Downturn in domestic tourism requires decisive action
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Downturn in domestic tourism requires decisive action

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It's not too dramatic to say that the economic storm is gathering over the hospitality industry.

The administration of two hotel companies - GuestInvest and Folio Hotels - together with falling hotel profits (down by nine per cent in October for UK hotels according to TRI Hospitality) and weaker demand for dining-out, is cause for much concern. Nor do the latest figures for UK tourism provide much comfort. They show that far fewer British people holidayed in the UK in August 2008 than in the same month in 2007; a similar picture emerges when comparing the first eight month of 2008 with the same period in the previous year. For August, the number of overnight trips dropped by 11 per cent - equivalent to 1.7m fewer trips - with spend down by nine per cent. For the year to the end of August, overnight trips have dropped by three per cent.

Clearly, there has been a considerable downturn in domestic tourism since the start of the year. This is unlikely to pick up much in 2009 if present economic trends continue. Domestic tourism is on the slide and unless decisive action is taken to support it a considerable number of tourism-related jobs will be at risk. The Government can introduce two key measures of support:

1) It can review existing and proposed legislation to see where costs to hospitality businesses can be reduced. Proposed regulations on employment, food labelling, service charges/tipping, and licensing will lead to additional costs that businesses can ill afford. The increase in Air Passenger Duty, announced in the pre-budget report, will deter people from visiting the UK just at the time we need to boost tourism. 2) Instead of cutting back Government funding for tourism promotion, which has happened, new public/private sector campaigns are needed to stimulate demand and take advantage of the fall of the value of the pound.

Implementing these two measures would go a long way towards protecting the UK tourism industry. Without them, tourism revenue will fall and job losses will multiply. Ironically, the Spanish government had just announced a financial package of assistance to its tourism and hospitality industry worth €400m. Spain recognises the value of its tourism industry which is hardly the case with the UK government.

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It's not too dramatic to say that the economic storm is gathering over the hospitality industry.
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Les Mills International
Les Mills International