BUSINESS BAROMETER
Each month UKinbound produces a Business Barometer, based on a confidential online survey of members, comparing visitor numbers and booking forecasts with a similar and corresponding period in the previous year. The results shown below are weighted composite figures for all business sectors.
Visitor Arrivals
Jun 2007 up 1.2% (in comparison with June 2006)
Jul 2007 up 0.2% (in comparison with Jul 2006)
Aug 2007 down 5.1% (in comparison with Aug 2006)
Sep 2007 up 0.4% (in comparison with Sep 2006)
Oct 2007 down 3.4% (in comparison with Oct 2006)
Nov 2007 down 4.2% (in comparison with Nov 2006)
Dec 2007 down 2.5% (in comparison with Dec 2006)
Jan 2008 down 3.9% (in comparison with Jan 2007)
Feb 2008 up 1.4% (in comparison with Feb 2007)
Mar 2008 up 2.3% (in comparison with Mar 2007)
Apr 2008 up 1.7% (in comparison with Apr 2007)
May 2008 down 3.8 (in comparison with May 2007)
Jun 2008 down 5.5% (in comparison with June 2007)
Forward Bookings
Jun 2007 down 1.5% (in comparison with Jun 2006)
Jul 2007 up 1.8% (in comparison with Jul 2006)
Aug 2007 down 4.4% (in comparison with Aug 2006)
Sep 2007 down 1.6% (in comparison with Sep 2006)
Oct 2007 down 0.5% (in comparison with Oct 2006)
Nov 2007 down 2.3% (in comparison with Nov 2006)
Dec 2007 down 4.8% (in comparison with Dec 2006)
Jan 2008 down 2.6% (in comparison with Jan 2007)
Feb 2008 down 2.5% (in comparison with Feb 2007)
Mar 2008 down 5.4% (in comparison with Mar 2007)
Apr 2008 up 1.3% (in comparison with Apr 2007)
May 2008 down 9.5% (in comparison with May 2007)
Jun 2008 down 6.4% (in comparison with Jun 2007)
BUSINESS BAROMETER - August 2008
27/10/2008
Visitor Arrivals - August 2008 up 1.2% (in comparison with August 2007)
Forward Bookings - August 2008 up 0.6% (in comparison with August 2007)
August has produced a small and somewh...
BUSINESS BAROMETER - August 2008
27/10/2008
Visitor Arrivals - August 2008 up 1.2% (in comparison with August 2007)
Forward Bookings - August 2008 up 0.6% (in comparison with August 2007)
August has produced a small and somewhat surprising increase in both visitor numbers and forward bookings for our members. This can largely be attributable to the resilience of group bookings, particularly from the EU, with many visitors making use of the pound’s weakness against the Euro. However, 2008 has overall been a disappointing year for inbound tourism, and many of our members are worried at what 2009 could bring.
One piece of good news for inbound tourism is the weakening pound against the US dollar, which according to anecdotal evidence, has even led to some US agents referring the UK to their customers as an affordable destination. However, the reality of the current economic climate and the anticipation of a new Presidential administration will probably mean fewer North American’s travelling to long haul destinations; but the ones who have already organised their trips will perhaps spend a little more while they are here.
Falling oil prices have given another small ray of light to travellers worldwide - and prices have continued to fall even after the decision last week by OPEC (the Organisation of Petroleum Exporting Countries) to cut the output of oil. The falling cost of oil means that some airlines are beginning to reduce their fuel surcharges, but while many airlines’ fares remain unchanged, any significant boost to passenger numbers looks unlikely in the short-term.
The application process for biometric visas remains an issue for some key emerging inbound markets. Many Chinese and Russian business travellers, as well as being affected by the impending recession are now also choosing other destinations in Europe, in many cases due to the onerous procedure of applying for a UK visa.
As market conditions continue to become tougher, we will persist in lobbying Government on issues such as biometric visas, where their involvement can make a positive difference to the number of overseas travellers choosing to visit the UK.
27 October 2008
BUSINESS BAROMETER - June 2008
11/08/2008
Visitor Arrivals - June 2008 down 5.5% (in comparison with June 2007)
Forward Bookings - June 2008 down 6.4% (in comparison with June 2007)
June saw another fall in visitor numbers c...
BUSINESS BAROMETER - June 2008
11/08/2008
Visitor Arrivals - June 2008 down 5.5% (in comparison with June 2007)
Forward Bookings - June 2008 down 6.4% (in comparison with June 2007)
June saw another fall in visitor numbers compared with 2007 and completes a disappointing half year for inbound tourism. With visitors for the year to date down by 1.3% and weak forward bookings there seems little prospect of any significant improvement in trading conditions in the short term. The economic outlook is particularly grim with the prospect of imminent recession driving consumer confidence in both Europe and the USA to record lows.
The last two weeks we have seen the Euro begin to weaken from the record highs against the Pound that has sustained the growth in European business over the last two years and it seems likely it will continue to weaken through the rest of the summer and into the autumn. With the prospect of reduced air capacity and higher travel costs this could curtail the growth in short haul city breaks in the months ahead.
Long haul leisure business remains poor, particularly from North America, but has been bolstered by the resilience of the business travel sector. However, there are worrying signs that companies are now looking for ways to reduce business trips.
Although it will probably have no impact on this year’s trading there is one small chink of light breaking through this gloomy landscape for export tourism and that is the recent resurgence of the US Dollar. Trading at $2.10 to the Pound just 9 months ago it is worth $1.93 today and market sentiment has shifted to expect further improvement as it is believed that European central banks, unlike the Federal Reserve, have been slow to respond to a potential slowdown by refusing to cut interest rates as they focus on fighting inflation. If this proves correct 2009 could be a much better year for inbound tourism.
11 August 2008
BUSINESS BAROMETER - May 2008
14/07/2008
Visitor Arrivals - May 2008 down 3.8% (in comparison with May 2007)
Forward Bookings - May 2008 down 9.5% (in comparison with May 2007)
May produced a sharp drop in visitor numbers c...
BUSINESS BAROMETER - May 2008
14/07/2008
Visitor Arrivals - May 2008 down 3.8% (in comparison with May 2007)
Forward Bookings - May 2008 down 9.5% (in comparison with May 2007)
May produced a sharp drop in visitor numbers compared with 2007 with an even larger and highly significant fall in forward bookings. There can be no doubt that the combined effects of economic uncertainty, unfavourable exchange rates, high oil prices and the increasing cost of food is seriously eroding consumer confidence in virtually all our key long haul markets; but most particularly in North America. With all outbound leisure tourism from the USA being severely curtailed we estimate this could mean up to 500,000 fewer American visitors to the UK this year. Eurozone business, particularly from the accession states, continues to remain fairly solid supported by a strong Euro and we expect this to continue for the rest of this year. However, beyond that it seems likely the Euro will ease off its current high-water mark.
The trend this year has been declining long haul demand being partially offset by modest growth in short haul traffic producing relatively flat visitor numbers and a drop in revenue. This scenario looks set to continue for at least the rest of 2008 and most likely well into 2009. In these trading conditions price becomes increasingly the prime determining factor for potential customers and, despite rising costs, there is extreme pressure to discount prices. Already it is clear that 2008 is going to be another tough year for export tourism.
14 July 2008
BUSINESS BAROMETER - April 2008
11/06/2008
Visitor Arrivals - Apr 2008 up1.7% (in comparison with Apr 2007)
Forward Bookings - Apr 2008 up 1.3% (in comparison with Apr2007)
The small increase in both visitor numbers and forwa...
BUSINESS BAROMETER - April 2008
11/06/2008
Visitor Arrivals - Apr 2008 up1.7% (in comparison with Apr 2007)
Forward Bookings - Apr 2008 up 1.3% (in comparison with Apr2007)
The small increase in both visitor numbers and forward bookings is welcome but the trend of recent months continues with trading conditions remaining difficult for all inbound tourism. In each of the last four months we have seen modest increases in visitors from short haul destinations and larger drops in long haul business particularly from countries whose citizens require visas.
The additional cost and inconvenience of applying for a UK tourist visa, compared with most of our main competitors, coupled with fragile economic conditions in many parts of the world is becoming a serious problem for our export tourism businesses that our Government seems unwilling to acknowledge. The UK tourism trade deficit has grown dramatically in recent years; reaching 20Bn in 2007 and looks set to continue to grow. This deficit can only be reduced in two ways; either UK citizens take fewer trips abroad, and there seems no realistic prospect of this, or we increase our export tourism revenues.
As market conditions continue to become tougher this will be impossible without a radical new approach by central Government; the realisation at the Home Office that tourism is different to migration; an understanding at the Treasury that a reduced tax burden for tourists will actually generate more tax revenue and an appreciation across the whole of Government of the value and importance of inbound tourism to the UK economy.
11 June 2008
BUSINESS BAROMETER - March 2008
16/05/2008
Visitor Arrivals - Mar 2008 up2.3% (in comparison with Mar 2007)
Forward Bookings - Mar 2008 down 5.4% (in comparison with Mar 2007)
The slight improvement in visitor numbers for Mar...
BUSINESS BAROMETER - March 2008
16/05/2008
Visitor Arrivals - Mar 2008 up2.3% (in comparison with Mar 2007)
Forward Bookings - Mar 2008 down 5.4% (in comparison with Mar 2007)
The slight improvement in visitor numbers for March are a reflection of the earlier Easter this year than 2007 rather any shift in the markets; whilst the sharp fall in forward booking emphasises the trend of increases in short haul traffic from Europe and the decline in long haul business.
Although we are seeing some signs of the Pound weakening against the US Dollar there is little prospect of any significant shift in currency exchange rates in the coming months and this does not bode well for this summer. We are seeing a steady fall in international consumer confidence as the credit crunch rumbles on and as one of the more expensive destinations this will undoubtedly have an impact on our ability to attract visitors to the UK in the short term. This is especially true for visitors who require a UK visa particularly in the developing markets of China, India and Russia where we continue to receive reports of problems from potential visitors trying to cope with the raft of changes unilaterally introduced by the UK Government for all visa applicants at the end of 2007.
We asked members this month if these changes have caused problems for their customers. Over 50% of respondents confirmed that some of their customers suffered either significant or some problems with visa applications. Only about 6% of all international visitors to the UK require a visa, but those visitors account for 13.2% of the 18Bn generated by export tourism each year. Moreover, they are predominantly our fastest growing markets and should remain so for at least the next decade. We completely endorse the need for the UK to have a secure border but we believe it can be secure without being unwelcoming to genuine tourists.
16 May 2008
BUSINESS BAROMETER - February 2008
10/04/2008
Visitor Arrivals - Feb 2008 up1.4% (in comparison with Feb 2007)
Forward Bookings - Feb 2008 down 2.5% (in comparison with Feb 2007)
It is important to note that due to essential wor...
BUSINESS BAROMETER - February 2008
10/04/2008
Visitor Arrivals - Feb 2008 up1.4% (in comparison with Feb 2007)
Forward Bookings - Feb 2008 down 2.5% (in comparison with Feb 2007)
It is important to note that due to essential work on our website during March we have only been able to receive about 50% of the responses we would normally expect for our business barometer and the figures recorded should be seen in this context.
Overall members seem to have done better than expected in February with a small increase over the same month in 2007 however it was clear that the majority, if not all, of this gain has come from European business on the back the seemingly inexorable strengthening of the Euro. While long haul business remains in the doldrums. It is also clear that much of the demand is coming from last minute bargain hunters and this is readily confirmed by the fall in forward bookings for the seventh month in a row.
Some economists are claiming that the worst of the so called credit crunch is now behind us and that the US economy is set for a strong second half of 2008; whilst fervently hoping this is so we fear that many consumers, particularly in the USA, may remain cautious in their holiday plans for some time yet.
This month we asked members if they thought Terminal 5 would be good for inbound tourism. They were almost unanimous in declaring it would be and we would heartily agree that in the long term it will; however, we are also sure that these votes were cast before Terminal 5 it opened for business.
BUSINESS BAROMETER - January 2008
10/03/2008
Visitor Arrivals - Jan 2008 down 3.9% (in comparison with Jan 2007)
Forward Bookings - Jan 2008 down 2.6% (in comparison with Jan 2007)
For the fourth consecutive month we have seen ...
BUSINESS BAROMETER - January 2008
10/03/2008
Visitor Arrivals - Jan 2008 down 3.9% (in comparison with Jan 2007)
Forward Bookings - Jan 2008 down 2.6% (in comparison with Jan 2007)
For the fourth consecutive month we have seen a fall in both visitor numbers and forward bookings compared to 12 months ago. Below these headline figures we are seeing significant reductions in demand from long haul markets with only modest increases in short haul business. With the US Dollar remaining weak, again dipping below the $2 to the Pound level, and US economy either in, or very near, recession we can expect no improvement in this key market during 2008 and maybe beyond. With consumer confidence in most long haul markets remaining fragile only Europe, with an appreciating Euro, provides any prospect of growth this year. However, as long as the current global economic instability persists business and consumer confidence will continue to decline in all markets in the short to medium term resulting in lower demand for tourism products. In such conditions price is king and in this regard the UK has an uphill struggle as confirmed by the World Economic Forum�s Travel and Tourism Competitiveness Report for 2008 which placed us a lowly 127 out of 130 countries for price competitiveness. We do exceptionally well in many other areas, such as cultural and human resources, giving a us a good overall result but high prices, driven by high operating costs and ever increasing taxes, remains our Achilles Heel.
This month we asked members about changes in volumes of online bookings compared to other distribution channels. Just over 21% said they had seen no change but 42% had seen a small increase and just under 20% a significant rise. With only 17% recording a �don�t know� it is clear that internet transactions are now a vitally important part of the inbound sector.
BUSINESS BAROMETER - December 2007
10/02/2008
Visitor Arrivals - Dec 2007 down 2.5% (in comparison with Dec 2006)
Forward Bookings - Dec 2007 down 4.8% (in comparison with Dec 2006)
A year that started so well for inbound touris...
BUSINESS BAROMETER - December 2007
10/02/2008
Visitor Arrivals - Dec 2007 down 2.5% (in comparison with Dec 2006)
Forward Bookings - Dec 2007 down 4.8% (in comparison with Dec 2006)
A year that started so well for inbound tourism ended with a disappointing last quarter culminating in a 2.5% drop in visitor numbers for December. With forward bookings in December producing the largest drop of the year the prospects for 2008 do not look promising.
Once again it is long haul traffic that is worst affected with the introduction of biometric data collection from all visa applicants from last October a particular concern. UKvisa's claim that the problems during initial rollout have been resolved but members are continuing to report severe drops in demand in some markets such as China, India and Russian citing the time and cost of travel to visa centres as the primary issue. As the UK is the first European country to introduce such a requirement for visa applicants we are also seeing a reluctance in some countries for potential visitors to apply for a visa either because of the increased inconvenience of providing biometric data or because their culture finds it intrusive. These issues will hopefully become less damaging over the next 2-3 years as other nations begin this process but they are currently an additional burden that tourism exporters have had imposed on them.
We continue to receive complaints about the high cost of UK visas compared to the price of a Schengen Visa which, since the 1 January 2008, covers 21 European countries for an average price of �40 compared to �65 (from the 1 April 2008) for a standard UK visa. Whilst cost of visas remain a small part of the total UK tourism package they are, alongside APD and now biometrics, the most visible disincentives to choose the UK over the plethora of competitor nations vying for this business.
With the global economic situation unlikely to change for the better, and a lowering expectation of large UK interest rate cuts this year we expect the current trends to continue for at least the first half of 2008. Europe remains the most likely source of growth this year but this is likely to be less than the decline in long haul markets leading to a net reduction in revenue if not volume for 2008.
This month we asked our members if a carbon-trading scheme would work for their business. Just over 33% thought it would while 18% felt it was not appropriate leaving nearly half of respondents (49%) unsure. At our Annual Convention in Torquay last week we ran a seminar stream dedicated to sustainable tourism so we hope many of the �don�t knows� now understand more about making tourism more environmentally friendly and if carbon trading would work for them.
14 February 2008
For further information please contact:
Stephen Dowd
Chief Executive
BUSINESS BAROMETER - October 2007
10/01/2008
Visitor Arrivals - Oct 2007 down 3.4% (in comparison with Oct 2006)
Forward Bookings - Oct 2007 down 0.5% (in comparison with Oct 2006)
October was another disappointing month for in...
BUSINESS BAROMETER - October 2007
10/01/2008
Visitor Arrivals - Oct 2007 down 3.4% (in comparison with Oct 2006)
Forward Bookings - Oct 2007 down 0.5% (in comparison with Oct 2006)
October was another disappointing month for inbound tourism with our members reporting a 3.4% fall in visitor numbers, while forward bookings remained flat, completing a poor summer for the industry. London continues to outperform the rest of the UK but concerns about the US and UK economies, particularly how this will affect business travel, are making everyone more cautious in their projections for the first quarter of 2008 and beyond. Leisure travel remains under severe price pressure and we can expect this to remain the case for the near future.
Long-haul business continues to be worst affected with, in particular, North American traffic badly affected as consumer confidence in the US plummets in the wake of the ever expanding credit crisis. European business is performing better and there is some hope that if the Euro continues to appreciate against Sterling we could see this being sustained through 2008. The downside being that European visitors generally stay for shorter periods and spend much less than long-haul visitors.
Also of great concern is the continued weakness of the US Dollar, which shows no sign or recovery despite some temporary relief following the Bank of England MPC�s quarter point reduction in base rates last week. There seems to be general consensus in financial circles that the situation is most likely to get worse in the medium to long term as central banks seek to replace their depreciating US Dollar reserves with stronger currencies like the Euro. There is also widespread speculation that a number of key countries are considering �depegging� their currencies from the US Dollar. This is a double edge sword that will further weaken the Dollar but could make Sterling exchange rates with those currencies more attractive.
As global competition becomes more fierce this is certainly not the time for the UK to be reducing its destination marketing spend, but with the savage cuts to VisitBritain�s budget for the next three years ordered by Department for Culture, Media and Sport (DCMS), this is exactly what we face. We therefore asked our members this month if they thought responsibility for tourism should be moved to another Government department. Just over 14% felt it should stay with DCMS while 44% thought it should move. However, just under 42% believed that a move would make no difference. It would seem that whilst a large majority of members are unhappy with DCMS�s stewardship of tourism nearly half of them have little confidence in another department doing any better.
12 December 2007
For further information please contact:
Stephen DowdChief Executive
BUSINESS BAROMETER - September 2007
09/01/2008
Visitor Arrivals - Sep 2007 up 0.4% (in comparison with Sep 2006)
Forward Bookings - Sep 2007 down 1.6% (in comparison with Sep 2006)
September proved to be another difficult month f...
BUSINESS BAROMETER - September 2007
09/01/2008
Visitor Arrivals - Sep 2007 up 0.4% (in comparison with Sep 2006)
Forward Bookings - Sep 2007 down 1.6% (in comparison with Sep 2006)
September proved to be another difficult month for inbound tourism with visitor numbers flat and a fall in forward bookings. Overall the key third quarter of 2007 has seen a fall in visitor numbers of 4.5% compared with 2006 and forward bookings dropping by 4.2%.
A recent survey by IPK International estimates that global outbound travel increased by 5-6% in the first 8 months of 2007, which means that as an international destination the UK continues to lose market share. This survey also indicated that the so-called �credit crunch� will reduce European demand while the sub-prime mortgage crisis will further dampen US consumer confidence. This was confirmed just a few days later when the USCB Consumer Confidence Index, a highly respected gauge of US household sentiment, fell sharply in October to its lowest level in over two years. With the US Dollar falling below $2.10 to the Pound today, and likely to fall still further, we can expect demand from the US to be markedly curtailed.
With global oversupply of tourism products and demand from our two biggest markets almost certain to fall in the short term, our members face stiff competition in the coming months. Of course we have some of the most compelling tourism products in the world to sell and we are lucky to have innovative, dedicated tourism professionals who will continue to market, sell and deliver their products to the high standards international travellers demand in this highly competitive business.
It is such a pity that we do not have the same level of competence and commitment from our Government. Is it too much to ask that in return for the �2.5Bn a year in tax revenue generated by inbound tourism our Government could just do the two things we cannot do for ourselves; destination marketing and statistics.
Successful businesses, especially exporters, rely on accurate data, but this Government has continuously failed to provide the robust statistics we need. Indeed, the March 2004 Allnutt Report into Tourism Statistics, commissioned by DCMS, made it clear that the UK was not even meeting the EU minimum standard. The report made 14 fully costed recommendations that were endorsed by the entire tourism industry. To date not one of these recommendations has been implemented.
Now the Secretary of State for Culture Media and Sport, James Purnell, has decided that our national tourist board will have to make-do with less money for international marketing after 11 years of stand still funding. He repeatedly says that VisitBritain does a good job but then demands they make �efficiency savings�. We wonder whether the rest of the DCMS portfolio, or their own staff, have been asked to make 18% efficiency savings from their budget.
We find it more than a little ironic that in the USA, where inbound tourism has been in decline been for the last 5 years, the US Congress has just agreed to set up a federal National Tourism Office, reversing decades of responsibility being devolved to individual states. And one of the reasons cited for this change of direction is the excellent return on Government investment in the UK achieved by VisitBritain.
7 November 2007
For further information please contact:
Stephen DowdChief Executive
