiday trips is unsurprisingly the most volatile and was by far the worst affected by the events of 2001. Recently, visiting friends and relatives (VFR) and business trips have become almost as significant as holiday trips, which have declined from peaks in 19961997. Table 5 on the following page provides more detail, including spending by each type of visitor, up to 2001.
Overseas visitors by purpose of trip ('000s)
12,000 Holiday 10,000 Business VFR Other
8,000
6,000
4,000
2,000
0 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
14
Table 5
Overseas visitors to the UK by purpose of visit

Thousands of trips; million Holiday Trips Spending 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Average annual growth Change 2000-01 5,037 5,265 5,818 6,385 6,666 5,919 6,828 6,655 7,286 7,725 7,169 7,949 8,729 9,048 10,323 10,987 10,803 10,475 9,826 9,302 7,585 2% -18% 1,276 1,386 1,711 2,052 2,379 2,228 2,695 2,473 2,757 3,198 2,849 3,125 3,925 3,947 4,567 4,848 4,555 4,488 4,251 4,383 3,446 5% -21% Business Trips Spending 2,453 2,393 2,556 2,863 3,014 3,286 3,564 4,096 4,363 4,461 4,219 3,855 4,706 4,986 5,763 6,095 6,347 6,882 7,044 7,322 6,778 5% -7% 763 794 961 1,091 1,293 1,552 1,644 1,852 2,032 2,174 2,077 2,146 2,420 2,559 3,219 3,220 3,501 3,820 3,967 4,048 3,582 8% -12% VFR Trips Spending 2,287 2,410 2,560 2,626 2,880 2,946 3,179 3,178 3,497 3,611 3,591 3,884 4,109 4,278 4,602 4,898 5,155 5,400 5,640 5,834 5,898 5% 1% 442 484 639 706 852 844 910 922 1,049 1,147 1,148 1,259 1,467 1,551 1,739 1,841 1,941 1,970 2,133 2,271 2,273 9% 0% Other Trips Spending 1,675 1,568 1,530 1,770 1,890 1,746 1,996 1,870 2,193 2,216 2,147 2,847 2,319 2,482 2,849 3,182 3,209 2,988 2,884 2,750 2,574 2% -6% 484 518 687 759 908 917 1,001 926 1,094 1,213 1,293 1,343 1,654 1,706 2,214 2,357 2,223 2,367 2,108 2,068 1,964 7% -5% Total Trips Spending 11,452 11,636 12,464 13,644 14,449 13,897 15,566 15,799 17,338 18,013 17,125 18,535 19,863 20,794 23,537 25,163 25,515 25,745 25,394 25,209 22,835 4% -9% 2,970 3,188 4,003 4,614 5,442 5,553 6,260 6,184 6,945 7,748 7,386 7,891 9,487 9,786 11,763 12,290 12,244 12,671 12,498 12,805 11,306 7% -12%
Notes: VFR visiting friends and relatives Care should be taken when comparing 1999-2001 results with earlier years due to changes in the sampling methodology
Source: Travel Trends 2002 table 1.03. Based on the International Passenger Survey
By English regional tourist board (RTB) area, overseas and domestic tourists showed differing distributions, with overseas visitors concentrating in London:
Table 6
Visits by UK and overseas tourists to each RTB area, 2000-2002

millions UK residents' trips RTB Area Cumbria Northumbria North West Yorkshire Heart of England East of England London South West Southern (a) South East (a) Total 2000 5.0 5.6 14.8 13.1 23.4 13.2 18.5 18.6 14.7 12.1 139.0 2001 4.5 4.3 13.7 11.0 22.2 13.0 16.9 19.8 13.3 12.6 131.3 2002 4.3 4.8 14.5 12.2 24.6 14.5 16.1 21.0 14.6 10.9 137.5 share total 2002 3% 3% 11% 9% 18% 11% 12% 15% 11% 8% 100% 2000 0.2 0.4 1.3 0.9 2.3 1.8 13.1 1.6 2.1 2.1 25.2 Overseas residents' visits 2001 0.2 0.4 1.3 0.8 2.0 1.4 11.5 1.4 1.9 2.0 22.9 2002 0.2 0.5 1.3 0.9 2.5 1.6 11.6 1.4 1.8 2.0 23.8 share total 2002 1% 2% 5% 4% 11% 7% 49% 6% 8% 8% 100%
Note: (a) merged with effect from 1 April 2003 Source: HC Deb 21 May 2003 c827-8W
B.
Domestic tourism
Domestic tourism is defined as trips by UK residents who spend at least one night away from home, so day trips are excluded. There were some 167 million such trips in 2002, generating spending of some 27 billion. In other words, domestic tourists generate far
15
more spending than overseas visitors to the UK. Over half of all trips were for just one (30%) or two (27%) nights. July, August and December were the busiest months.11 By region, these trips were split as follows:
Table 7
Distribution of domestic tourism in 2002

millions, rounded
Trips Cumbria Northumbria North West Yorkshire Heart of England East of England London South West Southern South East Total England Scotland Wales Northern Ireland Total UK 4 5 15 12 25 15 16 21 15 11 135 19 12 3 167 % total 3% 3% 9% 7% 15% 9% 10% 13% 9% 7% 81% 11% 7% 2% 100% Nights 13 13 39 36 65 44 35 87 46 32 416 65 40 9 532 % total 2% 3% 7% 7% 12% 8% 7% 16% 9% 6% 78% 12% 7% 2% 100% Spending () 728 868 2,316 1,595 3,166 1,704 2,818 3,901 2,065 1,355 20,787 3,683 1,543 525 26,699 % total 3% 3% 9% 6% 12% 6% 11% 15% 8% 5% 78% 14% 6% 2% 100%
Source: Star UK website www.staruk.org
Trends can be derived only from 1995, because the UK Tourism Survey (UKTS) changed its methodology in 2000 and data from 1995 to 1999 only were reworked:
Table 8
Trends in domestic tourism trips compared to visits abroad

Millions, rounded
Domestic tourism trips UK

1995 1996 1997 1998 1999 2000 2001 2002 Change 1995-2002 148 154 162 149 173 175 163 167 13%
England
114 117 126 115 138 140 132 135 18%
Scotland
18 20 21 19 19 19 18 19 6%
Wales
13 14 12 12 13 13 12 12 -7%
N Ireland
3 4 3 2 3 3 2 2 -43%
Visits abroad by UK residents

41 42 46 51 54 57 58 59 44%
Sources: UKTS data from http://www.staruk.org.uk//default.asp?ID=388&parentid=512 and Overseas Travel and Tourism (MQ6) Quarter 1 2003, National Statistics Table 2
11
United Kingdom Tourism Survey (UKTS) from the Star UK website http://www.staruk.org/
16
a.
Visitor attractions
The Survey of Visits to Visitor Attractions shows which paid and free attractions are the most popular in the UK, although many of the visits may be made by UK residents on day trips, of course. The 2002 survey showed an 8% increase in visitor numbers on the previous year compared to a 2% drop in 2001. Farm visits, country parks and wildlife attractions all showed large increases as they recovered from the effects of foot and mouth disease. Free entry to some London museums caused almost a doubling in their visitor numbers. However, visitor numbers to many attractions especially in London and the South East reliant on overseas visitors had still not fully recovered. The table contains only data on attractions which responded to the survey and gave permission for their information to be published:
Table 10
Visits to top UK attractions, 2002

Paid admission
British Airways London Eye Tower of London Eden Project (e) Legoland Windsor Flamingo Land Theme Park & Zoo (e) Windermere Lake Cruises Drayton Manor Family Theme Park (e) Edinburgh Castle Chester Zoo Canterbury Cathedral (e) Westminster Abbey Kew Gardens Windsor Castle London Zoo Roman Baths, Bath New MetroLand, Gateshead (e) Royal Academy of Arts St Paul`s Cathedral Stonehenge The Deep, Hull (e) 4,090,000 1,940,856 1,832,482 1,453,000 1,393,300 1,266,027 1,200,000 1,153,317 1,134,949 1,110,529 1,058,854 969,188 931,042 891,028 845,608 810,000 794,042 781,364 759,697 750,000
Change from 2001 Free admission

6.2 -3.9 7.8 -11.0 5.4 1.9 25.0 2.4 7.0 -3.5 7.4 -2.0 3.0 -1.8 -2.2 24.6 -12.8 -6.7 12.2 not open Blackpool Pleasure Beach Tate Modern British Museum National Gallery (e) Natural History Museum Victoria & Albert Museum Science Museum Pleasureland Theme Park, Southport (e) Eastbourne Pier (e) York Minster (e) Pleasure Beach, Gt Yarmouth (e) National Portrait Gallery Tate Britain Kelvingrove Art Gallery & Museum (e) Somerset House (e) Flamingo Family Fun Park, Hastings Chester Cathedral (e) The Lowry, Salford (e) Poole Pottery 6,200,000 4,618,632 4,607,311 4,130,973 2,957,501 2,661,338 2,628,374 2,000,000 1,900,000 1,570,500 1,500,000 1,484,331 1,178,235 955,671 900,000 900,000 850,000 810,200 808,725
Change from 2001

-4.6 30.0 -4.0 -16.0 74.4 84.0 94.3 0.0 -5.0 -1.8 0.0 16.9 16.5 -7.3 28.6 0.0 -5.6 -0.7 -24.0
(e) estimated Source: StarUK website, from Survey of Visits to Visitor Attractions
C.
UK residents visits abroad
UK tourism abroad has grown steadily and rapidly in recent years, in contrast to domestic tourism. From 1995 to 2002 overseas tourism by UK residents, in terms of trips made, increased by 44% while domestic tourism rose by only 13% (see table above). However, this should be seen in the context of the still very high number of trips made by UK residents within the UK each year - 167.4 million in 2002:
17
UK residents' domestic and overseas tourism

200
Domestic tourism trips

180 160 140
Visits abroad by UK residents (a)
Trips (millions)
120 100 80 60 40 20 0 1995 1996 1997 1998 1999 2000 2001 2002
Nevertheless, UK residents made 59.4 million trips abroad in 2002, the highest ever number, spending almost 27 billion, again a record.12 In 2001, two thirds of visits were to go on holiday and over 20 million of these were package holidays. The average length of stay abroad was for ten nights, and the average spend was 434. Around this average, people visiting friends and relatives (VFR) stayed for longer but spent less, while the reverse was true for business travellers. 13 The most popular destination was France closely followed by Spain, and then the USA and Republic of Ireland, but visitors to Spain spent the most money. This was because visits to Spain lasted longer, rather than because of a higher spend per day. Countries such as Spain, Portugal and Greece were almost exclusively holiday destinations, while almost half of all visits to Germany, for instance, were on business. Ranking the importance of destinations depends heavily on whether the number of visits made, the total number of nights spent there or the amount spent by UK residents is considered. The table shows a ranking by number of visits, the most commonly used measure:
12 13
National Statistics Overseas Travel and Tourism July 2003, 5 September 2003 Travel Trends 2002, Chapter 5 National Statistics
18
Table 9
UK residents' visits abroad, 2001
Top 12 countries ranked by number of visits
Visits ('000) 2,769 6,700 893 295 2,648 794 183 255 322 743 1,071 633 20,631 204,187 9,384 8,220 43,614 4,391 7,727 115,566 2,512 17,935 69,212 12,000 1,460 29,267 6,813 953 974 1,079 7,155 11,732 7,380 938 2,602 888 93 1,040 427 51 77 74 297 513 246 1,501 381 765 782 68 392 1,050 670 544 96 25 52 5,411 2,035 6,810 3,110 441 1,825 3,578 2,571 1,170 439 174 478 555 202 969 201 32 200 397 240 153 39 13 42 929 488 691 1,413 106 318 524 328 163 99 84 52 7,371 5,236 13,097 8,807 2,119 3,723 4,866 2,186 731 1,439 1,481 972 170 123 372 280 27 84 91 54 22 28 24 17 11,959 11,790 3,990 3,930 3,215 2,471 2,242 2,095 1,738 1,598 1,476 878 58,281
Holidays Nights ('000) Visits ('000) Spending (m) Visits ('000) Spending (m)
Spending (m)
Of which package Visits Nights Spending ('000) ('000) (m)
Business Nights ('000)
VFR Nights ('000)
Total (including misc.) Visits Nights Spending ('000) ('000) (m) 61,620 126,807 56,778 21,520 36,975 19,912 12,383 9,027 4,503 16,786 17,437 10,876 578,803 3,320 4,614 3,653 919 1,271 1,132 673 589 377 677 681 364 25,332
France Spain USA Irish Republic Greece Italy Germany Netherlands Belgium Portugal Cyprus Turkey
7,083 10,797 2,448 1,591 3,025 1,667 561 1,022 796 1,384 1,356 772
46,639 117,124 35,201 9,342 34,018 13,961 3,412 3,903 2,273 14,658 15,643 9,407
2,165 4,183 2,235 424 1,200 808 156 275 157 579 635 304
World total
38,670
399,349
17,317
Source: Travel Trends 2002 table 5.04, National Statistics
19
France comes top in terms of number of visits, but UK residents spend far more nights in total in Spain each year. Looking at individual countries only rather than regions, Australia for instance is ranked seventh highest in terms of money spent there, but only sixteenth in terms of visits made.
III
A.
Factors affecting UK tourism

2001
In 2001 there was a world reduction in tourism arrivals and receipts for the first time since 1982, the year of the Falklands War and other troubled international events (see section V). Yet the contraction in the UK tourism market was even more marked than for the world as a whole.14 Foot and mouth disease (FMD) was first announced towards the end of February 2001 but took fuller effect from mid-March, ie mainly in the second quarter onwards, and initially before the main tourist season. There were other confounding factors that year such as bad weather and falling stock markets, and then the effects of 11 September, which were felt most strongly in the fourth quarter, were in the end far more extensive than those of FMD. 15 Library research paper 01/35 Foot and Mouth Disease summarised the situation during the outbreak, the expected effects on tourism and the government action taken. At the time the eventual outcome was very uncertain but some parts of the country and small businesses were especially badly hit by visitors staying away, in some cases unnecessarily. Some early predictions of losses were far too high and of the order of 9 billion net.16 11 September had a much more immediate effect on tourism than FMD with an initial sharp downturn in airline bookings. In November 2001 the Secretary of State for Culture, Media and Sport (Tessa Jowell) said:17
Transatlantic tourism has been badly hit as a result of the terrorist attack on the World Trade Centre and the Pentagon. Airlines are reporting ticket sales down by between 20 and 30 per cent. on some key transatlantic routes. The impact on the British tourism market is severe, because transatlantic tourists typically spend 6 for every 1 spent by a domestic tourist. The fall in income could reach 2.5 billion this year, but a survey from the British Tourist Authority suggests that there will be a recovery in the second half of next year.
14 15
Tourism Intelligence Quarterly BTA March 2003 Travel Trends 2002 Chapter 6: The impact of the events of 2001 on travel and tourism. National Statistics 16 Bill for farms crisis hits 9 billion, Sunday Times, 18 March 2001 17 HC Deb 5 November 2001 c6
20
A survey by the English Tourism Council indicated that some 900,000 UK holidaymakers had changed their plans between October 2001 and the end of December 2001 and would holiday at home, instead of abroad.18 Airline restrictions also reduced the number of UK residents who travelled abroad. It was thought that some of these people might substitute foreign trips with breaks at home instead, which would help areas affected by foot and mouth earlier in the year. The official travel figures for September 2001 based on the International Passenger Survey19 showed that according to estimated, seasonally adjusted figures there was a sharp fall from August to September in the number of tourists from North America. This was offset by an increase in visits from Western Europe, so the overall number of visitors to the UK actually rose slightly (by 1%). But earnings from overseas visitors spending in the UK fell from August to September, by 20 million to 920 million for the month. By March 2002 the following estimates were given for the cost of 11 September and FMD in the previous year:20
Dr. Howells [holding answer 28 February 2002]: It is estimated that foot and mouth disease caused direct losses to the tourism industry during the months of MarchAugust 2001 of between 2.7 billion and 3.2 billion in terms of value added. Visitor expenditure from overseas residents fell by 1.8 billion in 2001, compared to 2000. This downturn is mainly attributable to the impact of foot and mouth disease, the events of 11 September and current global economic conditions. The impact across the country has been mixed and there are signs that we are now in the early stages of a recovery.
In its submission to the third tourism summit of March 2002 the British Tourist Authority (BTA) summarised the year:21
2001/2002 was a particularly challenging year for British tourism. The outbreak of foot and mouth disease and the way it was depicted by overseas media caused strong negative images of Britain as a destination; with visitor expenditure down 16% against pre FMD forecasts by April 2001. BTA secured an additional 14.2m from HM Treasury to fight these negative perceptions and implement recovery plans. The terrorist atrocities of September 11 changed peoples attitudes to travel and tourism dramatically and hit Britains inbound tourism industry again, with spending in October 2001 down 27% against original forecasts. Total
18 19
22 October 2001 press release British residents stay in the UK Overseas Travel and Tourism September 2001 National Statistics 7 November 2001 20 HC Deb 13 March 2002 c1152w 21 5 March 2002 see http://www.culture.gov.uk/tourism/default.htm
21
losses over the whole of 2001 are estimated at 2bn (15%). BTA has worked closely with the national and regional tourist boards and the travel industry to implement recovery plans to help rebuild the value of tourism to Britain. Despite the events of 2001, there are a number of success stories and achievements to report. September 11 The events of September 11 hit international tourism hard, both inbound to Britain and to an extent outgoing tourism by British residents. The adverse impacts on the UK tourism industry were therefore concentrated on destinations favoured by overseas visitors, particularly London which accounts for half of all visitors and half of their spending, other cities and historic towns, and icon rural areas such as the Lake District, Cotswolds, parts of the West Country, Scottish Highlands, etc. Meanwhile, many rural areas (including the icon areas) have actually benefited from fewer British going overseas, helping the recovery from Foot and Mouth Disease. Short haul traffic has suffered less than long haul: the fear of travel and of being away from home is less, and the aggressive pricing and promotion of the low cost airlines in Europe has boosted travel. In November and December, European travel was level with 2000, while North America was down 16% and the rest of the world down 22%. The GLA family and London Tourist Board have embarked on a major domestic promotion of London, and are working with BTA on international recovery plans. The 3rd stage of FMD recovery was re-planned to deal with the consequences of September 11. In January 2002, BTA launched UKOK, a high profile international marketing campaign to stimulate overseas visitors to travel to Britain in 2002
a.
International travel to and from the UK
By comparing quarterly data to previous years equivalent quarters, the effects of FMD and 11 September can be assessed separately, and seasonal variation taken into account. 11 September had a greater effect on international travel to and from the UK than FMD. When quarters of 2001 are compared to the same quarters in 2000, the greatest fall occurred in the fourth quarter, when overseas residents visits fell by 17% from 5.5 million in 2000 to 4.6 million in 2001.22 (The effect was most pronounced in the fourth rather than third quarter despite the suspension of flights because the survey is carried out on people returning to the UK, and overseas visitors leaving.) The quarter 4 2001 figures showed the lowest number of visits to the UK by overseas residents for any quarter during the last five years. For each quarter of the year, visits by EU residents fell most in absolute terms. They account for the bulk of visitors to the UK-
22
Travel Trends 2002 Report on the International Passenger Survey National Statistics http://www.statistics.gov.uk/downloads/theme_transport/TTrends02.pdf Chapter 6 The impact of the events of 2001 on Travel and Tourism.
22
64% in 2002, compared to US visitors accounting for under a fifth (section II). As a percentage of visits made, those by North American residents fell by more (by 28% between Q4 2000 and Q4 2001). This was against trend - while visits by EU residents had been falling anyway, for the past few years visits by North American residents to the UK had been rising. National Statistics summarises the effects on different types of traveller:23
In summary, these data suggest that FMD had a major effect on the number and spending of overseas residents visiting the UK for holiday purposes but little effect on visits for business purposes. In contrast, the effects of September 11th were more widespread, affecting business as well as holiday visits. The number of business visits made by residents from all parts of the world fell sharply in the second half of the year, and from North America and EU Europe in particular. The number of holiday visits made by North American residents also fell sharply, as did those made by EU European residents but to a smaller degree. The spending of North American residents on holiday and business visits was similarly affected by September 11th. The number of visits made by overseas residents to friends or relatives in the UK was the least affected by either event.
The same assessment shows that for UK residents, between Q4 2000 and 2001, while there was a negligible change in visits to the EU, visits made to North America fell by 24%. Despite this, UK residents spending abroad increased between 2000 and 2001. Some work by the British Tourist Authority noted several similarities between the effects of FMD and 11 September.24 In both cases, in absolute terms holiday and business visits fell most, and accounted for over 90% of losses in visits and for the bulk of the losses in spending. VFR visitors were the most resilient in both cases. The BTA also notes key differences, however. Certain long haul markets (Asia, Pacific and the Americas) and also package holidays were far more affected by 11 September than by FMD, and generally, the losses following 11 September were deeper and more widespread.
B.
2003 - The Iraq conflict and SARS
In Q4 2002, the number of overseas visitors to the UK was 25% higher than in the same quarter in 2001.25 However, no sooner had tourism apparently recovered from the events of 2001 than the situation in Iraq and the Gulf became more serious. Military operations began officially on 20 March 2003.26 A short conflict in the Gulf was not expected to
Ibid. The impacts of foot and mouth disease and September 11th on tourism to the UK, BTA 2002 http://www.staruk.org/../../downloads/BTA%20Documents/FMDandSept11.pdf 25 Overseas Travel and Tourism, July 2003. National Statistics 5 September 2003 26 Library research paper 03/50 The conflict in Iraq
24
23
23
affect a traditionally resilient industry too badly27 but then severe acute respiratory syndrome (SARS) developed in Asia and resulted in a global alert being issued by the World Health Organisation on 12 March 2003.28 During a debate on tourism in the Lords in April 2003, Lord Davies of Oldham, speaking for the government, said:29
We are still sustaining the effect of the devastating anxieties produced in American society as a result of September 11th. Inevitably, the war in Iraq contributes to that aspect. Although the medical profession will identify that the present threat of SARS in this country looks very muted, and although the outbreak of that frightening disease will probably cause limited numbers of deaths across the globe, the uncertainty of the situation and its impact will mostly affect tourism. We pay the price, even though objectively the risk involved may be limited. That is the nature of the tourism industry.
In the event, tourism has not been as badly affected as some feared,30 and SARS has now been contained.31 There have been some shifts, however. Looking at visitor numbers by quarter and comparing these to the previous year to remove seasonal effects, provides some idea of how tourists from Europe and America have responded to the events of the past three years and the four main events: FMD, 11 September, the Gulf conflict and SARS. The date on which each was announced is indicated but the effect was often felt most keenly, at least by the International Passenger Survey, in the following quarter.
Overseas visitors to the UK

30
W Europe
20
N America
Rest
% change from one year earlier
10
-10
-20
-30 FMD end February -40 Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 September 11
SARS, Iraq, mid March Q1 2003 Q2 2003
27 28
WTO press release War in Iraq may postpone tourism growth but will not cause collapse 21 March 2003 http://www.phls.org.uk/topics_az/SARS/background.htm 29 HL Deb 30 April 2003 c768 30 Tourism: the disaster that didnt happen Economist 19 August 2003 p.25 31 WHO 5 July 2003 SARS: breaking the chain of transmission
24
Overlying all of these are other factors, notably the economic downturn, and factors such as weather, of course. It is clear that visitors from Western Europe are the most resilient.
C.
Other issues
It has been pointed out that many of the factors affecting tourism are those affecting any other UK industry. It is sensitive to the general economic climate. As well as this, the Tourism Alliance32 cites the 1% increase in National Insurance contributions from April 2003, rises in compulsory insurance following 11 September, and the national minimum wage as extra burdens on UK tourism businesses, in a labour-intensive industry. The Alliance also notes other possible threats on the horizon. The proposed EC Temporary (Agency) Workers Directive would require that agency temps receive, after six weeks, the same terms, conditions and pay as permanent staff. This might affect areas such as contract catering or where workers are taken on to cope with seasonal peaks. The Alliance also fears that if further taxes need to be raised by the Chancellor, then increases in general business taxes including a possible supplementary local business rate in designated areas would hit tourism businesses hard. On 30 April 2003 there was a debate in the Lords on tourism.33 Lord Pendry, chairman of the All-Party Parliamentary Tourism Group and former Opposition spokesman on tourism, said that the Government's moves were admirable and in Dr Kim Howells tourism had a real champion. But he believed that with the pressure of recent years and economic downturn, there was a need to consider resurrecting the Government's policy towards PAYE and VAT holidays for tourism businesses. Flexibility in paying business rates, tax and NI contributions could help avoid the laying-off of staff. Reducing or suspending air passenger duty could also help. VisitBritains grant-in-aid needed upgrading to correct the shortfall. Free entry to national museums and galleries had been a positive move, but the Government might consider extending the VAT recovery scheme to all museums and galleries. The National Lottery Commission might be encouraged to target funding towards tourism-related projects. Seaside resorts had many difficult social and economic issues and needed investment from RDAs and other bodies in their general infrastructure. (There was a Westminster Hall debate on regenerating seaside towns on 10 September 2003.34) The Culture, Media and Sport Committee has also outlined pressures on UK tourism, including, it says, some of the highest VAT rates in Europe.35 The Committee is currently taking further evidence on the UK 2012 Olympic bid. In its memorandum to the
32 33
Tourism Alliance Priorities for Tourism - First Year Review. June 2003 c739 onwards 34 HC Deb 10 September 2003 c99WH onwards 35 The Structure and Strategy for Supporting Tourism 4 February 2003 HC 65 Fourth Report 2002-2003
25
Committees report on the same subject earlier this year, the then English Tourism Council called the bid a once in a generation opportunity for UK tourism. 36
IV
UK tourism support structures
Tourism is a wholly devolved issue, which in England comes under the responsibility of the Department for Culture, Media and Sport (DCMS). The Development of Tourism Act 1969 established the Wales Tourist Board, the Scottish Tourist Board, now VisitScotland, and the English Tourist Board and British Tourist Authority (now VisitBritain). 1. Reorganisation in England
Tomorrows Tourism37 was the DCMS tourism strategy published in 1999 that, inter alia, argued for a more joined-up Government approach to tourism. Following on from this, the Rural White Paper of November 200038 recognised the importance of tourism to rural life and said that the Government wanted it to be an increasingly important business sector:
Tourism is an important rural business. Day visitors spend around 8 billion a year in the English countryside. We want more people to be able to enjoy its pleasures, which is why we are opening up more rights of access to mountain, moor, heath and registered common land as well as protecting and improving our network of historic rights of way. In future, tourism-related businesses such as forestry and horse riding will provide increased sources of rural income, as will distinctive local products. The English Tourism Council and the Countryside Agency will produce a joint strategy to help promote rural tourism beyond the oversubscribed 'honeypot' sites. It will focus on better visitor information, better business advice and cooperation, access to start-up finance and a review of planning guidance.
A series of tourism summits have now been held, intended to bring together panGovernment Ministers and the industry. The fourth was held in November 2002 and documents are available on the DCMS website.39 At the third annual tourism summit held in March 2002 a new Tourism Alliance was announced, to be chaired by Digby Jones (Director General, CBI) and to provide a unified voice for the industry. The Alliance was duly established within the CBIs offices and a
Third Report 2002-03 A London Olympic Bid for 2012 21 January 2003 Appendix 15 Minutes of Evidence 37 A growth industry for the new Millennium DCMS, 26 February 1999 Available at http://www.culture.gov.uk/tourism/default.htm 38 Department for Environment, Food and Rural Affairs Our Countryside: The Future A Fair Deal for Rural England 28 November 2000 Cm 4909 39 http://www.culture.gov.uk/tourism/tourism_policy/tourism_summit.htm
36
26
first annual review Priorities for Tourism - First Year Review was produced in June 2003.40 This pointed out that the pressures on tourism match those on other industries, and was critical that the government had not done more, financially, to help. The first annual review said:
In conclusion, the Alliance observes that notwithstanding world events, the tourism sector is undergoing some major negative pressures. The 2003 Budget produced no noteworthy measures for the sector. This we find disappointing given the timely opportunity to provide a much needed boost in this important economic sector.
In 2002 several large changes were announced to the marketing of tourism in England. In brief, the English Tourism Council (ETC) and British Tourist Authority (BTA) were merged, creating a new body VisitBritain from 1 April 2003. A Statement in October 2002 gave details:41
We wish to combine some of the day-to-day operations of the English Tourism Council with the BTA. These two organisations have served tourism well, but combining their resources and strengths allows us to develop more quickly the marketing team for England we need. This will also enable us to put more resource into direct support for tourism and less into overheads. We will take this opportunity to develop more effective partnerships with private industry investors to support tourism. We will pursue our commitment to the sustainable development of tourism, particularly in rural areas, some of which are still in recovery following the foot-and-mouth outbreak. Accordingly, I am today asking Tom Wright to broaden the BTA reform programme and to draw up detailed plans for a further unit to lead and coordinate the marketing of England, promoting destinations to customers within our own country. Funding for this activity, and other activities of the relaunched national organisation in support of English tourism, will be accounted for and reported to Parliament separately from action in overseas markets on behalf of all three parts of Britain. [..] I have asked Alan Britten and David Quarmby, the chairs of the existing boards, to work closely together to ensure the new arrangements are implemented quickly and effectively. Staff from both organisations will be treated on an equal and fair basis, taking full account of their own skills and experience and the requirements of the new arrangements. I have asked them to make recommendations about the new name when they have made further progress on the reforms.
Regional development agencies (RDAs) are to play a much greater role, as presaged in the Rural White Paper. Funding which previously went to Regional Tourist Boards via the ETC will now be channelled via the RDAs. Several RDAs have been in discussion
40 41
Tourism Alliance Priorities for Tourism - First Year Review. June 2003 Statement at HC Deb 31 October 2002 c887w
27
with their local regional tourist boards, to develop joint strategies. Examples include stronger local branding and using local marketing money in a more strategic way.42 The February 2003 Culture, Media and Sport (CMS) Select Committee report on The Structure and Strategy for Supporting Tourism43 found that, despite the above initiatives: The real challenges for the tourism sector now are further successful recovery and keeping tourism very high on the Government's agenda. (Paragraph 25) The evidence presented to us indicates that at present the Government is not providing an adequate support structure for the tourist industry. The Tourism Alliance told us that "the Department takes too much of a laissez faire approach to tourism" and we agree. (Paragraph 41) We are concerned at the serious under-funding for tourism in England, and believe there is a need to make increased funding available, especially with the adoption of the additional marketing of England proposed for the new body. (Paragraph 43) The amount of money available to the sector, especially in England, from Government is not sufficient to support such a large and diverse industry. The new arrangement seems to be just a more complicated way of cutting the same funding cake. (Paragraph 47)
The committee was not convinced that the new body (VisitBritain - the merged ETC/BTA) was the right organisational structure for taking things forward. There should have been consultation before this was decided, and Government Department responsibilities needed re-aligning. Tourism should not get lost in the currently oversized DTI, but neither remain stranded as the Cinderella of government within the DCMS. The report included a consideration of the roles of RDAs:44
The introduction of responsibilities for tourism for Regional Development Agencies within England was intended to give a regional perspective to tourism strategy and its support, with the aim of enabling the appropriate investment into tourism to be made depending on the importance of the industry to the economy of the region. Whether it has succeeded in doing so is a different matter. [] The RDAs have an increased responsibility for the strategic development of tourism, creating an integrated strategy for tourism at a regional level. The Secretary of State announced on 13 May 2002 said that "Regional Development Agencies will in future play a stronger part in the strategic leadership of tourism. Regional Tourist Boards are the natural delivery partners for the RDAs" Each RDA can promote its region both domestically (which has been encouraged as the primary form of domestic tourism promotion within England) and also abroad.
42 43
4th Tourism Summit of November 2002. The Structure and Strategy for Supporting Tourism 4 February 2003 HC 65 Fourth Report 2002-2003 44 Ibid.
28
Finally, the Committee concluded: Tourism must be a priority for the Government. It is one of Britain's largest and fastest growing industries and it should be treated as such The success of the UK tourism industry is crucial to our cultural and economic well-being. It is time the Government gave tourism the priority it deserves.
In its response to the Committee45, the Government said that tourism was high on its agenda. Its reforms would provide a less centralised but more effective framework of support, including a stronger role for the RDAs. The Government felt that financial resources in the industry were huge - direct government support had always being quite small relative to the industrys turnover - but the trick was to make more effective use of them. If just a few percent of the industrys current spend on marketing was invested directly or in joint programmes this would offer a vast improvement on productivity and profitability. Tourism was properly situated within DCMS and closely linked to its other policy areas. 2. Funding
The CMS Committee drew attention to serious disparities in the funding received by the tourism boards in England, Scotland and Wales, and some witnesses felt that devolution had in this respect led to fragmentation and higher priorities being attached to tourism in the devolved bodies. England earns 4 out of every 5 spent on tourism in the UK46, but its per capita funding for tourism promotion is by far the lowest of the three countries. The minister for tourism, Dr Kim Howells, told the Committee that the governments spending on tourism was just 24p per head of population in England compared to 8.10 in Wales and 5.50 in Scotland, but that this funding was there to correct market failure. 47 The Committees report noted that There are serious disparities in the funding received by the three tourist boards, with the WTB receiving a 22.6 million grant-in-aid from the Welsh Assembly for 2002-03, VisitScotland receiving a core grant-in-aid of 28 million for 2002-03 and the ETC receiving only 11.6 million for the same year of which less than half is passed onto the RTBs for marketing purposes.48 This issue has been revisited during DCMS Questions.49 Core national funding for 2003-2004, now that VisitBritain has been created (which of course has a marketing role for all countries, not just England), is as follows:
45
Cm 5790 Government Response to The Structure and Strategy for Supporting Tourism Report of the Culture, Media and Sport Committee Session 2002-2003 April 2003 46 Tourism Alliance Priorities for Tourism - First Year Review 47 op.cit. Question 157 48 para. 43 49 for example HC Deb 30 June 2003 c9
29
Table 11
National tourist board funding 2003-2004

million Core funding/grant in aid 22.0 29.4 51.6 9.7 112.7 Additional funding 5.0 2.0 3.1
Wales Tourist Board VisitScotland VisitBritain Northern Ireland Tourist Board Total
10.1
Source: Priorities for Tourism, Tourism Alliance June 2003
In turn, VisitBritains grant in aid and additional funding comprises the following:
Table 12
DCMS allocation for tourism, 2003-04

million VisitBritain grant-in-aid Overseas promotion Domestic promotion Transition funds for reform Total Other RDAs London EnglandNet (Invest to Save) Tourism total
Source: HC Deb 17 July 2003 c567w
35.5 10.4 2.0 47.9 3.6 1.9 1.2 54.6
In other words, domestic promotion or spending on marketing England is some 10 million. To split this down once more, RDA funding for England is split between the regional tourist boards (RTBs) as follows:
Table 13
Amounts for RDAs to pass to regional tourist boards, 2003-04

East of England Development Agency Advantage West Midlands East Midlands Development Agency One North East South East England Development Agency South West England RDA Yorkshire Forward North West RDA Total Amount ('000) 543 252 252 333 744 403 360 713 3,600 % total 15% 7% 7% 9% 21% 11% 10% 20% 100% Tourist board Covering East of England RTB 50% contribution to Visit Heart of England RTB 50% contribution to Visit Heart of England RTB Covering Northumbria RTB Covering Southern and South East RTB Covering South West RTB Covering Yorkshire Tourist Board 337,000 for Cumbria RTB & 376,000 for North West RTB
Source: HC Deb 21 May 2003 c827-8W
Government funding for the RTBs, to be distributed via the RDAs single pot for three years from 2003-04, is guaranteed for three years at the same level as in 2002-03. It does 30
not take into account local authority spending on tourism, which may include membership subscriptions to RTBs. For London, the DCMS funds the Greater London Authority (GLA) which then passes money to the London Development Agency, and thence to the London Tourist Board.50 Not only the CMS Committee but the Tourism Alliance itself is critical of government funding for tourism. The latter says that while government funding remains woefully low, too often the Government seeks to justify this by pointing to indirect funding streams such as local authorities and the need to co-ordinate these with private sector funding. But the Alliance concludes that this is unlikely to happen given that delivery has been devolved to regional bodies, each of which will fight its own corner.51 When asked how the UK tourism would be promoted while respecting the distinct identities of Scotland, England and Wales, the government replied:52
Dr. Howells: On 31 October we announced plans to develop a lead Government body for inbound tourism to Britain and the marketing of England within Britain. This will create a more coherent marketing focus across Britain, one that ensures that England, Scotland and Wales retain and develop strong separate brand identities to attract both domestic and overseas holidaymakers.
3.
Wales
A Winning Wales, the Welsh economic development strategy53 stressed the need to implement the ten year plan Achieving Our Potential A National Tourism Strategy for Wales. It advocated sustainable and environmentally friendly tourism, to help boost the rural economy, and an increase in tourism expenditure in Wales by an average of at least 6% per year. The Wales Tourist Board (WTB) provides ten top facts on Welsh tourism: 54
Tourism contributes over 6 million a day to the Welsh economy This amounts to more than 2.5 billion a year Our baseline budget at the Wales Tourist Board for 2002/2003 is 22 million. Tourism represents 7% of the Welsh GDP and is therefore one of the most important industries in Wales 100,000 people in Wales are employed in tourism. This represents 10% of the workforce There are up to 10,000 private sector businesses in Wales. The average size of a hotel in Wales is 6 bedrooms and the average number of employees is 10 per business The UK accounts for 93% of tourism trips to Wales
50 51
HC Deb 21 May 2003 c827w Priorities for Tourism - First Year Review 52 HC Deb 13 February 2003 c896w 53 Welsh Assembly Government, January 2002 54 www.wtbonline.gov.uk/
31
Overseas tourism accounts for 7% of tourism trips to Wales 50% of tourism revenue is in rural Wales The Wales Tourist Board has stimulated over 50 million total investment during the past five years in coastal resorts and historic towns
The WTB is an Assembly Sponsored Public Body and the Welsh Assembly Government approves its corporate plan. Under the Tourism (Overseas Promotion) (Wales) Act 1992, it is able to undertake overseas marketing to supplement the work of VisitBritain. As well as its core funding, the WTB receives European Objective 1 funding:
Table 14
Wales tourist board funding

'000
2002/03 Assembly core funding Programme spending Capital spending Running costs Total grant in aid EU funding Match funding- pathway to prosperity Rural recovery fund Commercial revenue Total 14,586 3,150 4,912 22,648 4,773 6,934 1,270 1,413 37,038
2003/04 13,736 3,150 4,700 21,586 6,390 4,932 1,289 34,197
2004/05 13,736 3,150 4,700 21,586 4,849 1,200 1,289 28,924
Source: Quinquinnial review of the WTB Stage Two Report December 2002 p.15
4.
Scotland
The Scottish Executive says that tourism is Scotlands biggest business sector, accounting for nearly 200,000 jobs across the country, many in rural areas where tourism is the leading employer. Total visitor expenditure of 4.5 billion in 2002 was an 8% increase on 2001.55 In 2000 the Scottish Executive announced its New Strategy for Scottish Tourism, which said that Scotland had the assets to become a world class tourism destination. Chairing a meeting of the Tourism Framework for Action Steering Group in September 2003, the minister for tourism Frank McAveety said:56
Earlier this year the Executive published the first annual report under our Tourism Framework For Action. Since then, it has become clear that tourism has proved enormously resilient, recovering strongly last year from the shocks of 2001 caused by foot and mouth disease and September 11. And the indications we have so far for this year are most promising.
55 56
VisitScotland Annual Report and Accounts 2002/03 Tourism steering group meets Scottish Executive News Release: SET216/2003 02/09/2003
32
In the first 4 months of 2003, estimated expenditure by UK tourists in Scotland was 980 million, which represents a 5% increase on 2002 against a 1% decrease for the UK as a whole. "First quarter overseas visitor figures for Scotland show an 8% increase, with a 37% increase from EU countries. And since then the record breaking Edinburgh Festivals have clearly helped to attract many tourists this summer. Overall the performance of the sector is ahead of last year in economic terms, with Scotland outperforming the rest of the UK. That has not happened by accident, it is the result of a lot of very hard work by people across the entire sector.
The March 2002 Tourism Framework For Action 2002-2005 is available on-line.57 In January 2003 the Scottish Parliament's Enterprise and Lifelong Learning Committee published The Future of Tourism in Scotland.58 This acknowledged, inter alia, the importance of new air links in attracting visitors, and also recommended that VisitBritain be monitored, to ensure that there was no decline in Scotland's promotion. VisitScotlands planned allocation of resources for the coming years is as follows:
Table 15
Planned allocation of resources, VisitScotland

'000 2002/3 Budget Programme budgets Marketing activities Industry development/support Total programme Total running costs Total 24,017 7,064 31,081 4,068 35,149 2003/4 Budget 17,934 6,999 24,933 4,126 29,059 2004/5 Indicative 19,847 6,116 25,963 4,096 30,059 2005/6 Indicative 20,857 6,116 26,973 4,086 31,059
Source: VisitScotland Business Plan 2003-2006
5.
Northern Ireland
Tourism in Northern Ireland is characterised by VFR (47% of 1.7 million visitors in 2002) and business trips (30%) rather than pure holidays. Over two thirds of visitors came from Great Britain in 2002. Visitors spent some 274 million in 2002, a 5% fall on 2001, even though the total number of visits was up 4% on the year. 59 The Northern Ireland Tourist Board (NITB) is an NDPB sponsored by DETI, the Department of Enterprise, Trade and Investment. The marketing company Tourism Ireland was established in 2002 under the framework of the Good Friday Agreement to promote tourism in both North and South, and is a limited company jointly funded by the two governments on a 2:1 South/North ratio.
http://www.scotland.gov.uk/library3/tourism/tfar-00.asp SP Paper 740 Session 1 (2003) First Report Report on the Future of Tourism in Scotland 29 January 2003 59 Visitor Tourism Performance 2002 NITB research at http://www.nitb.com/research/
58
57
33
In 2002/03 the NITB budget allocation was as follows: around 3.7 million for operating costs, 3.8 million for marketing support initiatives and 1.7 million for amenity and attraction capital development. In addition, the NITB helps administer the International Fund for Ireland Tourism Programme, worth some 5 million in 2002. A further 15 million is available via the EU Peace II Programme (2000-2004) for event, marketing and physical development support.60
World tourism
France was the worlds top destination in terms of arrivals in 2002, although the United States ranks highest in terms of receipts.
Table 16
World's Top Tourism Destinations

International tourist arrivals Growth rate 2001 Est. 2002 2000-2001 (millions) (millions) (%) 75.2 2.0 76.7 50.1 3.3 51.7 45.5 -0.1 45.4 39.1 n/a 1.0 33.2 11.0 36.8 International tourist receipts Market share (%) 10.7 7.2 6.4 n/a 5.1 Rank 3 2 1 4 5 2001 (bn euro) 33.5 36.7 80.7 29.0 19.9 Market share (%) 4.7 5.1 11.3 4.1 2.8
Rank France Spain United States Italy China 1 2 3 4 5
Source: World Tourism Organisation, data collected January 2003
Although the UK does not appear in this ranking, provisional WTO data from another source place it sixth in terms of arrivals in 2001, and seventh in terms of receipts, after the above countries and Germany.61 Europe receives almost 60% of the worlds tourist arrivals (see the following table and chart). Eight million people are employed in the EU tourism sector, and it is estimated that travel and tourism jobs within the Union will increase by two million during the next 10 years. The Commission says that European tourism is dominated by small and medium-sized enterprises (SMEs). Over 99% of firms employ fewer than 250 individuals. In 1997, tourism SMEs accounted for 7.4% of all SMEs in Europe and 6.5 % of turnover of European SMEs. 62 Tourism supplies an estimated 5% of total employment and of GDP in the EU, and 30% of total external trade in services. Together with employment and GDP indicated in other sectors, such as transport or distributive trade, these figures rise to 20 million jobs and to roughly 12% of GDP.63
60 61
NITB Corporate Plan 2002-2005, http://www.nitb.com/Corporate%20Affairs/corporate_plan.pdf VisitBritain, http://www.visitbritain.com/corporate/links/visitbritain/tips.htm 62 Structure, performance and competitiveness of European tourism and its enterprises European Commission, October 2002 63 http://www.europa.eu.int/comm/enterprise/services/tourism/tourismeu.htm
34
The WTO forecasts 717 million cross-border tourist arrivals in Europe by 2020, with higher growth in Central and Eastern Europe than Western Europe. Europes popularity is partly due to that fact that it comprises many relatively small countries, which stimulates cross border intra-European travel. Three quarters of Europeans travelling abroad do so within Europe. The chart and table illustrate worldwide tourism patterns.
Market share- international tourist arrivals 2002
Middle East 3% Africa 4% North America 12%
Americas -other 5% Europe 58% Asia and the Pacific 18%
Table 17
International Tourist Arrivals by sub-region

International tourist arrivals (millions) 1990 World Europe Northern Europe Western Europe Central/Eastem Europe South Mediterranean Europe Asia and the Pacific North-East Asia South-East Asia Oceania South Asia Americas North America Caribbean Central America South America Africa North Africa Subsaharan Africa Middle East 456.8 282.2 29.1 113.8 43.8 95.5 57.7 28.0 21.5 5.2 3.2 92.9 71.7 11.4 1.8 7.9 15.0 8.4 6.6 9.0 1995 551.7 324.2 37.6 116.7 67.1 102.7 85.6 44.1 29.2 8.1 4.2 108.9 80.5 14.0 2.6 11.8 20.0 7.3 12.7 13.1 2000 696.1 402.8 44.1 141.2 76.8 140.7 115.3 62.5 37.0 9.6 6.1 128.3 91.2 17.2 4.3 15.5 27.0 10.1 17.0 22.7 2001 692.9 401.4 41.5 138.9 78.0 143.0 121.0 65.6 40.1 9.4 5.8 121.0 85.0 16.9 4.4 14.7 27.7 10.6 17.1 21.8 2002* 714.6 411.0 42.5 141.4 81.1 146.1 130.6 73.4 41.7 9.6 5.9 120.2 85.3 16.4 4.8 13.6 28.7 10.1 18.6 24.1 Market share (%) 1995 100.0 58.8 6.8 21.2 12.2 18.6 15.5 8.0 5.3 1.5 0.8 19.7 14.6 2.5 0.5 2.1 3.6 1.3 2.3 2.4 2002* 100.0 57.5 5.9 19.8 11.3 20.4 18.3 10.3 5.8 1.3 0.8 16.8 11.9 2.3 0.7 1.9 4.0 1.4 2.6 3.4 Growth rate (%) 00/99 6.8 6.8 1.2 4.0 4.1 10.4 12.3 13.2 13.0 8.7 5.4 5.0 4.9 6.9 8.9 2.4 3.2 6.8 1.2 0.0 01/00 02*/01 -0.5 -3.0 -5.9 -1.6 1.6 1.6 5.0 5.0 8.3 -2.1 -4.5 -5.7 -6.8 -1.9 1.6 -5.1 2.5 4.8 1.0 -3.9 3.1 2.4 2.3 1.8 3.9 2.2 7.9 11.9 3.9 1.1 2.0 -0.6 0.4 -3.0 9.7 -7.0 3.7 -4.0 8.5 10.6
Average annual growth (%) 1990-2000 4.3 3.6 4.3 2.2 5.8 4.0 7.2 8.4 5.6 6.5 6.8 3.3 2.4 4.2 9.0 7.0 6.1 1.8 10.0 9.7
Source: World Tourism Organisation data collected January 2003 (* provisional)
35
A.
Events of 2001
Table 17 above shows quite clearly the slump in many regions growth from 2000 to 2001. The World Tourism Organisations (WTOs) 2002 overview64 called 2001 the worst year for tourism in living memory. It was only the second year since records began in 1951 in which tourism had declined. (The other year, 1982, saw the Falklands War, martial law in Poland, the second oil crisis and conflict in Lebanon.) Nevertheless, in both of these years the decline which occurred was under 1%. In 2001, the 693 million international tourist arrivals were a fall of only 0.6% or 4 million from 2000s total of 697 million. The WTO called this an impressive tribute to tourisms intrinsic resilience and natural growth potential. The downturn was due to the worldwide economic recession as well as to 11 September. Even before the attacks, an average growth rate of around 4% during the 1990s looked set to fall to under 3%, mirroring the fall in world GDP growth from 2000 to 2001. In Northern Europe, the WTO notes that FMD had already hit bookings, too. Between January and June 2001 there had already been a switching from business and first class air travel towards economy. However, the immediate effects of 11 September were drastic. US air traffic fell by a third and there were high numbers of cancellations: a quarter of a million in the Japanese market alone. Travellers initial reactions were to get and stay home, and not fly long haul. The decline in long-haul travel was not expected to last, but 11 September accelerated other trends which the WTO characterises as money rich-time poor travel leading to short and city breaks, last minute and DIY (internet) bookings, and price sensitivity. There have been a number of special assessments looking specifically at the effects of the events of 2001. The European Commission concludes, essentially, that tourism in the EU is stable and was relatively unaffected, but there were short term, destination and sectorspecific effects - the UK fared worst of all. A European Commission report on the effects of 11 September on tourism soon after the event noted that things were not as bad as might have been expected65
Europe, with the greatest diversity and density of tourist attractions, is the most visited tourist region in the world. Two million tourism enterprises in the
64 65
Tourism market trends World Overview and Tourism Topics 2002 edition WTO 2002 Follow-up of the European Council of 21 September: the situation in the European tourism sector COM(2001) 668 final European Commission 13 November 2001 see http://www.europa.eu.int/eurlex/en/com/rpt/2001/com2001_0668en01.pdf
36
European Union account for about 5 % of both GDP and employment, i.e. more than 8 million jobs. Tourism also generates a considerable amount of activity in other sectors. An impact simulation carried out immediately after 11 September forecasted dramatic losses in tourism, with severe effects on GDP and employment worldwide. The simulation also included alarming figures for Europe. The Commission, based on wide consultation of European stakeholders, did not find confirmation for these results. It believes that the information available does not yet allow the release of precise figures on the short-term, nor medium to longterm impact of the 11 September attacks. The European Commission therefore largely agrees with the analysis and conclusions issued by the World Tourism Organisation: that is that, from an economic viewpoint, the impact on tourism in Europe can be expected to be rather limited in scope and time, provided that no new dramatic events take place. No doubt, as further explained below, the short-term impact is significant in particular for certain forms of tourism, destination types and specific sectors. It is, however, conceivable that there will be no measurable impact on EU tourism in the medium to long term. In addition, the effect on overall EU economic growth and employment could also be mitigated to some extent by the fact that short-term cuts in consumers' tourism expenditure could lead to reallocation to other goods and services.
Nevertheless, since a fear of travel had primarily affected high-spending tourists from America, Japan and the Middle East, Ireland and the UK which traditionally rely on an above-average share of American visitors were more affected than other EU countries. By August 2002 the Commission was able to state that trends in tourism had remained stable in 2001 overall in the EU, even after 11 September.66 However, the UK had seen the sharpest drop in total overnight stays compared to 2000 (-6.4%). While in several countries increases in overnight stays by domestic residents substituted for falls from overseas visitors, this was not the case for the UK. The World Tourism Organisation (WTO) produced at least two reports on 11 September. In the second67 it said there had been a re-distribution of traffic, and destinations still suffering from the downturn included those heavily dependent on US traffic and those dependent on long-haul air traffic. Countries close to their generating markets still did well: Spain showed a growth rate (in international tourist arrivals) of 3.4% in 2001 and France of 1.2%. But the US and countries such as Italy did less well. Of course it is another matter attributing all of these changes in growth rates purely to 11 September. The WTO considered that there had already been a decline in growth before 11
66
Stability of tourism flows in the European Union, Eurostat Statistics in Focus Theme 4 28/2002 August 2002 67 April 2002 Special report number 20 The impact of the September 11th attacks on tourism: the light at the end of the tunnel
37
September and to some extent the attacks exacerbated trends that were already appearing (greater cost consciousness and internet bookings, for instance). The WTOs 2002 Tourism Market Trends provided an overview of the situation through Europe. The message again seems to be that Britain - and Ireland - fared worse than most. For 2002, few countries were expecting a decrease but in Britain, heavily dependent on the US market, figures are still falling well short of 2000. Data collected by the WTO in September 2002 showed tourist arrivals down by 9.4% between 2000 and 2001 in the UK, and although Germany and Italy also showed decreases, France, Spain and Austria increased.68 UK international tourism receipts fell by 16.7%, a greater decrease than for any other country in the top 15 destinations. Some of the WTOs summary publications are on line.69 FMD apparently not only impacted on Britain and the Netherlands but also nearby countries like Ireland that took precautionary measures.70 Although there are figures for decreases in each country, it is impossible to say how much is attributable solely to FMD. The take home message is perhaps that some destinations in the north, especially the United Kingdom and Ireland, which suffered two major blows in the same year, will probably need three to four years to recover fully. 71
B.
2002
Despite the problems of 2001, in 2002 the number of world international tourist arrivals rose to almost 715 million, for the first time above 700 million and a 3.1% increase on 2001. Initial results for 2002 showed some changing patterns; Europe remained the top destination but Asia and the Pacific rose above the Americas: 72
More than 130 million international tourist arrivals were registered in Asia and the Pacific, which many regard as the "destination of the future". Northeast Asia led all subregions with almost 12 per cent growth, followed by Southeast Asia (a bit less than 4 per cent growth), Oceania (1 per cent growth) and South Asia (2 per cent increase). This means that the WTO predictions from some years ago -namely China, together with Hong Kong and Macau, becoming an increasingly relevant tourism power -- have already started to become reality. India suffered a 6.6 per cent fall, while Iran, the Maldives and Sri Lanka are doing way above average, so it seems that their strategies work. The Americas was the only region to close 2002 in the red. But it should be noted that the decline from dramatic 2001 averages out to 0.6 per cent, with North
68 69
WTO World Overview and tourism topics 2002 p.32 http://www.worldtourism.org/market_research/facts&figures/latest_data/Mje.%20Highlights%202002%20INGLES.pdf 70 WTO World Overview and tourism topics 2002 71 WTO Tourism Market Trends 2002 Edition: Europe p.18 72 WTO press release. World Tourism in 2002: better than expected. WTO January 2003
38
America (the United States, Canada and Mexico) increasing, thanks to positive results of Canada, 0.4 per cent on 2001, which -- with a fall of almost 7 per cent - was painful enough. North America still holds a "decent" global market share of almost 12 per cent, but this is much lower than its 14.6 per cent share in 1995. The Caribbean islands experienced a decline for the second year in the row, with a 3 per cent drop -- much bigger than the 1.9 per cent decline the subregion suffered in 2001 -- probably as a side effect of the problems in the US airline industry. But the damage was small compared to the 7 per cent fall in international arrivals to South America, 1.9 percentage point worse than last year's 5.1 per cent decline. The only subregion to have enjoyed growth in Americas was Central America, almost 10 per cent, but on a rather low base compared to other subregions. Africa offers a very different picture. While Northern Africa experienced a decrease of 4 per cent, Sub-Saharan Africa performed way above average, with an 8.5 per cent increase. The Middle East suffered an almost 4 per cent decrease in 2001, but performed extremely well, with an 11 per cent increase in 2002. The post-September 11 syndrome has not yet been overcome, although the media sometimes tend to give it too much importance. The picture of US tourism would namely be much more favourable if the economy performed as desired and if some large airlines and tour operators didn't cautiously downplay capacities.
Examining the effects of the Bali, Mombassa and Djerba bombings the WTO SecretaryGeneral concludes that the world economic situation is a more powerful threat to international tourism arrivals than fear of terrorism, even though the media transmits those effects so widely, and even though Wars and tourism are completely incompatible, just like fire and water. This is largely because tourists are becoming ever more experienced and the industry is so resilient. However: 73
"The biggest problem in the current situation of world tourism is uncertainty", says Mr. Frangialli. In addition to that, the economic situation in the world is not improving as fast as desired, oil is expensive and the stock exchanges reached low points. The tourism industry, however, rapidly reacted to the important structural changes in the sector and to the new challenges in the relationship between supply and demand.
C.
2003
The WTO has recently started producing a World Tourism Barometer incorporating a panel of world tourism experts.74 The first barometer threw light on the events in 2003; the SARS virus and the conflict in the Gulf. The first part of 2003 continued the trends of last minute and DIY (internet) bookings, and price sensitivity, and any economic recovery was delayed through uncertainty over the Iraq conflict. Growth in some destinations (the UK, Asia, Caribbean, South Africa) was relative to depressed conditions in 2002.
73 74
ibid. WTO World Tourism Barometer, Volume 1, number 1 June 2003
39
When the Iraq conflict began there was an immediate plunge in demand especially for air travel, interregional travel and travel in destinations close to the conflict. However, the WTO considered that national tourism boards, businesses and administrations were well geared to adapt to this. Because of this, the unexpected SARS outbreak disrupted destinations and businesses more severely. Most European destinations showed declines in early 2003, accelerating with the start of the military intervention in March. In the Americas the United States, Canada, and Mexico showed the greatest falls in March. The emergence of SARS in the second half of March affected tourism in Asia in the first months of 2003, in the majority of the destinations in the region. Destinations in the Middle East and North Africa reflected the impact of the conflict in Iraq with many countries showing increases in January but sizeable drops by March. In April 2003 losses were more limited, with certain destinations posting modest increases. The WTO says:75
The results of the new WTO World Tourism Barometer indicate that international tourism might be close to a turning point. Although the world economy is still rather weak, a change for the better is expected to take place in the second half of the year. Initial data for 2003 clearly show the effects of the Iraq conflict and the SARS outbreak. Nevertheless, various destinations managed to post surprisingly good results, in particular, some of the recently most-afflicted destinations in the Caribbean, South America, and South Asia. With the uncertainty due to the geopolitical situation gradually falling away, the perspective is switching back towards economic prospects.
World Tourism Day will be held on 27 September 2003. The Secretary-General of the World Tourism Organisation wants to use this to stress the role that tourism can play in alleviating poverty:76
Tourism is an important export for 83 per cent of developing countries and it is the main export for one third of them. In 2000, developing countries recorded 292.6 million international arrivals, an increase of nearly 95 per cent on the figures for 1990. Furthermore, in the least developed countries (LDCs), there has been a 75 per cent increase in international arrivals in the past decade. Tourism is the main source of foreign exchange earnings in the 49 LDCs, as listed by UNCTAD (United Nations Conference on Trade and Development). There are a number of proven strategies that can be used to increase overall economic benefits, in ways that have a poverty reduction focus. These include attracting higher-yield market segments and increasing tourists' length of stay
WTO press release First WTO world tourism barometer shows steadily improving conditions for international tourism Madrid, 24 June 2003 76 WTD 2003 to highlight tourism's vital role in global plan for poverty alleviation Madrid, 22 September 2003
75
40
plus visitor expenditure, developing complementary products, spreading the benefits of tourism geographically, enhancing local management of tourism and partnerships, reducing the seasonality of tourism and increasing employment and training. "In a year shaken by political turmoil, environmental and natural disasters, international conflicts and new diseases that have affected tourist movements, we are more confident than ever that tourism has the capacity to successfully address some of the main issues which are at the root of such problems, especially extreme poverty and social harmony," says Mr. Frangialli in his message. "We invite all tourism stakeholders, particularly national tourism administrations and the private tourism sector, to strengthen their activities with this new, poverty-reduction focus. We are convinced that they will find numerous ways to combine solidarity with profitability, national tourism growth with employment opportunities for the poor, and long-term business success with socioeconomic sustainability."
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RESEARCH PAPER 03/73

Patsy Richards ECONOMIC POLICY & STATISTICS

Summary of main points

UK tourism support structures

World tourism A. B. C. Events of 2001 2002 2003

RESEARCH PAPER 03/73

Value of tourism to the UK

RESEARCH PAPER 03/73

Employment in tourism related industries in Great Britian

All tourism-related industries All of which: employee jobs selfemployed jobs

RESEARCH PAPER 03/73

Total employment in tourism related industries, GB

Employee jobs and self employed jobs (thousands)

Tourism expenditure in the UK, 2002

VisitBritain Industry website, http://www.visitbritain.com/corporate/links/visitbritain/tips.htm

Se p9 D 6 ec -9 M 6 ar -9 7 Ju n97 Se p9 D 7 ec -9 M 7 ar -9 8 Ju n98 Se p9 D 8 ec -9 M 8 ar -9 9 Ju n99 Se p9 D 9 ec -9 M 9 ar -0 0 Ju n00 Se p0 D 0 ec -0 M 0 ar -0 1 Ju n01 Se p0 D 1 ec -0 M 1 ar -0 2 Ju n02

RESEARCH PAPER 03/73

Tourism's contribution to GDP

RESEARCH PAPER 03/73

Eating out 21%

Travel within UK 16%

Entertainment 6% Services etc 2% Other 3%

Balance of payments the travel account

RESEARCH PAPER 03/73

UK trade in services - the travel account balance of payments

RESEARCH PAPER 03/73

Spending by overseas residents in UK, and by UK residents abroad

25,000 Overseas residents in UK 20,000 millions UK residents abroad

RESEARCH PAPER 03/73

Overseas visitors to the UK by country of residence ('000s)

RESEARCH PAPER 03/73

Overseas visitors to the UK by purpose of visit

Visits by UK and overseas tourists to each RTB area, 2000-2002

RESEARCH PAPER 03/73

Distribution of domestic tourism in 2002

Source: Star UK website www.staruk.org

Trends in domestic tourism trips compared to visits abroad

Domestic tourism trips UK

Visits abroad by UK residents

RESEARCH PAPER 03/73

Visits to top UK attractions, 2002

Change from 2001 Free admission

Change from 2001

UK residents visits abroad

RESEARCH PAPER 03/73

UK residents' domestic and overseas tourism

Domestic tourism trips

Visits abroad by UK residents (a)

RESEARCH PAPER 03/73

UK residents' visits abroad, 2001

Top 12 countries ranked by number of visits

Of which package Visits Nights Spending ('000) ('000) (m)

Business Nights ('000)

VFR Nights ('000)

Source: Travel Trends 2002 table 5.04, National Statistics

RESEARCH PAPER 03/73

Factors affecting UK tourism

RESEARCH PAPER 03/73

RESEARCH PAPER 03/73