Tourism Trends from Visit Britain

Tourism Trends

David EdwardsTourism Trends Manager

June 2008

The £85.6bn pie

Spending by overseas residents during visit to UK

19%

Spending by overseas residents on fares to UK carriers

3%

Spending by domestic residents on trips of 1+ nights

24%

Spending by domestic residents on tourism day trips for leisure

53%

Rent for second ownership1%

Global picture – share of international arrivals in 2007

Europe53%

Asia and the Pacific21%

Americas16%

Africa5%

Middle East5%

4 in 5 are intra-Europe

trips9 in 10

are intra-AP

trips

UK’s global market share of international tourism

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

International Tourist Arrivals

International Tourism Receipts, US$bn

Source: UNWTO, VisitBritain

6th most visited destination and earner

from international tourism

Trends in inbound and outbound tourism

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

65,000

70,000

75,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Thou

sand

s

Inbound

Outbound

1991 – Gulf War

1994 – Channel Tunnel

1997 – Asia finance crisis

2001 – FMD and 9/11

2003 – Gulf War/SARS

2004 – EU expands

The UK’s International Tourism Balance of Payments

-20,000

-16,000

-12,000

-8,000

-4,000

-

4,00019

79

1983

1987

1991

1995

1999

2003

2007

Inbo

und

spen

d le

ss o

utbo

und

spen

d, £

m 2

007

price

s

Contrasting trends in number of inbound visits 2000-07+1.3 million from Spain

+1.1 million from Poland

+900,000 from Ireland

+640,000 from Italy

+630,000 from Germany-510,000 from USA

-243,000 from Japan

-79,000 from Israel

-62,000 from Greece

-43,000 from Hong Kong

Shorter length of stay drives down spend per visit

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

12.5

19

79

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

Nig

hts

pe

r V

isit

450

500

550

600

650

700

750

800

850

900

Sp

en

d p

er

Vis

it (£

s, 2

00

7 p

rice

s)

Nights per visit Real Spend per Visit

43% inbound visits are 1-3

nights

Outbound length of stay

down from13.3 to 10.0

Inbound visits to the UK by region of the world

-15%

-5%

5%

15%

25%

35%

45%

55%

65%

Jan-00

May-00

Sep-00

Jan-01

May-01

Sep-01

Jan-02

May-02

Sep-02

Jan-03

May-03

Sep-03

Jan-04

May-04

Sep-04

Jan-05

May-05

Sep-05

Jan-06

May-06

Sep-06

Jan-07

May-07

Sep-07

Jan-08

Rolling 12 Month Period Ending

Annu

al C

hang

e

North America EU15 A12 Rest of Europe Rest of World

Forecast for 2008:

Volume +2.0%

Value +1.4%

Regional spread challenge: inbound shares

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

London

South East

South West

East of England

West Midlands

East Midlands

Yorkshire

North West

North East

Wales

Scotland

Northern Ireland

Trips Spend

Over the past few years...

• UK population is more diverse (550,000 A12 nationals live in the UK)

• More UK residents own a second home abroad (around 250,000)

• More Brits live permanently abroad (IPPR estimate is 5.6 million)

• More foreign students study at UK universities (49,000 entered in 2007)

• More UK based multi-nationals• Competition for holiday visitors is more intense

(Krakow, Dubai, Marrakech)

Leading to a shift in the ‘purpose mix’ of inbound trips

Holiday45%

Business19%

Miscellaneous18%

Visiting Friends/Relatives18%

1979…2007

Business27%

Visiting Friends/Relatives30%

Miscellaneous11%

Holiday33%

Relative contribution to growth in visits, 1993-2007

-5% 0% 5% 10% 15% 20% 25%

Holiday

Business

VFR

Study

Other

Long-haul emerging Long-haul mature Short-haul emerging Short-haul mature

Short-haul mature 58% Holiday 16%

Short-haul emerging 21% Business 32%

Long-haul mature 13% VFR 42%

Long-haul emerging 8% Study/other 10%

Visiting Friends and Relatives trips – do they really matter?

• 23% of inbound spend in 2007 (+138% ‘real’ growth since 1979: 18% ‘holiday’ growth)

• Regional spread: 60% of VFR spend is outside London, 40% for holiday visits

• Seasonality: 49% of VFR visits between October and March, 38% of holiday visits

• 1.8m visits to museums/galleries, 2.6m visits to a castle, church or historic house

• 8 million nights in paid accommodation• Hosts spend too!

Outbound versus domestic

• Brits took 123 million domestic overnight trips in 2007 compared to 70 million outbound trips

• But spent £172 per domestic overnight trip and £507 per outbound trip

• Meaning that we spent £21bn on domestic trips and £35bn on outbound

• For every £1 spent on a domestic overnight holiday, we spent £2.11 on outbound holidays

Domestic overnight trends

123.0

124.0

125.0

126.0

127.0

128.0

129.0

130.0

131.0

Ap

r-06

May

-06

Jun

-06

Jul-

06

Au

g-0

6

Se

p-0

6

Oct

-06

Nov

-06

Dec

-06

Jan

-07

Fe

b-0

7

Mar

-07

Ap

r-07

May

-07

Jun

-07

Jul-

07

Au

g-0

7

Se

p-0

7

Oct

-07

Nov

-07

Dec

-07

Jan

-08

Fe

b-0

8

Rolling twelve months ending

Trip

s (m

illio

ns)

20,000

20,300

20,600

20,900

21,200

21,500

21,800

Exp

endi

ture

(£m

illio

ns)

Trips (m) Spend (£m)

Regional spread challenge: domestic overnight shares

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

London

South East

South West

East of England

West Midlands

East Midlands

Yorkshire

North West

North East

Wales

Scotland

Northern Ireland

Trips Spend

In 1996 32% trips were to a large city, by 2007 it was 39%

Seaside destinations accounted for 25% of trips in 1996 now just

21%

What we do well (inbound visitors)• Britain perceived as a world leader

(Ranked 3rd in NBI behind France and Italy)

• Potential holiday visitors express desire to experience our heritage and culture

• Among the most popular activities undertaken by holiday visitors

• In an increasingly competitive market vital to build on USPs, not rely solely on tactical use of ‘fashion’

• But heritage and culture must be presented imaginatively

What we do well (domestic visitors)• Key strengths (attributes rated highly and

strongly correlated with customer retention and destination choice)

• Wide variety of accommodation• Opportunities to visit museums, galleries and

contemporary arts• Opportunities to visit famous buildings and

monuments• Interesting cities, towns and villages to visit

What we do less well

• Expectations of ‘welcome’ are poor (UK ranked 16th by NBI, Canada top)

• ‘availability of good restaurants and fine dining’ seen as a weakness by Brits

• But key issue is ‘Value for money’: an attribute strongly correlated with visitor retention and destination choice

• Weather…

How Britons describe a holiday in Britain

0% 5% 10% 15% 20% 25% 30% 35% 40%

Romantic

Depressing

Exciting

Boring

Predictable

Fascinating

Unpleasant

Risky

% choosing each adjective

53% choose negative adjective

Socio-demographic challenges and opportunities• Older age groups more important in relative terms (1

in 6 Brits over 65)• Population set to grow by 7 million by 2031• Domestic overnight tourism highly dependent on

higher social grades (ABs account for 39% of spend but 20% of population, DEs 14% spend, 31% population)

• The ‘family unit’ is evolving

The economy

• Downturn may be worse than expected• Inflation as much a threat as the ‘credit crunch’• Average household paying £15 more per week for

groceries than this time last year• Airlines feeling the pinch• Is this an opportunity for domestic tourism?

Leisure time choices – a cluttered marketplace • Internet surfing (61% of households have

access, of which 84% broadband)• Cinema (157 million admissions in 2006)• Shopping• iPods, DVDs, TV channel hopping • DIY/gardening (17 mins per person per day)• Hobbies• Driving the kids to their leisure activities• Tourism activity

Challenge of the more demanding and unpredictable consumer

• ‘what you do’ more important than ‘where you do it’: ‘experiences’ not ‘destinations’ count

• Authenticity: travel-savvy visitors expect more than earlier generations

• Fly in on Ryanair, stay in a Hilton, grab lunch in McDonalds: no neat segments

Short-term risks and opportunities

• Exchange rate fluctuations• ‘Open Skies’• Eurostar to St Pancras• Liverpool08• Avian flu, Blue tongue…• West Coast Main Line improvements

The future (1)

• Economic cycles will ensure good years and bad years but…

• …has the era of rising discretionary spending power and falling travel costs ended?

• New global hubs for business set to challenge London (Mumbai, Shanghai)

• Socio-demographic change will impact why we travel and who we travel with

The future (2)• Geo-politics matters (China won’t have a

significant balance of payments deficit)• Fashions will come and go• Technology will alter how we research, book,

experience and recount travel• Climate change will shape government, business and

consumer behaviour• Competition for the tourist $, and potential tourists’

attention will intensify• There will always be ‘shocks’

To find out more…

www.visitbritain.com/research