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Monday, 10 May 2010

Leisure could be one of UK's fastest growing industries in the next 10 years!

Recently mentioned in the Daily Telegraph, Leisure business leaders have urged the Government to back Britain's £115bn tourist industry with tax breaks and fresh investment in recognition of the role it can play in kick-starting the economy.

New research by accountants Deloitte shows that tourism could be one of Britain's fastest growing industries over the next decade, with the visitor economy expected to account for 2.9m UK jobs by 2020, up 250,000 on today. Tourism's gross value added contribution – a measure of its economic impact – is expected to rise by 3.5pc a year. That compares to 2.9pc across the total economy.

Leading leisure companies – such as Premier Inn-owner Whitbread and Merlin Entertainments, which owns Madame Tussauds, Alton Towers and a string of leisure attractions around the world – believe the growth would be faster if there was targeted Government support and a more proactive approach from the Treasury.

Alan Parker, Whitbread chief executive, said he believed ministerial responsibility for tourism was currently in the wrong department, and urged Britain to follow the lead set in continental Europe and cut VAT to boost investment.

"We have been lumped in with sport in the Department for Culture, Media and Sport. I think tourism needs to be part of a business department," said Mr Parker, pointing out that tourism was Britain's fifth biggest industry. He said the Treasury had "always been a drag because it regards everything as a cost rather than a benefit". He urged the spending department to take a more enlightened approach to taxation to boost investment in new hotel stock.

"Why is it that every other major economy in Western Europe has been cutting VAT on hotel accommodation, while we are paying 17.5pc and it's probably going up," he said. He cited Germany's cut from 19pc to 7pc and France's reduction from 19.6pc to 5.5pc. In Spain, the rate is 5.5pc.

His arguments were supported by Nick Varney, chief executive of Merlin.
"The UK deserves a level playing field for tourism because the current situation puts us at a serious value disadvantage against our international competitors," he said. "Cutting VAT would boost tourism's earning power which, in turn, would allow us to create thousands of new jobs. "If the Government really wants to make a difference in these straightened economic times, our sector has a key role to play. The UK's tourism trade deficit has rocketed from £3.9bn in 1996 to £19.4bn today and is forecast to rise to £25bn by 2020.

"This means that for every five people who travel out from the UK as tourists, only two come back the other way. We believe that the Government's refusal to acknowledge our basic uncompetitive position is the key driver behind the falling tourist rates to this country and yet another example of the lack of political support for this key UK industry."
Mr Parker and Mr Varney were speaking on the eve of British tourism week – an opportunity, according to VisitBritain chairman Christopher Rodrigues, for the country to showcase the industry.

The week will see various celebrations of premier UK attractions, including last night's illumination of Hadrian's Wall – Britain's longest historic monument – where more than a thousand volunteers helped light the 84-mile path stretching from coast to coast.

Mr Rodrigues called for a "relatively modest" £10m increase in VisitBritain's £40m budget, arguing that the Treasury could make back its investment in tourism eight times over via proceeds from air passenger duty (APD) and VAT receipts alone – before even considering the spin-off benefits to other parts of the Economy. He said it cost about £40 to attract a long-haul visitor, but half of that sum came from foreign carriers that matched any promotional spending by the UK Government. "That generates £168 in VAT and APD alone," Mr Rodrigues said. "That's an eight times return on the Government's investment. If you could do a private equity deal and buy in-bound tourism revenue you would do it tomorrow." He said, however, that "last year we could not match foreign carrier desire to spend. We had the best part of £10m that we couldn't match." With the pound weak against the euro and the dollar, the strong interest in visiting Britain is likely to increase.

"In the short term, if you want to pump some adrenaline into the economy, tourism gets a lot of ticks. There is a very clear business case for a modest investment in tourism - say another £10m," Mr Rodrigues said.

However, he admitted:

"We have not yet won the battle with the Treasury. It should be a slam-dunk, but sadly it isn't."

Mr Rodrigues believed this was because "the only time people are interested in tourism is when it isn't there, such as during the foot and mouth crisis. They forget it's a huge industry. But it's sort of invisible and governments take it for granted. Those who get it big time are developing countries, like Mauritius, where tourism accounts for 25pc-30pc of the economy."

The Government, he said, could learn from such nations, particularly in the run-up to the London 2012 Olympics. That's because tourism had a "Heineken effect - it refreshes parts of the country other industries do not reach".

The latest Deloitte research shows that one in 12 jobs in the UK is supported by tourism – an industry that is particularly adept at attracting workers of all skill levels, with small businesses accounting for 80pc of the 200,000 companies involved in the visitor economy.

Mr Rodrigues said 30m international tourists currently visit Britain a year, ranking it the sixth most popular destination by visitors – behind France, USA, Spain, China and Italy. International tourists spend £16bn, with tourism Britain's third biggest earner of foreign exchange. "We are an industry almost like the submarine service – run silent, run deep," he said.

"It gives the economic return on the investment a nation makes in it's social and cultural assets. This is how we monetise all of that."