Britain’s £560m tourism gap

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The FINANCIAL — The UK is losing out on hundreds of millions of pounds by failing to take advantage of the rapid growth in outbound tourism from E & SE Asia, according to new analysis from independent research company QUOD.  The figures suggest that constraint at Heathrow could be one of the key factors holding back the UK’s growth potential in the region.

The economic growth opportunities presented by the rise of Asian economies are centre stage and outbound tourism from the region represents a significant untapped market for UK plc. Yet the latest figures show the UK – which has traditionally had a higher market share of East Asian tourists than its competitors – is losing that competitive advantage, forfeiting hundreds of millions of pounds in tourist spend to European rivals.  Independent analysis shows that if Britain had been able to grow its market share by the same rate as the Netherlands or Germany, it could have benefited from and additional £560m in expenditure over the last five years. If Britain’s share of inbound tourists from these markets had grown by the same rate as France, it could have seen an additional £330m expenditure during the same period.

Whilst there are likely to be a number of factors contributing to the deficit – including Air Passenger Duty and visa restrictions which are a burden on British competitiveness – the tourism slump parallels a period where European hub rivals have increased flights to E & SE Asia significantly more than the UK over the last five years.  Paris Charles de Gaulle has increased its flights to East Asian routes by a staggering 21%, Schiphol increasing 10% and Frankfurt increasing 9%. Heathrow’s routes to this key region have only grown 6% over the last 5 years. Over the next decade alone, the UK could lose out on £800 million in tourism revenue from the region compared to France. Inaction and further delay to relieve the capacity constraints at the UK’s only hub airport could see this trend continue and worsen.

The latest OECD statistics highlight the size of the rapidly growing East Asian tourist market, which now generates annual tourist spend at around £98 billion, due to an increase of 56% in trips from these countries in the past seven years. This rate of growth dwarfs that of the USA, which by contrast grew by 5% over the same period and currently generates around £76 billion. Heathrow is the only UK airport which brings in more visitors to the UK than it flies out – making it a net contributor to the UK’s tourism industry. The Government’s new tourism strategy recognises the vital role aviation connectivity plays, promising to increase air capacity as a means of driving inbound tourism.

British Hospitality Association Chief Executive Ufi Ibrahim said:

“We know that there is huge demand from visitors to come to the UK, whether it’s to take in our unique culture and heritage,  see the wild beauty of our countryside or to experience the nightlife, shopping and cuisine in our great cities. But if we can’t make it easy for visitors to get here because of constraint at our only hub airport, we’ll fall further behind our European competitors and lose out on the economic benefits that the tourist pound brings.”

Heathrow CEO John Holland-Kaye said:

“The Government is making great strides in promoting trade to Asia. With tourism supporting almost one in ten jobs in the UK, tapping into the booming East Asian tourist market would give a boost to its plans to drive economic growth and rebalance the economy.

We’re on the cusp of a decision which will shape our economy for generations to come. Heathrow is already a world-class front door for the UK and with expansion we’ll welcome more of the visitors whose spending will underpin the jobs of the future. Let’s deliver it.”

 

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