Tourism in the United Kingdom

Introduction

The United Kingdom stands as the tenth-largest destination for tourists worldwide with more than thirty-six million visitors in 2018. Between 1980 and 2018, the number of tourists visiting the United Kingdom rose by two hundred and five per cent (inbound visits). The number of United Kingdom citizens visiting other countries also climbed by over three hundred and ten within the same period. Data shows that visitors from North America are the most valuable visitors while the highest number of visitors hail from Europe with over twenty-one million visitors compared to only three million five hundred thousand hailing from Canada and the United States. There was a substantial reduction in the number of visitors to the United Kingdom from 2017-2018 after a seven-year all-time high. Domestic tourism maintains as the most significant portion of tourism spending in the United Kingdom. The busiest period for travel in the United Kingdom is on bank holidays and summer months with august as the most active.

The number of inbound visits to the United Kingdom totalled thirty-seven million nine hundred thousand in 2018, which was a three per cent drop compared to the previous year. In 2017, the number of outbound visits from the United Kingdom totalled seven two million eight hundred thousand visits, a one per cent drop in 2017. Spain was the preferable tourist destination by United Kingdom tourists which attracted twenty-two per cent of all visits. The number of domestic overnight trips totalled one hundred and eighteen million within Great Britain in 2018; however, this was a two per cent decline compared to the previous year.

In 2016 the Gross Value Added (GVA) economic output of the tourism industry in the United Kingdom was sixty-eight billion pounds. This was six per cent of the total United Kingdom’s economic output. In 2016, one million five hundred thousand people had direct employment within the tourism industry; this represented five per cent of total employment in the country. However, in the period 2015 -2016, employment within the tourism industry fell by sixty-six thousand representing a four per cent drop.

The government announced the tourism sector deal in June 2019. Sector deals are a partnership between the government and particular industries established under the government’s Industrial Strategy tourism sector deal has the intention of boosting productivity within the tourism industry support destinations of tourism within the             United Kingdom and develop skills of the UK workforce.

The purpose of this report is to examine the status of tourism in the United Kingdom through the provision of statistics on outbound and inbound visitors, economic impacts of tourism and identify opportunities and challenges in the sector with regards to the United Kingdom.

Characteristics of UK’s Tourism Industry

Overseas Tourism

i.            Inbound and Outbound Visitors

Thirty-seven million, nine hundred thousand people from abroad visited the United Kingdom in 2018; this was a three per cent drop compared to 2017. In 2018, Seventy-two million, eight hundred thousand visits were made by people residing in the United Kingdom, and this was one per cent lower representation than the previous year. Since the 1980s, travel costs have reduced, and rising propensity has led to an explosion of overseas tourism. Between the years 9180 and 2018, the number of visits to the United Kingdom rose by two hundred and five per cent. Moreover, the number of outbound visits subsequently rose by three hundred and ten per cent over a similar period.

The rate of outbound/inbound numbers was affected by the 2008/2009 financial crisis. There was a sharp decline in United Kingdom residents travelling abroad; this was deep dive from sixty-nine million five hundred thousand in 2006 to fifty-five point six million in 2010. The number of outbound visitors. In 2016, the 2006 deep of outbound visitors was surpassed.

The financial crisis also affected the rate of inbound visitors but to a lesser extent compared to the outbound visitors. There was a fall in the number of inbound visitors from thirty-two million eight hundred thousand visits to twenty-nine million, eight hundred thousand visits in 2010, this represented a nine per cent or a three million visit decline within three years. However, the inbound visitor is recovering steadily, breaching the earlier high of 2014 which had continuously risen until the deep in 2017-2018 period.

The recent deepening in inbound visitor numbers has been associated with a decline in European visitors. Since the Brexit referendum, European interest in visiting the United Kingdom has declined from seventy-two per cent in 2016 of August to sixty-four per cent in March 2019. This decline can be attributed to the wait and see attitude among visitor because of the slowdown of the global economy, Brexit uncertainties, including trade and geopolitical tensions.

ii.            Inbound and Outbound Tourist Spending

Oversee visitors to the United Kingdom spent twenty-three billion pounds in 2018. This was a drop of seven per cent from 2017 when visitors spent twenty-four billion five hundred million pounds. United Kingdom residents who travelled abroad spent forty-five billion, four hundred million pounds in 2018, representing a one per cent increase – five hundred and ninety-five million pounds – in 2017.

Figure 1: Visits to the UK by overseas residents and visits overseas by UK residents

Source: Office for National Statistics – International Passenger Survey (2019)

Inbound Visits

i.                    Visit Reasons

Forty per cent or fifteen million one hundred thousand visits of the nine hundred million visits, thirty-seven million came to the United Kingdom as part of their holiday plan. Thirty-one per cent or eleven million eight hundred thousand visits were made in visits to relatives or friends in the United Kingdom. Twenty-two per cent or eight million four hundred thousand came for business reasons, while the remaining two million six hundred thousand visits were made for other reasons. The table below depicts the sum number of visits to the United Kingdom by reason for the visit.

Source: ONS, International Passenger Survey (2019)

1. Origins of Inbound Visitors

In 2018, seventy-one per cent of the total visitors in the United Kingdom were from Europe, twelve per cent hailed from North America, and the remaining sixteen per cent were from other countries. Visitors from France and the United States each made ten per cent visit to the United Kingdom, while Germany made nine per cent of the visits to the United Kingdom. In 2018, foreign visitors to the United Kingdom spent twenty-two billion nine hundred million pounds which were seven per cent less than in 2017. Nearly half of all expenditure in 2018 was from European visitors

Source: ONS, International Passenger Survey (2019)

iii.                Inbound Visit Destination

London was the most preferred visit location by visitors to the United Kingdom in 2018. About fifty per cent of all visits to the United Kingdom was made to London. London visits were four times as much visits to Scotland. Northern Ireland and Wales combined. The government encourages oversea visitors to explore other destinations apart from the capital, as stated in the Tourism Sector Deal.

Outbound Tourism

i.                    Travel Reasons

There were a total of seventy-one million visits by United Kingdom residents to other locations in 2018, representing a one per cent decline from 2017. Sixty-six per cent were made of holiday purposes in 2018. Visits to relatives and friends were composed of twenty-three per cent of the total outbound visits while reasons for business took up nine per cent. The table below shows figures for the reasons for the visits made by residents of the United Kingdom.

Source: ONS, International Passenger Survey (2019)

ii.                  Outbound Visit Destination

Spain was the most preferred tourist destination by UK residents as Spain made up a fifth of the total oversea visits. The United States, as the most visited non-European destination with five per cent visits.  The average stay period for United Kingdom residents abroad was thirteen days, and the United States was the most preferred lengthy destination. Tours to Poland lasted ten nights on average. The table below depicts the outbound visit destination preference by UK residents.

Source: ONS, International Passenger Survey (2019)

Domestic Tourism

Domestic tourism is where United Kingdom residents take trips of one or more nights within the United Kingdom. It should be noted that when a single resident takes two trips, then it would be counted as two trips.

1. Domestic Tourism in the United Kingdom

Despite the recent rise in both outbound and inbound visits to the United Kingdom, the number of domestic tourism has with 2015 as an exception either remained flat or fallen since 2011. Domestic trips to the United Kingdom has fallen by four million or three per cent from 2006 to 2018. Within the past twelve years, 2011 was the year with the highest domestic trips at one hundred and twenty-six million six hundred thousand visits. It was closely followed in 2012 by one hundred and twenty-six million visits. However, compared to August 2011, August 2012 experienced an eight per cent increase in the number of trips. Generally, total domestic trips were fifty per cent higher than the number of foreign trips.

ii.                  Domestic Trip Reasons

In 2018, almost half of all domestic trips were made with regard to holiday reasons, thirty-five per cent of the trips were made to visiting relatives and friends, and the remaining fourteen per cent were for business-related reasons.

iii.                Domestic Tourists’ Destination

In 2017, England was the preferred destination for overnight domestic trips in the United Kingdom, compared to ten per cent in Scotland and Eight per cent in Wales. In 2018, domestic overnight tourists spent twenty-four billion dollars; this was a one-point two per cent increase compared to 2017.  England consumes eighty-one per cent United Kingdom’s domestic tourism expenditure. There were three times as many domestic tourists compared to foreign visitors in the United Kingdom where foreign visitors spent twenty-three billion pounds compared to twenty fur billion pounds by domestic tourists.

Tourisms and the United Kingdom Economy

It is challenging to calculate the exact impact of tourism to the economy. There are several industries within the hospitality sector linked to the tourism industry and provide services to tourists such as galleries and museums, food and beverage industry, and the accommodation services industry. However, these industries not only provide their services to tourists but also the local people. Moreover, other non-tourists related industries provide services to tourist, such as the retail industry.

Economic Output

There was a growth of less than one per cent in the output of the tourist industry. There was an overall economic growth rate of four per cent in the United Kingdom. There is a profound variation in the sectors that make up the tourism sector in the United Kingdom. The following chart demonstrates the economic of these sectors.

Source: ONS tourism satellite account, 2018

The industry classification of “other consumption products” entails all tourism-related economic activities occurring outside the traditional set up of the tourism sector. This involves the purchase of goods by tourists such as clothing, Second homeownership costs, and car parking. The other consumption sector contributed most to the tourism economic output with twenty-three billion in 2016. Other reservation services category, including the travel agencies, made eleven billion pounds while the accommodation services contributed ten billion pounds the same as the food and beverage industry.

Employment

One million five hundred thousand people were directly employed within the tourism sector industry in 2016. This represented a five per cent employment within the whole of the United Kingdom. However, there was a fall in the number of people directly employed in the industry by sixty-six thousand or four per cent in the period 2015-2016. Concerning economic outputs, employment within other consumption products industry was the largest in 2016 – four hundred and sixty-three thousand. The food and beverage industry contributed three hundred and ninety-five thousand jobs while accommodation contributed two hundred and seventy-five thousand jobs.

International Tourism Comparison

The Organization for Economic Corporation and Development (OECD) publishes employment estimates associated with tourism. From the selected countries, the United Kingdom’s share of employment in the tourism sector is five per cent. The rate is relatively higher in New Zealand at nine per cent. In the United States, the sector provides a four per cent employment capacity and only three per cent in Sweden.

Key Trends and Developments

Trends

There has been increasing popularity in package holidays. For instance, data shows that in 2013 almost half of all holidaymakers who took foreign visits preferred package treatments, and they also wanted it to continue in the following year. Package holiday popularity stems from consumers wanting everything being taken care of and that there is value in packages. It is less costly to use tour operators to book the trip instead of self-booking because tour operators have ideas about the best deals available in the market. The package tours have evolved to include bespoke itineraries and tailor-made tours.

Since 2014, the cruise industry has continued performing well with many large cruise companies experiencing massive growths. There is also a keen interest in coach and train holidays were in 2014, six per cent of consumers considered holiday coaches while seven per cent considered train holidays. Cruising is essential because it provides everything to the customer and also all-inclusive. The growth of the cruise industry can be attributed to tourists seeking an alternative to flying. The cruise growth rate was estimated at seven per cent from 1990 to 2018. High capacity new builds have facilitated growth strategies in the cruise line industry, more local ports, ship diversification, new on-shore/onboard activities that match up with consumer demand.

Natural disasters have a massive effect on the travel and tourism industry. Natural disaster decrease the number of people visiting a particular area. Moreover, while decreased visitors means little money spent or earned in these areas, natural disasters can destroy tourism areas. For instance, the volcanic ash cloud of 2010 had a massive impact on the travel and tourism industry.

Health warnings negatively impact the global tourism industry. This usually due to a disease outbreak in a particular area. For instance, the Swine Flu outbreak had a significant impact on the tourism industry in the region. Several tour operators cancelled their flights to Mexico due to the travel restrictions imposed.

Developments

Realizing the importance of the tourism industry, the UK government has put in place new laws and policies over the years. The Development of Tourism Act of 1969 aimed at coordinating all organizations involved in the tourism industry. It leads to the creation of British Tourists Authority and Tourist Board of England, Wales and Scotland with the duty of promoting tourism within the UK.

Technological advancements since the 1990s have ensured the success of the tourism industry, particularly the internet — the advent of the internet-enabled online bookings before travelling abroad. New technological developments over the past five decades have shaped the current tourism and related travel industry making the overall experience better for consumers.

Over the past five decades, there has been a tremendous improvement in lifestyle changes in the United Kingdom. More people now have disposable income and can afford yearly holidays. There has also been a change in the age lifestyle, and continuously the British tourism industry has been forced to adapt to the needs of the different age groups.

Opportunities and Challenges

The United Kingdom’s decision to leave the European Union has presented some challenges and opportunities in the tourism industry. As the future relationship of the United Kingdom and the EU remain uncertain, neither of the below points is comprehensive. Package Travel, Package Holidays and Package Tours Regulations 1992 required all tour operators offering package holidays to act in according to the provision of the regulations provided herein. The laws ensured proper conduct of Tour Operators.

i.                    Opportunities

Increased number of tourists from non-European Union countries. Currently, the UK is a preferred destination for several visitors from non-EU countries. However, the onset of Brexit is opportunities to exploit these markets further. The Department for International Trade is working in non EU markets to attract foreign investments and trade by marketing the United Kingdom as a perfect destination. Through the GREAT Campaign, marketing in nations such as Canada and Australia have been increased, and the campaign is also working with several government departments to market the United Kingdom.

Since the June 2016 EU referendum, the pounds have diminished in value against the Euro and the dollar. A weaker pound compared to foreign currencies means that it will be relatively cheaper for tourists to visit the United Kingdom. This will, in turn, make the United Kingdom a hotspot for the attraction of international tourists.

There is a high possibility that Brexit may lead to high travel requirements for United Kingdom residents seeking to visit other European nations; therefore, this may lead to more domestic tourisms or ‘staycations’. Research already suggests that travel requirement uncertainties have led to an increase in domestic holidays as alternatives to European holidays. For instance, according to VoucherCodes, twenty-five per cent of British citizens will cut down on holidays because of Brexit, and thirty-six per cent will go for a staycation in 2019.  A weaker pound makes overseas travel for residents of the United Kingdom very costly helping to boost the popularity of domestic tourism.

The United Kingdom is heavily dependent on employees from other European nations. Of all employees in the United Kingdom, seven per cent come from the twenty-seven countries within the EU. Within the most significant tourism industries, the proportion increases significantly where there are twelve per cent of foreign employees within the food and beverage sector and nineteen per cent within the accommodation service activities. There is, therefore, an opportunity for the employment of UK nationals as this reliance on foreign employees might be reduced if there are challenges in migrations from the EU to the United Kingdom.

ii.                  Challenges

More restriction might be created between the United Kingdom and the European Union due to Brexit. This may lead to more travel complexities, thereby discouraging travel to and from the United Kingdom.

The utilization of the United Kingdom as a gateway to other European countries by tourists from Non-European Union nations may be curtailed. Tourist from the United States usually does this; however, if travel between the UK and EU becomes complicated, this market may be negatively affected. However, it is worth pointing out that there are several agreements between the UK and other European nations regarding third-party tourists where it can be said Brexit would have only a limited impact.

It could be extremely damaging to the United Kingdom if funding from the EU to Destination Management Organizations and tourist areas due to Brexit. The EU well funds the development and support to strategies of marketing for tourist areas. The EU also oversees the regeneration of tourist areas that have historically been deprived. It is for this reason that the United Kingdom secured a deal with the European Union that guarantees to fund for this area until the end of 2020 whether Brexit happens or not.

Many consumer protection areas are subject to regulations from the EU. Therefore, Brexit could profoundly impact this. The UK government has affirmed that such law will be rolled over in case Brexit is successful in protecting both the UK and EU customers, UK consumers within the EU are still subject to final agreements with the European Union. Consumer protection rights under EU laws include:

• Since June 2017, there has been an abolishment of roaming charges for phone data records issues in the EU. This abolishment will also apply in the UK post-Brexit, but uncertainties still revolve around the costs to be applied to UK tourists in the EU.
• The Package Holiday Directive protects EU customers if their travel agents become insolvent during their holiday. There are uncertainties if different EU states will still hold this ‘mutual recognition’ of financial protection put in place by this directive post Brexit.
• The Consumer Rights Directive protects EU consumers in terms of transparency in pricing and a right of withdrawal within fourteen days to services and goods purchased. EU laws will possibly be maintained in the UK for EU tourist visiting the UK even after Brexit. However, it is impossible to determine if the rights of UK nationals will equally be protected while visiting the EU.
• All EU citizens are entitled to the European Health Insurance Card (EHIC), which guarantees the holders to local health services. The Healthcare (International Arrangements) Bill 2017-19 was introduced by the government to establish models that will allow the continued arrangement of the EHIC scheme subject to EU agreements.

Air travel between EU member states is cheap for consumers and straight forward to operators, this because of the European Common Aviation Area (ECAA) which allow UK registered airlines to fly without restriction to other EU member countries. Brexit might lead to the imposition of more restrictions on flights between the EU and the UK. However, the British government maintains that air travel agreements with the EU can be put in place to ensure constant connectivity between the REU and the UK.

It has been established that the tourism industry is reliant on workers from other European countries. If Brexit were to be successful, it would mean less number of workers would be moving from the EU to the UK. It may be challenging to fill the vacancies that have been created thereby causing a massive demand of workers and pushing up wages of tourism; this will lead to higher cost for both local and international tourists diminishing the UK as a desirable tourist destination.

Key Organizations

The tourism industry in the United Kingdom encompasses collaboration between the private and public sector including international private businesses such as large hotel chains and airlines,  small to medium-sized enterprises (SMEs), including Destination Management Organisation (DMO) at both regional and local level.

Public Sector

1. Department of Digital, Culture, Media and Sports

It is the government body responsible for tourism policy and tourism funding by the promotion of organizations such as VisitBritain. It is involved in tourism content such as the arts and the creative industry. The GREAT Britain campaign has facilitated collaborative efforts between VisitBritain and other public diplomacy partners such as the British Council, and the Department of International Trade.

1. HM Treasury

It facilitates the decisions making when it comes to funding of tourism oversees the promotion of the United Kingdom. It is also responsible for policies which impact international tourism such as Air Passenger duty. Business rates and VAT.

• Home office

It is responsible for border controls and visa issuing, which has an impact on the ease of travelling to Britain. It is the major organization that deals with immigration and visas. It also looks into other matters affecting tourism, such as licensing.

1. Department of Transport

Through shipping and aviation polices, they have an impact o travel to the United Kingdom, including the domestic transport system of the UK.

1. Foreign and Common Wealth Office

This is a partner with the GREAT Britain Campaign. It realizes that tourism is a component of soft power and diplomacy, thus has offices located FCO posts. This is the overseeing Department of the British Council.

1. Department of Business, innovation and Skills

It partners with the GREAT Britain campaign to ensure that local governments and Department for Communities which are responsible for Regional Growth Fund and Local Enterprise Partnerships. The Department of International Trade is the overseeing Department.

• Department for Energy and Climate Change

Responsible for policies dealing with climate change and energy pricing in the UK.  It also determines the locations of wind turbines and trading emissions.

Works Cited

“Both UK Trips Abroad and Visits to the UK Have Decreased in 2018.” Office of National Statistics, 24 June 2019, https://www.ons.gov.uk/peoplepopulationandcommunity/leisureandtourism/articles/traveltrends/2018#both-uk-trips-abroad-and-visits-to-the-uk-have-decreased-in-2018.

“PM Announces New Tourism Sector Deal.” Gov.uk, 27 June, 2019, https://www.gov.uk/government/news/pm-announces-new-tourism-sector-deal.

“Tourist Numbers to the UK down While Global Figures Continue to rising.” Theguardian.com, 22 Jan. 2019, https://www.theguardian.com/travel/2019/jan/22/tourist-numbers-to-the-uk-down-while-global-figures-continue-to-rise.

“Tourist Numbers to the UK down While Global Figures Continue to Rise.” Theguardian.com, 22 Jan. 2019, https://www.theguardian.com/travel/2019/jan/22/tourist-numbers-to-the-uk-down-while-global-figures-continue-to-rise

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