With the 2006 Comprepensive Spending Review now …



17 May 2006

The Rt. Hon. Gordon Brown MP,

Chancellor of the Exchequer,

HM Treasury,

1 Horse Guards Road,

London SW1A 2HQ.

Comprehensive Spending Review - Tourism

With the Comprehensive Spending Review now underway, I thought it appropriate to write to you in my capacity as the Chairman of the Tourism Alliance to state the case for increasing Government’s investment in tourism marketing.

The tourism industry considers that this spending review is an appropriate time to redress the lack of investment in one of the country’s largest and most productive industries. In particular, there are three areas where investment is required to maximise the contribution that tourism makes the British economy. These are;

1. The Provision of Sufficient Funding to Maximise the Tourism Legacy of the Olympic Games

2. Maximising the Benefit of Government Expenditure on Domestic Tourism

3. Improving Tourism Statistics

Before I do this, I would like to first provide some background. The Tourism Alliance is an umbrella trade association for the tourism industry, comprising almost 50 tourism-related trade associations and organisations ranging from the British Hospitality Association and the British Beer and Pub Association through to the Association of Leading Visitor Attractions and the Confederation of Passenger Transport. Together, Tourism Alliance members represent almost 200,000 business throughout Britain from large corporate chains down to small guesthouses and charities. This makes the Alliance the voice of the tourism industry.

What is not generally appreciated across Government is the importance of the tourism industry to the British economy. Not only is it one of the largest industry sectors (generating £74bn for the British economy and employing over 2 million people), it is also one of Britain’s largest export industries, generating over £15bn per annum in foreign exchange each year. In fact, Britain earns more foreign exchange from tourism than it does from the export of North Sea oil, vehicles or food, beverage and tobacco put together.

On the international stage, the competitiveness and productivity of the sector is such that Britain has the sixth largest inbound tourism industry in the world. However, the UK’s share of global tourism expenditure is decreasing. A recent report my VisitBritain shows that Britain’s share of the global tourism market has fallen by 16% over the last 20 years. Not only this but, over the same period, the average length of stay has fallen by 30% from 11.5 days to 8.1days and the average expenditure per stay as fallen by 40% in real terms from £750 per visit to £450 per visit. This trend needs to be corrected if Britain is to retain its position in the global tourism market and continue to generate significant economic benefits for the UK economy.

From a Treasury perspective it is also important that investment in the tourism industry is maintained. It is estimated that the Exchequer gains £2.5bn in Air Passenger Duty and VAT expenditure from inbound tourism alone. Yet, despite the demonstrable economic and social benefits that the tourism industry provides the country, there has been a tendency for Government to overlook the industry in successive spending reviews.

For example, funding to market Britain overseas stands at £35.5m and has not increased since 1997. This means that, in real terms, it has actually decreased by more than 20% over the last 10 years. This is despite DCMS’s funding increasing by almost 50% over the last five years alone.

This, therefore, brings me to the three actions that the industry considers to be paramount for the Government to take as part of the 2006 Comprehensive Spending Review.

1. Maximising the Tourism Benefits of the Olympic Games

As you know, there is a huge tourism-related opportunity afforded by London winning the right to stage the Olympic Games in 2012. It is commonly acknowledged that there will be two main legacies from staging the Olympics

1. The regeneration of the East End of London

2. The opportunity to showcase London and Britain to an estimated global audience of over 4bn people as the place to visit, undertake business and invest.

The opportunity to market Britain to the 200 countries who will send teams to the Olympics is an unprecedented and truly once in a lifetime opportunity. However, to maximise this opportunity requires a certain level of investment in the marketing of the country in the lead-up to, and after, the staging of the Games.

As the current Comprehensive Spending Review is for the period 2008/9 - 2010/11 it is important to the success of attracting people to the UK that adequate additional funding be provided to undertake the build-up marketing of the country in the lead-up to the Games.

Restoring VisitBritain’s Grant-in-Aid to its 1997 value and providing additional funding specifically for the funding of the Games is paramount. The level of funding required would be inconsequential in terms of DCMS’s overall funding, let alone Government expenditure, and has the opportunity to generate a step change in the already substantial amount of overseas revenue generated by tourism.

VisitBritain’s ability to deliver tangible benefits with this additional funding is highlighted by the National Audit Office’s 2005 report on the organisation which concluded that there was “no doubt that the organisation was generating very high levels of return”. These returns amount to well over £30 of foreign expenditure and £5 in revenue to the Exchequer for every £1 Grant-in-Aid provided for marketing.

We, therefore have the opportunity and the mechanism to maximise the country’s return from the Olympic games. The only thing that we need is the political commitment to make it happen.

2. Maximising the Benefit of Domestic Tourism Expenditure

With the establishment of the RDAs in 1999, the Government devolved responsibility for domestic tourism marketing in England from the national (English Tourist Board) to the regional level.

The newly established English Tourism Council was then given a purely strategic remit to develop and co-ordinate national tourism policy and initiatives. However, after various impacts on domestic tourism, not least the Foot and Mouth outbreak in 2001, it was recognised that there was a requirement to and, indeed, a benefit from, undertaking domestic marketing at the national level.

So when VisitBritain was formed from the merger of the English Tourism Council and the British Tourism Authority in 2004, it was given the remit to market England domestically. However, at the same time, the remit to develop and co-ordinate national policy was ended. Therefore, the problem now faced by the industry is that there are two streams of Government funding for domestic tourism (via DCMS for VisitBritain and via DTI to the RDAs) that are not connected or co-ordinated in policy terms.

As a result, it is both difficult for the industry to undertake national promotions with the RDAs and for Government to determine whether it is receiving the most effective or efficient return on its investment. The Tourism Alliance, therefore, urges Government to move to ensure that there is better co-ordination of domestic tourism in respect of marketing investment and organisation so that it is able to generate the maximum benefit for Britain.

3. Improving Tourism Statistics

Despite tourism being one of Britain’s largest industries, the accurate and timely provision of national and regional statistics that the industry needs to plan, review and amend business plans, monitor day to day business performance, manage projects and satisfactorily interpret market information is sorely lacking.

The national tourism surveys have methodological weaknesses and do not disaggregate well at a regional level due to small sample sizes and volumes. Not only does this make it difficult for the industry to plan, it also makes it difficult for Government measure the productivity of the industry.

In 2004, the Department of Culture, Media and Sport published an assessment of tourism statistics. This report found that there were major gaps in Britain’s national tourist statistics and that Government investment was required to improve their quality to the requisite standard. The gaps identified included:

• Good quality lists of accommodation providers and other tourism businesses

• Frequent and timely statistics on day visitors

• Frequent and timely indicators on short term market trends

• More detailed statistics on tourist expenditure

• More comprehensive and robust local statistics.

The report concluded that improvements to the main tourism surveys were required to ensure that they provided statistics that were fit for purpose and warrant the reliance that the industry and local and central government agencies place upon them. However, few of the report’s recommendations were implemented and the problem with tourism statistics has continued.

At the recent “Partners for England” Summit, attended by 50 of the leading figures in national and regional tourism, the lack of high quality national tourism statistics was again highlighted as one of the key barriers to the growth of the industry. Indeed, the RDAs at the Summit agreed that they were willing to work with DCMS to establish a “Tourism Analysis Unit” that would fulfil both Government’s international commitments for tourism statistics and the industry’s need for timely and accurate information.

With the industry and the regional bodies committed to working with Government to address this issue it is now timely for action to be taken to finally resolve this issue.

If these three initiatives are undertaken as part of this Comprehensive Spending Review, the Tourism Alliance believes that Britain will be well placed to maximise the potential afforded by winning the Olympic Games and maintain the growth of the industry over the next 10 years. We realise that this CSR will be even tighter than usual but consider that the addition funding required to undertake these initiatives is nominal and that the return on investment will be substantial.

If you would like more information on the Tourism Alliance or to discuss the three initiatives I have highlighted please to not hesitate to contact either myself or the Tourism Alliance’s Policy Director, Kurt Janson, on 020 7395-8246.

Brigid Simmonds

Chairman

Tourism Alliance

Chairman: Brigid Simmonds

Policy Director: Kurt Janson

Telephone: 0207 395 8246 Fax: 0207 3958178

Email: kurt.janson@

Web:

Tourism Alliance Centre Point, 103 New Oxford Street, London, WC1A 1DU

Letter Copied To:

The Rt Hon Tessa Jowell MP (Secretary of State, DCMS)

Shaun Woodward MP (Tourism Minister)

The Rt Hon Stephen Timms MP (Financial Secretary to the Treasury)

Nicolas Holgate (Chief Operating Officer at DCMS)

Lord Tom Pendry All Party Tourism Group

Janet Anderson MP (Chair, All Party Tourism Group)

Rosemary McKenna MP

Huw Irranca-Davies MP (PPS to Tessa Jowell)

Michael Hall MP

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