10 July 2018
Our recent study, comparing 2016 to 2015, has shown that tourist spending in the UK, representing 1.6% of the economy, is almost a quarter below the European average (2.1%), with the UK ranking 23rd in a study of 34 countries. The country with the highest percentage of GDP in tourism included in the study was Croatia, with tourist expenditure accounting for 18.8% of GDP.
The main driver behind the slower rate of growth could be connected to slow turnarounds on upgrades to tourist infrastructure, such as airports. More developed economies, including many in European countries, can often find it a slower, more difficult process to increase tourism capacity. Although the expansion of London Heathrow Airport, with a third runway, gained parliamentary approval in June, it may come too late to protect London’s position as a leading transport hub, with the airport only becoming fully operational in 2028. In contrast, China is investing heavily in the infrastructure needed for large numbers of international visitors. For instance, Beijing Daxing Airport is set to be the largest airport in the world when it opens in 2019 and Guangzhou’s new airport has expanded to accommodate 100 million passengers annually.
For the hospitality industry, this could spell bad news. Tourism is likely to become an even more important source of jobs and a catalyst for business creation and growth as time goes on. The study found that the rate of growth in tourist spending year on year actually fell by 9% (resulting in the UK being ranked bottom out of all 34 countries), although it has been boosted by the fall in the value of the pound following the EU referendum in June 2016. A fall in tourism has a knock on adverse effect to most hospitality businesses, the UK’s third largest private sector employer, such as hotels, restaurants and bars, which are already struggling with lower consumer demand and higher property and staff costs. It could also get worse with the introduction of a tourist tax, which has been mooted for Edinburgh by the local Council.
Tourism is a major battleground in the global economy and the UK appears to be lagging behind. The drop in sterling has helped to attract tourists to the UK since the Brexit vote. However, unless the Government builds the capacity needed to welcome large numbers of tourists, the country will not be able to take full advantage of the impact of the fall in sterling and hospitality businesses will suffer.
If you would like any advice about the topics covered in this article, please contact Martin Jones.
