Destination Intelligence – August 2010

1. Destination Intelligence – August 2010 Prepared by Tom Williams, Insight Executive t.williams@visitchesterandcheshire.co.uk & Joseph Phelan, Research Assistant j.phelan@visitchesterandcheshire.co.uk

2. Quick links • Bigger Picture - Economic News • Bigger Picture - International Tourism • Bigger Picture - Domestic Tourism • EuroZone - Looking forward • Did you know? - an in-depth look at Chester’s key international markets • Chester and Cheshire news - important news stories from July • Chester hotel performance • Cheshire hotel performance • RevPAR performance • Forward bookings and analysis - A look at how the forward bookings are performing compared the previous years

3. Return to Quick Links Menu Bigger Picture – Economic News • The UK economy grew by a faster than expected rate of 1.1% in the second quarter of the year • Moody’s downgrades Ireland’s sovereign bond rating • IMF says Hungary must do more to cut its deficit, resulting in a sharp fall in the value of the forint • The Russian economy grew at an annual rate of 5.4% in the second quarter of the year • The Reserve Bank of India again increase base rates by a further 25 basis points to 5.75% • Chairman of the US Federal Reserve says that the economic outlook remains ‘unusually uncertain’ • China v US energy consumption:China has overtaken the US as the world's biggest consumer of energy, further evidence to support its growing global importance as a super power Source: Visit Britain – Trends, Guardian – Aug 2010

4. Return to Quick Links Menu Bigger Picture – International Tourism China to invest $120bn in high-speed rail network • China has said that it will spend about 120 billion dollars to nearly double the country's high-speed rail network by 2012, as part of an ambitious programme to expand the national train system • Beijing will invest 800 billion yuan laying about 6,000 kilometres (3,730 miles) of new high-speed track across the nation. By 2020 the government plans to have more than 16,000 kilometres of high-speed track Price is the most important criteria when booking a flight • Over 500 people voted in the poll, with 47% stating that price was the most important factor in their decision. 22% said that the reputation and reliability of the airline (in terms of safety and comfort) were the most important factors • 13% stated that the departure and arrival times were most important; 11% said the distance to and from airports was the decider, whereas the financial stability of the airline was by far the least important factor, with only 6% stating that it was important to their decision • A similar poll conducted by Skyscanner in May 2009 revealed that 37% considered flight price the most important factor, suggesting that the economic downturn has made price an even more vital consideration to air passengers Source: TravelDailyNews, Independent – Prepared by Joe Phelan

5. Return to Quick Links Menu Bigger Picture – Domestic Tourism UK Tourism Survey – April 2010 • While parts of the west and north of the UK experience above average rainfall in July the south east sees exceptionally dry conditions • During the month of April, domestic tourism trips in the UK grew by 2% compared to the same month in 2009 • The total number of bednights fell by 8% and total expenditure dropped by 3% • In the first four months of 2010 overall trip numbers were up 3% in the UK compared to January-April 2009, while trips in England were unchanged in the same period • In the past 12 months, 127.1m overnight trips were taken in the UK, 9.7 more than in the 12 months from May 2008 to April 2009, an increase of 8% • In April, residents made 17% fewer trips abroad than in April 2009, spending 4% less. Between January and April, trips fell by 12% and spend fell by 9% • The UK Occupancy Survey showed that within serviced accommodation bedspace occupancy was at 43% for the month of April, which was unchanged from the previous year’s results VisitEngland UK Tourism Survey – April 2010 Prepared by Joe Phelan

6. Return to Quick Links Menu Bigger Picture – Domestic Tourism More people camping than staying in B&Bs • Figures from the Office for National Statistics show that a total of 5.43 million camping trips were made last year, an astonishing increase of 29 per cent on the year before • For the first time, this number overtook bed and breakfasts, which attracted 4.98 million stays • John Lewis, the department store, noted camping equipment had increased by 44 percent on wedding lists, suggesting middle-class couples were now as happy to receive a sleeping bag or tent, rather than a kettle or sandwich maker for their wedding gift 1/3 of Britons will holiday in the UK • Many British people are holidaying at home this summer amid fears over tour operator problems, flight upsets and the eurozone's debt crisis, according to a study by CSMA Club • One in four holidaymakers is taking more "staycations" this year than last, and a third will be spending this year's main holiday on home soil, the motoring and leisure association's research found • For many, the financial instability in Europe (11%) and the risk of a repeat of the ash cloud problems (6%) has deterred them from taking a break abroad. A further one in 15 (7%) are put off by the threat of airline strikes Source: Telegraph

7. Return to Quick Links Menu Euro Cities - Looking Forward… • Key finding: Growth in bed nights is expected to continue into summer 2010. In fact positive expectations outnumber negative expectations by 48% points. This is 14% higher than the last quarter. • Much of this optimism stems from the leisure market (49% positive swing). There was a slight rise in expectations for business segments – namely non-corporate markets (15%) and corporate sectors (11%). • This business tourism insight shows the difference between international markets. For instance, at a macro-level (European) this evidence suggests that non-corporate markets are set to grow and there is optimism amongst the cities. • In contrast, within the UK and Cheshire context, the non-corporate markets (e.g. Associations) are still present but have large leads and require a high investment of resources/time to secure. Source: European City Tourism Monitor, VI – July 2010, (Sample of 52 cities across Europe)

8. Return to Quick Links Menu Euro Cities - Looking Forward… • Consequently, VCC and the LJ Forecaster group are targeting corporate sectors through a new commercial strategy attempting to identify emerging corporate sectors like pharmaceutical, medical, veterinary etc • Therefore, at a local level we are attempting to adopt a sales orientated approach to address a gap in the mid-week occupancy market in Chester, most notably November • This allows us to understand the market at a ‘global’ level (i.e. there is growing optimism across all business segments) but act at a local level (feedback from hoteliers and our Business Tourism team to target emerging corporate markets) • In terms of international source markets, tourism experts feel most confident about growth in the Italian and German markets. This has certainly been noticed within Chester and Cheshire with the continued weakness of the pound (to the euro) • Consequently opening up key European markets, with visits from places like Germany, Italy and France in June are 9% up compared to the same time last year (Visitrac, 2010) Source: European City Tourism Monitor, VI – July 2010, (Sample of 52 cities across Europe)

9. Chester (000’s) Canterbury 000’s) York (000’s) Bath (000’s) Oxford (000’s) USA 64 Germany 33 USA 43 USA 42 France 19 Germany 18 France 18 Australia 22 Germany 52 Germany 26 Ireland 17 Germany 17 France 24 France 47 USA 14 Australia 21 Dutch 16 Italy 16 USA 14 Dutch 12 Spain 17 France 11 Australia 11 Spain 11 Spain 10 Return to Quick Links Menu International visitors to heritage cities Source: VisitBritain (Foresight – July 2010 showing average annual number of staying inbound visitors, 2006 to 2009 (000s)

10. Return to Quick Links Menu Did you know…? • The importance of the French and German market to Chester – according to VisitBritain, over the past 4 years these markets account for 47% of all international visitors to Chester • Traditionally the US market has been relatively strong but in comparison is a little down the league table (17%) • Over the past 18months, VCC have noticed increased traffic through our consumer websites from a German origin, just over ½ million website visits to www.visitchester.com in just 6 months (July-Dec, 2009) • Although France is the largest international market to Chester, the consumer traffic is minimal in comparison, only 34, 637 website visits in the same period • Indicating, that the French market adopt a slightly different approach in researching and booking holidays e.g. a last-minute model Source: VisitBritain (Foresight – July 2010 showing average annual number of staying inbound visitors, 2006 to 2009 (000s), VCC DMS

11. Return to Quick Links Menu In the spotlight: French market • Who visits? Even age balance – majority (41%) aged 25-44. Importantly for Cheshire, growing over 55s • What do they do? 2/3 went shopping and visited Built Heritage sites, which is the product offering of Chester • When do they visit? 56% visited between April and September • Travel trends? • Shorter holidays but more of them. The French reduce the length of their holidays but travel more often throughout the year. There is an increase in the short-stays/weekend breaks, that are mainly booked online • Last-minute booking. The French continue to booking at the last minute. In general, 17% of bookings are made less than two weeks before departure and 80% of these last minute bookings have been made online. • The UK is seen as being rich in built/historical heritage (4th position), with vibrant cities (5th). It is not seen as being a world-leader in terms of the richness of its natural beauty (36th), so competitors have a big advantage here Source: VisitBritain (Country Profiles, France)

12. Return to Quick Links Menu In the spotlight: German market • Who visits? 45% of visitors aged between 25-44 – likely to be travelling alone or in groups made up of other adults (friends and family) • What do they do? Over 2/3 visited Britain’s Built Heritage which has clear links with Chester’s offering. Importantly for Cheshire, over a quarter visited countryside – Germans are keen walkers • When do they visit? 59% visit Apr-Sept and stay 1-3 nights • Travel trends? • Short-breakers. The European city product is very popular amongst the German market, with city breaks the most common (39%) • Last-minute booking not as important. Although this is a growing trend in Germany, it is not as a big factor in comparison to the UK and France • The internet is important for researching holidays but Germans do not trust it for financial transactions, 22% said they were afraid to give data away online • In fact Spend per German online travel buyer is lower than in any other European country

13. Return to Quick Links Menu What does that mean? Similarities • We know from VisitBritain, France and Germany are the two key markets sources for Chester • They seek what Chester and Cheshire offers e.g. predominantly short and Euro city breaks, shopping, built heritage and countryside – which explains the high volume • There is a similar age demographic attracted to the UK; majority being 25-44. It is paramount for Cheshire to attract younger markets otherwise we face a ‘demographic time-bomb’ like we do with the domestic market. • They generally take their holidays during April-September, although have different lead times. French are very much last-minute via on-line, while Germans tend to plan a little more

14. Return to Quick Links Menu What does that mean? Differences • The French have a last-minute holiday culture similar to the UK, where good value is essential. 17% of bookings are made less than two weeks before departure and 80% of these last minute deals are made online • When French tourists are planning and booking their holidays they use websites that are perceived to be independent of local tourist boards – using places like TripAdvisor or Voyages-Sncf.com • This would explain the paradox of why the French visit Chester in such large numbers but there is minimal traffic through VCC’s consumer website (34k) • As highlighted on an earlier slide, the German market frequently use VCC’s consumer sites to research their holiday (hence ½ million visitors) • This insight further reinforces the key drivers present in the German market; value, order, privacy and punctuality, they respect perfectionism in all areas of life. They prize forward-thinking and knowing what they will be specifically doing at any time or day • They have a long lead time (up to 1yr) and frequently use travel agents to book

15. Return to Quick Links Menu Chester & Cheshire’s News - July 2010 • Chester Rows on Government list for World Heritage status (Chester Chronicle) - The Government has decided to submit a 38-strong list, also including Brunel’s Great Western Railway, the Forth Rail Bridge in Edinburgh and the Eighth century Offa’s Dyke- Chester’s famous shopping galleries date back to the Thirteenth century and were originally shops or warehouses at street level with a long gallery above, reached by steps from the street • Virgin Trains announce huge increase in passenger uptake between London, Milton Keynes and Chester (Chester Chronicle)- An increase in passengers using Virgin Voyager Trains between London and Chester has led to a 150,000 visitor increase and £17m shot in the arm for the Cheshire economy- Figures released by Visit Chester & Cheshire at a press conference held jointly with Virgin Trains management and the Feathers Hotel Group showed the city of Chester had been given a massive public transport boost

16. Return to Quick Links Menu Chester & Cheshire’s News - July 2010 • - Chestival extravaganza declared a tremendous success(Chester Chronicle)- The cultural extravaganza filled the city with a spectacular menagerie of music, plays, dancing, Romans, rhinos, show jumping, cycling and town criers- During the course of the month-long festival there were all kinds of characters that hit the streets to amaze crowds and bring the rich tapestry of Chester’s culture alive once more- One of the most dramatic events in the Chestival programme was the Roman Weekend where over 8,500 people came to visit the Roman Camp in Grosvenor Park and went on to watch gladiator flights in the Amphitheatre

17. Return to Quick Links Menu Chester Hotel Performance – July 2010 • The average monthly room occupancy (74%) from 2010 in July has increased since the same period in 2009 (up by 2%). Year-to-date, Chester occupancy is 68%. This is 2% points down compared to the same period in 2008 • Weekend wise, each Saturday had a room occupancy of at least 95%, with a peaking of 98%. Only two of these weekends were on race meets, indicating normal summer leisure performed strongly • On the weekend of July 9th, there was a 1.4% increase in hotel occupancy in Chester. This can be attributed to the race meeting and summer holidays

18. Return to Quick Links Menu Cheshire Hotel Performance – July 2010 • The average monthly room occupancy (72%) from 2010 is higher than at the same period in 2009. There has been a relative 2% increase in room occupancy, although it is still 3% lower than the same period in 2008. The Cheshire hotel occupancy from July is current the highest occupancy of any month in 2010. In 2009 August, September and October were the most occupied months • It is likely that the Cheshire figures were also helped by the three day long Summer Fine Arts and Antiques fair, because 2010 saw large increase in 2 of the 3 days of the weekend beginning the 9th July. In the 2010 figures, one of the days increased by 21%, and another by 9%. The only decrease was relatively mall, with only a 1% drop

19. Return to Quick Links Menu RevPAR Performance – July 2010 • The July figures for 2010 are very positive when compared to the same period in 2009. The average RevPAR has increased 13.5%. • The RevPAR figures for Cheshire follow a similar trend to those for Chester, although the change is not quite so large. The 2010 figures are £4.90 higher than the same time last year. This is a 10.7% increase from last year • As of the current month, the RevPAR for Chester is 9.5% up on 2009, but 6.7% down on 2008. There is asimilar pattern for the Cheshire RevPAR, which has an 8.8% increase since 2009, but a 4.5% decrease sincethe same period in 2008

20. Return to Quick Links Menu LJ Forecaster: Forward Bookings • Forward bookings are looking very positive when compared to 2009 and 2008. 2010 forward bookings for August are 3% higher than 2009, and 6% higher than they were in 2010. A similar trend can be seen for September, where the 2010 forward bookings are 6% up on 2009 and 7% up on the same time in 2008 • The rest of the months in the year, however, do not look so positive. From October – July, not one month which has a higher level of forward bookings in 2010 than there were in 2009

21. Return to Quick Links Menu LJ Forecaster: Forward Booking Analysis

22. Return to Quick Links Menu LJ Forecaster: Forward Booking Analysis • From looking at the forward bookings in comparison to 2009, there is still only one event which saw a lower number of bookings in 2010 (Races from 5-7th May) • With the figures for July, it can be seen that the race weekend of 9-10th July saw forward bookings increase by 9% from the same period in 2009. Despite this large increase, there was only a 2% pickup from the forward bookings • There was also a substantial increase in forward bookings for the race event on 31st July, with a 7% increase from the same period in 2009. As opposed to the relatively small pickup for the previous event, this particular race saw a pickup of 28% • So far in 2010 the pickup has varied dramatically. The smallest pickup was 2%, which happened in July, with the largest being 32%, which occurred in the February school holidays • All of the current events in 2010 are up on the forward bookings from 2009, but all of these increases are relatively small. The largest increase is 5% (race event 10-11th September), with the lowest being a 1% increase (race event 25th September) • When looking at the forward bookings as a whole for the entire events season, there is an increase of 12.2% forward bookings from the same period in 2009

23. Return to Quick Links Menu LJ Forecaster: Forward Booking Analysis

24. Return to Quick Links Menu LJ Forecaster: Forward Booking Analysis • For the next 11 weekends, beginning with 6th-8th August, only two were down on the forward bookings from the previous year. The weekend of 24th-26th September is currently down by 1%, and the October weekend of 8-10th is down by 8% • The largest increase in forward bookings is from the weekend of 17-19th September, which has seen an increase of 10% forward bookings from the same period in 2009. One reason for this could be the British Mensa Annual Gathering which takes place over this weekend at the Queen Hotel, Chester • One of the few weekends which has the number of forwards bookings down on last year is the 24th-26th September. This is also the weekend when the new term begins at the University of Chester, so people may be less likely to want to stay in the city during the first weekend back for University students