The sector has done both well and poorly this summer depending on who you ask, says Kurt Janson, Tourism Alliance director
Over the last few months there have been widely varying reports emerging on the state of the UK domestic tourism industry. For example, just this morning, Expedia issued a press release stating that the number of domestic trips during the main summer period of July, August and September increased by just over 20% compared to the same period last year.
And yet the reports that I am getting from some destinations and businesses paints a very different picture. Indeed, just last night I was talking to the chief executive of a large operator in the domestic market who told me that 2017 season had been poor, especially during the main summer period.
With contradictory evidence such as this it is always helpful to look at the figures from the GB Tourism Survey, the official national domestic tourism survey for the UK. Unfortunately, the lag period for this survey is over three months at present so this survey only has figures for the period up until the end of June.
However, although these figures do not cover the main summer months, they do provide a clue that help interpret the reports. This clue is significantly different trends occurring between different types of tourism. Most significantly, the survey shows that domestic holiday taking is doing very well at present with expenditure up by an average of 23.5% over the three months from April to June – this equates to an additional £760m.
However, the survey also shows that Business tourism revenue is down 9% this year due to uncertainty related to Brexit and constraints on Government and council budgets. This means that if a business or destination focuses on business visitors, then their experience of the year will be very different to those who are concentrating on holiday visitors.
A second factor to take into consideration is the weather. Although the 2017 summer was the fifth warmest on record, the more important factor was that this summer was also the 11th wettest on record with the 320mm of rain that fell during summer being a third more than average.
This means that businesses or destinations that are weather-dependent would have struggled this summer, whereas businesses and destinations that are less weather-dependent would have seen significant increases in visitor numbers.
And then there is the third key factor, which is the economy. Inflation has increased to 3% while wage increases, especially within the public sector remain static. As such, discretionary expenditure for a large section of society has been squeezed for the seventh year in a row. Research by VisitEngland shows that there is a two-tier economy operating in the UK at the moment that runs along socio-economic lines.
People in the lower C2, D and E categories (which comprise around 44% of people in the UK) are suffering the most and have been cutting down on their expenditure on holidays for the last few years. However, those people in the A and B socio-economic groups, have generally experienced higher wage rises and, more significantly, have benefited from much lower mortgage and loan rates. As such, their level of expenditure on domestic holidays has increased. And on top of this, the Government’s new rules on pension withdrawal has allowed pensions the ability to access their saving and spend this on holidays.
So, again, businesses or destinations catering for D or E socio-economic groups will be reporting very different operating conditions than those targeting the A and B groups or retirees.
Overall, therefore, there is a matrix of factors that are resulting in widely varying experiences as to the strength of the domestic tourism market. So yes, the domestic tourism industry has done very well, and poorly this summer – it just depends which business you ask.