Angela Balakrishnan, Pui-Guan Man and Laura Valdez 

The year British holidays were rained off

If floods weren't enough, a strong pound has cast deep gloom over an £85bn sector.
  
  


For Britain's tourism industry, the bank holiday weekend this year is more crucial than ever. All eyes are on the weather forecast in the hope that a spell of sunshine will help save what has so far been a miserable summer.

With some of the wettest weather on record, a surge in the strength of the pound, stockmarket turmoil and scares over an outbreak of foot and mouth disease, the industry has been fighting a series of battles.

The Office for National Statistics said last week that in the three months to June this year, 8.1 million tourists came to the UK. This was 3% fewer than in the winter months of January to March.

Numbers of American visitors in particular were down for the second consecutive quarter. VisitBritain, the national tourism agency, said that last year the number of French visitors overtook Americans for the first time.

Since November 2006, the pound has flirted with the $2 mark, setting a series of 26-year highs against the dollar. Two years ago it was around $1.75.

"Exchange rate fluctuations are obviously something that have the potential to affect transatlantic travel and Britain's competitiveness as a destination," says Tom Wright, chief executive of VisitBritain. "Many of our overseas officers have told us this has had a major impact on visitor bookings."

Janet Bayer, from Texas, is on holiday with her mother Dolores, spending four days in the UK before going on a European cruise.

"My best friend lives and works here so it means we don't have to pay a lot for a hotel," she says. "The exchange rate hurts. I would love to stay here longer if it was more affordable."

The strong pound comes at a time when US holidaymakers have been getting more adventurous in their trips abroad, after a lull following the World Trade Centre attack on September 11 2001, says Mr Wright. This is making it even harder for the UK to compete as a holiday destination.

Adding to the problem are deteriorating economic conditions in the US, which are knocking consumer confidence.

The University of Michigan's measure of consumer sentiment recently reported a large drop, while expectations for a positive economic outlook also fell to their weakest in a year. Economists say this could be a sign that troubles in the US mortgage market are starting to spread to consumer spending. It is not encouraging news for the British tourism industry.

Official figures last week showed that spending by visitors was already suffering. In the year to the end of June, tourist spending dropped by 3% to £3.9bn. It was the first fall in four years, following a hefty annual rise of 12% in the first three months of this year.

Meanwhile spending by UK visitors abroad continues to increase, rising 1% in the same period, and the tourism deficit has widened to around 40% of the total trade gap. Tim Helliwell, head of hotel finance at Barclays, says this is a worrying sign.

"Hoteliers won't be unduly worried by the overall slowdown in visitor growth," he says. "However, there will be some concerns about the decrease in visitor spending."

The problem was highlighted by the annual report from the Tourism Alliance last year. It showed that visitors flying long-haul were dropping off, with growth coming from short stays and short-haul flight - but where long-haul visitors spend an average of £786 per visit, for short-haul visitors the average is £356.

Meanwhile, Britons going on day trips have been held back by the atrocious weather, particularly during the crucial school summer holidays.

At the worst point, Stratford-upon-Avon, one of Britain's most popular tourist spots, was a ghost town. An overcast sky and endless rain emptied the usually busy streets. Trains were cancelled and roads were closed as flooding made them impassible.

Tourists attempting to take shelter in Shakespeare's birthplace found the structure was leaking. The Royal Shakespeare Company had to cancel the first two screenings of its open air film festival due to flooding.

In London, while popular tourist spots have shown remarkable resilience, many businesses have suffered.

"Last summer was a lot better," says Michal Mikler, at the outdoor cafe Paul's Patisserie by the Tower of London. "Our business is really dependent on the weather. When it is raining there is almost nobody around. I don't think it will get a lot better."

Forecasts for the bank holiday weekend look promising. The Met Office says that although not hot for the time of year, temperatures may creep above average for the first time in a while. But it adds there are signals for a gradual deterioration in conditions with some thundery showers and winds.

Damage to the tourism industry could have a knock-on effect for the wider economy, analysts warn. Tourism is Britain's fifth-largest industry, worth £85bn. It employs 2.1 million people, equivalent to 7.7% of the workforce and more than construction or transport. Last year tourism generated £15bn in export earnings.

VisitBritain realises it has a fight on its hands to keep Britain competitive in the tourism market. It has already introduced a range of measures to help American visitors save money, such as by buying travel passes and tickets to attractions before they leave home - paying in dollars and getting a better exchange rate.

Meanwhile, it is focusing on steady growth in visitors from countries such as Poland and Hungary, two of the 12 that joined the European Union in 2004, as well as rapidly growing economies such as India and China.

"We need to remind visitors why they love to come to Britain," says Mr Wright. "It's not just our history and heritage but our unique events."

 

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