UK tourism industry in peril as overseas visitors stay away
Last year’s boom in British summer holidays was not enough to save thousands of tourism businesses, despite increased domestic bookings to popular places such as Cornwall and the Yorkshire Dales.
A survey by the Tourism Alliance of 1,927 tour operators, hotels, attractions, language schools and other travel and hospitality businesses serving foreign tourists found that 11% believe they are “very likely to fail” in 2022, and a total of 41% think they are “quite likely to fail”.
The first three months of 2022 are looking bleak, with cancellations soaring in the wake of the Omicron variant. Almost a third of businesses surveyed have lost at least half of bookings made for domestic holidays between January and March this year.
With far less government support available after the end of the furlough scheme, a quarter of those surveyed said they had no more cash reserves, and just over half said they would run out within two months.
Last summer saw crowded beaches and sold-out seaside resorts, but that masked an overall drop in domestic tourism away from coastal and rural areas, according to Kurt Janson, director of the Tourism Alliance. The alliance comprises more than 60 trade associations that together represent 303,000 UK travel businesses.
“There’s traditionally been a huge amount of domestic tourism in towns and cities, and a lot of business travel and conferences, and those sectors have done very badly,” Janson said. “Businesses that rely on international travel have done badly – language schools, events, conferences. And because booking times for these things are longer, they will take longer to recover.”
Janson was particularly concerned about tour operators serving foreign visitors. “They are responsible for about 60% of overseas visitors to the UK and if they are not out there promoting the UK as a destination, inbound tourism will take a long time to recover. We need them out there, fighting for our corner of the market.”
One indication of the struggles facing the tourism sector came last week, when the Hungarian government said it would again delay a scheme that would have seen as many as 60,000 students visiting the UK this summer.
“It would have been a massive boost,” said Huan Japes, membership director of English UK, the trade body for language schools. “We used to get 550,000 students coming, but we’ve barely risen above 100,000 a year since the pandemic.”
Janson said the figures showed it was unlikely that the government’s tourism recovery plan would meet its targets. It hopes to see a bounceback to 2019 levels of domestic tourism by the end of the year, and of overseas tourism by the end of 2023.
The UK was becoming less competitive as an international destination, Janson said. Visitors could no longer reclaim VAT when they left, other countries were spending more on marketing, and EU visitors now needed passports to enter the UK.
Tourists from China and Middle Eastern countries were keen to shop in places like Bicester Village, but were now more likely to choose France because they could get a tax refund when they left. (The UK scrapped the VAT reclaim scheme at the end of 2020.) “The government has basically said to those visitors ‘don’t come here – go to Paris instead’,” said Janson.
He said the government urgently needed to promote the UK as a destination. Ireland is spending £33m. Australia will spend £250m in the next three years, and the US is about to approve a £185m budget to rebuild its tourism industry.
Joss Croft, chief executive of trade body UKinbound, said: “These figures lay bare the devastating impact the pandemic continues to have on the UK’s inbound, outbound and domestic tourism industry, along with the entire supply chain. We are seeing green shoots, but the crippling border restrictions and ever-changing government guidance continue to stifle recovery.”
From 1 April, hotels, restaurants and other hospitality firms will have to start paying business rates again, as well as VAT at the full 20%, following the reduction to 12.5% during the pandemic.
Kate Nicholls, chief executive of
UKHospitality, said keeping the reduced rate would bolster the tourism trade, instead of raising prices for staycationers and overseas tourists.
“The main driver for inbound tourism is price, and travel to the UK is very price sensitive,” she said. “A 1% fall in the cost of a holiday in the UK delivers a 1.3% increase in inbound tourism revenue for the economy.”
Bernard Donoghue, chief executive of the Association for Leading Visitor Attractions, said: “Tourism was hit first, hit hardest and will take the longest to recover, and those attractions and businesses which are usually highly dependent on inbound tourists, who have been absent for nearly two years, will take the longest to recover of all. Our industry lost, on average, £200m a day in 2021.”