Prospects Event Recap

Sunday January 20, 2019

The Society’s annual Prospects event was held on January 15th. This longstanding New Year fixture in our calendar was as popular as ever, with some 100 attendees coming together to discuss the outlook for UK tourism in 2019.  We are extremely grateful for the support of Expedia, who hosted the event in their London office, and our other sponsor, the consultancy company BVA BDRC. 

The event was most ably chaired by Rt Hon Michael Portillo, the former Cabinet Minister and presenter of the popular BBC series on railway journeys.  Inevitably, Michael touched on the uncertain political times in the UK – a major vote on Brexit was happening that very afternoon. However, his belief was that the overall health of the global economy would have a greater effect on the performance of tourism. Michael reminded us that his TV programmes only deliver positive messages and do not seek to judge or criticise our product, but nevertheless he was concerned about a possible lack of joined up thinking about tourism in the UK compared with other destinations.  Feedback following his programmes suggests that the market is increasingly susceptible to influence through the creative presentation of visitor experiences, supported by positive media relations.

Richard Nicolls, Head of Research and Forecasting, VisitBritain looked initially at tourism performance over the last two years, which saw:

  • Significant growth in inbound holidays in 2017.
  • Ongoing dominance of Europe as a source market in terms of number of visits, but with much higher spend per visit from elsewhere, including the Middle East, USA, Australia and China.
  • A decline in total inbound visits, nights and spend in the first half of 2018.
  • A more static performance in the domestic market over time, but with 2017 achieving a record number of holidays, followed by some decline in 2018.

Evidence on future prospects can be found in data on consumer sentiment towards travel to the UK.  While the EU Referendum decision appeared to have little effect on people’s stated likelihood to visit Britain, this showed some decline in 2018 compared with 2016.  Influences pull in different directions, with potential visitors boosted by a weak pound but negatively affected by security concerns and uncertainty about policy changes and travel arrangements.  In general, the UK is still seen as a welcoming destination. Forecasts for 2019 suggest a possible increase of 3% in total inbound arrivals, with higher percentage growth from long haul markets, in holidays/leisure and in spending.  The greatest risk is a possible global economic slowdown.

Christopher Michau, Vice President, Platform Services, Expedia Group spoke about the influence of technological changes.  Continuous innovation is transforming online travel and has led Expedia to make enhancements to its online lodging platforms on average every 24 minutes. The most significant recent trend has been in the use of mobile devices by travellers, which now acount for one third of Expedia Group transactions.  Looking to the future, Christopher underlined two key changes that could profoundly affect travel decisions: the spread of voice activated assistants, such as Alexa, which provide instant response to questions about travel options, bookings etc. and will be owned by 50% of households by 2022; and machine learning from data on users, enabling products to be designed and promoted to match their interests.  In answering questions from the audience, Christopher spoke of the need for evolving relationships between suppliers and online agents, to keep abreast of new technologies and provide integrated services and added value to travellers.

Jonathan Raggett, Managing Director, Red Carnation hotels spoke passionately about the human resource issues in the tourism sector, illustrated by the situation in the Red Carnation collection. The vast majority of his employees in the UK do not hold British passports. In the last year many very able people have returned to their home countries and applications have dried up.  The reasons given include the value of the pound, high costs in London and an increasing feeling of not being welcome.  British people tend not to look positively at the hospitality sector as a source of employment.  Jonathan described the current situation as dire, but expressed his determination to work through it and continue to offer the high quality service required in the sector.

Merilee Karr, CEO, UnderTheDoormat spoke from the perspective of her company, which provides homestay accommodation in London, working with individual homeowners.  She pointed to growing consumer demand for quality and predicted that 2019 will see increased professionalism in the homestay segment.  In future, homestays providers will need to work more closely with destinations, with further recognition of their significance as a key component of the mainstream tourism offer. 

The four speakers joined a panel, facilitated by Michael Portillo, who asked his own searching questions as well as directing those from the audience.  Some of the key points made included:

  • A concern that staffing issues may lead to price increases, business failures and reduced product choice.
  • Some preparedness to consider bed-taxes provided that the revenue raised is used to support tourism; though there is little track record of successful hypothecated taxation.
  • A need for small businesses to focus on improving their online content and effectiveness.
  • Recognition that technology may help in addressing staffing issues, but only in certain activities.
  • General belief in the inexorable growth in tourism, with implications for management.

In closing, the panel was asked to sum up their outlook for 2019.  Despite the concerns raised by the speakers, all struck an optimistic note. The weak pound was seen as an opportunity for growth in the short term, but there was greater concern about the global economy in 2020.  Overall, it was felt that travel and tourism will continue to evolve to meet the challenges and turn them into opportunities.

Written by Richard Denman, FTS