Delivering the full potential of the visitor economy Tom Wright, VisitBritain CEO P4E Forum, Leicester 25 November 2008

1. Delivering the full potential of the visitor economy Tom Wright, VisitBritain CEO P4E Forum, Leicester 25 November 2008

2. The Tourism Prize

3. The Economic Case for the Visitor Economy.

4. Current economic contribution Visitor economy worth more than previous estimates. • DIRECT: • GDP – £52 billion (3.7 per cent) • Employment – 1.36 million • TOTAL (DIRECT AND INDIRECT) • GDP – £114 billion (8.2 per cent) • Employment – 2.6 million • SPILLOVER IMPACT: • Retail • Manufacturing • Health.

5. Growth Potential – Long term opportunity Over the next 10 years, the sector is expected to grow but the share of the total economy would remain similar to current levels • LONG TERM: • Total economic contribution of £188 billion • Employment growth to 2.8 million • Share of the economy broadly similar to current levels at around 8 per cent • UNDERPINNED BY: • Primarily driven by overseas visitors but domestic is likely to grow as well; • 45 million visitors by 2018 compared to 32.6 million in 2007; • Transport, attractions and accommodation improvements (quality and capacity) are assumed – failure to invest (by public sector and industry) could undermine this; • More proactive approach to the development of the UK visitor economy (including addressing investment, marketing and market failure issues) could allow the UK to sustain its share of inbound tourism and grow further.

6. Growth Potential – recession challenges Over the next three years, it would be a very challenging environment and the base case is likely to be replaced by our ‘recession scenario’ • In the light of current economic downturn, the analysis was reviewed: • Revised analysis – 2007 analysis accurate • 2018 projected growth still achievable but at a greater risk • Over the next three years: • GVA is expected to be £11 billion below base case • Employment 114,000 below base case • Exchange rate competitiveness and import substitution present opportunities for the industry but a concerted effort is required to minimise damage.

7. Policy considerations Quality of the offer and visitor experience are critical for high value added visitor economy. • Maximise volume and value (led by industry) • Improve offer and quality of experience • Targeted marketing (including domestic) • Adaptability – globalisation, climate change and emerging markets (led by industry and tourism bodies) • Maintain attractiveness of the offer • Explore new markets/value propositions? • Support long-term drivers of economic growth (led by industry, Government and public sector) • Infrastructure • Innovation • Skills • Coordination of policy and delivery (led by public sector/NTO).

8. Policy barriers Wider (non-tourism specific) policy barriers can have significant impact on the outcomes for the visitor economy. • Transport infrastructure; • Entry costs and border policy; • Limits on movement; • Climate change legislation; • National and regional policies; and • Influencing policies (where possible) and adapting to new realities is the key for a dynamic visitor economy.

9. Market failures Market failures suggest that public sector intervention is essential to maximise economic impacts. • Imperfect information – significant failures where both consumers and businesses in the visitor economy suffer from information gaps and potential visitors (both overseas and domestic) do not have the relevant information to use in their decisions; • The free-rider problem - due to the fragmented nature of the industry, individual business or a group of businesses are unlikely to market a place; • Positive and negative externalities – choice, heritage, culture, global profile as well as congestion and climate change; and • Skills & training provision - due to labour mobility and the seasonality of the tourism employment market, there are limited incentives for businesses to invest in skills where employee turnover is high.

10. So what? Communicate your contribution, take advantage of growth opportunities and deal with the short term challenges – complacency is not an option. • Big industry • Significant long term growth potential • Real short term challenges but you can do something about them • Long term would not happen unless industry and government work together to pull all necessary levers • Framework review is a key opportunity to deliver a clear strategy and delivery plan.

11. Review Findings

12. Strengths Geographic location/transport hub Aviation giants/low cost carriers/rail network Proximity of Continental Europe Culture & heritage resources Coast & countryside Global events Sport Education London

13. Weaknesses • Losing share of world travel market • Not seen as a welcoming destination • Visas expensive and difficult to obtain • Quality variable • Creaking transport infrastructure • London-centric and seasonal • Visitors heavily taxed • British not best ambassadors for own country

14. Challenges & opportunities • International visitors becoming older • Experiences matter as much as destinations • New destinations • New investment in existing destinations • Events • Ryder Cup 2010 • London 2012 Olympic & Paralymic Games • Commonwealth Games 2014 • 2nd generation online/user-generated content

15. Inspiring people to explore Britain From this… …to a brand toolkit

16. VisitBritain’s focus • Overseas network - serving all, equally • Champion of Britain brand • Strategy & insights to inform policy agenda • Shared platforms • technology • commercial

17. Review findings for VisitEngland • Developing England’s national tourism strategy • Engaging with the industry • Marketing the visitor economy

18. Marketing Britain overseas • Consolidate Britain’s position in traditional international markets and invest in emerging markets building on VisitBritain’s overseas network. • Create product development and marketing initiatives that increase the value of inbound tourism spend. • 3. Work with the industry and the national tourist board to develop UK-wide internet platforms and shared new media strategies. Marketing England at home and overseas • Create a new English tourism lead body and agree processes for interaction with stakeholders and appropriate performance metrics. • Create the strategy and 10 point plan for England’s tourism industry.

19. Supporting the development of national tourism policy • 6.Engage all stakeholders in national tourism policy development and the nation in support for the tourism industry. • Create a new Government-sponsored Tourism Advisory Council which draws together senior practitioners from industry and the public sector to engage with the government departments whose policies impact on tourism. • Ensure that the visitor economy is considered in the development of public policy. • Re-define the role of VisitBritain and agree new ways for it to work with its stakeholders and develop metrics to demonstrate its performance and value. Securing the legacy tourism benefits of 2012 • Secure agreement on future public and private sector funding and the resources needed to deliver the 2012 Olympic tourism legacy.

20. The Future England Framework