Two months ago the Prime Minister launched the Government's 'GREAT' campaign - part of its attempt to attract what it hopes will be millions of extra visitors to the UK. But no matter how much the Government champions the UK as a tourist destination (and by the way, the budget for Visit Britain has shrunk by 65 per cent in real terms since 2000) there are huge obstacles that stand in the way of tourists coming to the UK.
A new survey published today finds that many of the organisations that depend on income from inbound tourism are already seeing bookings for 2012 lower than expected, with few anticipating this trend will reverse. So how, in the year of the 2012 Games and the Queen's Diamond Jubilee, could tourism possibly be forecast to shrink?
You'd be forgiven for thinking the Olympiad - and to a lesser extend the Queen's Jubilee - might be a boon for inbound tourism in the UK. In fact, without wishing to be a naysayer, Britain's hosting of the 2012 Games is likely deter people coming to the UK - many will be put off by the crowds and the congestion. But there is not a great deal the Government can do about that - the Games will, after all, have upsides and downsides. However, the way Britain can in the long-term attract more tourism is by urgently addressing some of the structural disincentives that put off travellers from coming to the UK year-after-year. One major barrier is Air Passenger Duty (APD) - a levy which is the highest in the world for all travellers departing British airports.
The sad truth is that inbound tourism - the UK's third largest export industry - is coming under threat. The 29.7 million overseas visitors who came here in 2009 spent £16.5 billion in the UK. This is a 6.3% decline in volume compared with 2008. While in 2009 the UK fell to seventh in the international tourism earnings league (compared with sixth in 2007) behind the USA, Spain, France, Italy, China and Germany.
Last year three million Chinese visitors came to Europe - of which just 127,000 visited to the UK. Part of the explanation for this is the combination of the cost of UK visas combined with our prohibitively high aviation taxes. The UK has by far the highest aviation duty in the world - levied on all passengers departing British airports. That is partly the reason that France and Germany attracted six times more visitors from China in 2010 than the UK. In fact, a family of four from China visiting the UK will pay around £600 more than if they were to visit another European country in the Schengen Area. It's no wonder Chinese tour operators are cutting out the UK from standard package tours - a stop-off in the UK just doesn't make good financial sense.
The survey we conducted shines a light on the extent to which organisations, dependent on inbound tourism, are worried by the high level of our aviation tax. Next year the Chancellor plans to increase APD yet further - by an anticipated 10%. Unsurprisingly, 40 per cent of the organisations we surveyed said this would 'significantly harm our business' in 2012. What's more, the hotels, restaurants and tour operators that we spoke to told us that they anticipated - because of the expected aviation tax increase next year - that bookings would be down by an average of 4.75 percent. If this materialises - and if our survey is in any way representative of the thousands of companies whose livelihoods are dependent upon foreign tourism - then it means that the UK economy could miss out of upwards of half a billion pounds in lost income and sacrifice thousands of jobs that depend on tourism.
So it's no wonder that the World Economic Forum's 2011 study on international competitiveness shows that the UK now ranks 134th out of 138 countries in terms of taxation on tourists. I'd be surprised if it didn't fall even further next year. The Chancellor indicated he plans to announce a double-inflation rise in Air Passenger Duty in his Autumn Statement next month. I would urge him to acknowledge that it would be better for the UK's economy to encourage tourism rather than tax it out of existence - which successive Governments have done.
The GREAT campaign certainly has its merits but without action on all fronts to make the UK an affordable destination of choice, there is only so much that a marketing exercise can do, when the underlying economics make a visit to the UK unaffordable for many families. Unless the Government recognises the damaging impact our high aviation taxes are having on inbound tourism, 2012 could be a very disappointing year - regardless of how many medals Team GB wins.