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Tourism after the Brexit Vote

November 2016

During the summer holidays, we again packed our bags in large numbers to travel the world, from Magaluf to Angkor Wat in search of sun, fun, relaxation and to feed our curiosity. UK residents made more visits abroad in the last twelve months than there are people here.

Transatlantic Spending

The evidence suggests that affordability is a key factor for consumers in their travel choices while concerns about the impact on our economy or on climate change are less important. In this, my second “Let’s Talk About Society” article, I take a look at the evidence on tourism and the questions it raises post-Brexit. It’s something of an unfashionable topic and our travel choices have been out of the spotlight for many social commentators. However, Brexit challenges the status quo with a fall in the value of the pound potentially making visits abroad for us more expensive, but visits to the UK from abroad cheaper. So travel patterns in the next few years are likely to be of significant interest not just in the UK, because of the impact on the economy and jobs, but in those EU countries that we visit and whose residents visit us.   

The European Context

International tourism is important to the EU economy, especially the Mediterranean countries.

Eurostat reports that the highest international travel receipts in the EU in 2014 were recorded to Spain (49 billion euros) and France (43 billion), followed by the UK, Italy and Germany (all three in the 32-36 billion euro range). German residents had the highest level of spend abroad (over 70 billion euros), followed by the UK (approaching 48 billion) and France (37 billion).  

For the travel account of the balance of payments in any country, it is the net spend on international travel (travel receipts in the country minus spend abroad by its residents) that is important. It determines how much money overall is brought into the relevant country or leaves it.

Profiting from Tourism

 Welcome to Great Britain

“Welcome to Great Britain. Iconic landmarks, breath-taking countryside and unrivalled heritage” says Visit Britain’s website. The tourism strategy, “Delivering a Golden Legacy”, set a goal to attract 40 million international visitors a year, earning £31.5 billion by 2020.

Provisional tourism figures from the Office for National Statistics for the 12 months to August 2016 show that almost 37 million visits were made to the UK by overseas residents, an increase of 4% year-on-year, with an attached spend of £22 billion. We have seen consistent increases in tourism numbers coming to the UK since 2001, except for relatively small dips in visits between 2008 and 2010 during the recession.

Brexit potentially brings further opportunities for the inbound tourism industry because a lower value of the pound can make visits to the UK cheaper for overseas residents. The number of visits to the UK in the month of August 2016 was up 2%, when compared with August 2015, suggesting there was little immediate Brexit impact (although many of these visits would have been booked months earlier).

The evidence supports promoting business visits, as well as holidays. While holiday visits held up during the recession, business visits and visits to friends/family fell sharply, the former in 2015 remained below 2006 levels. This may point to a need in the UK to more proactively encourage business visitors, conferences and trade fairs (for example, in the “off-season” for tourism).

Most visits to the UK remain from residents of EU countries. If the UK’s image from EU withdrawal is that we are seen as unwelcoming (for example, because of Brexit negotiations or migration policy) or we have burdensome border or visa requirements then this could make us a less attractive destination.

Another potential benefit to the inward tourism industry arises from the so-called “staycation effect”. This is where we decide to stay at home rather than visit abroad. This summer holidays, I stayed in the UK to see the views from the Olympic rings in Portland, Weymouth, along with many international visitors. The Government has indicated a desire to increase domestic tourism but both the GB Day Visits Survey and the GB Tourism Survey have reported relatively flat levels of visits or trips over time, indeed both show slight falls in 2015 when compared with 2011.

While any decision by consumers to holiday at home impacts on the outward tourism industry, it offers opportunities to see some of our own heritage in the UK, which may be an inevitable consequence of Brexit for some families and businesses, and a desirable one for the UK economy.               

Touching the World

UK residents could be regarded as having “the travel bug”. In 2015, we made almost 13 million visits to Spain and 9 million to France, with the next highest being Italy, Ireland and USA (about 3.5 million each). There is an impressive spread across Europe and the rest of the world - when it comes to travel, we are truly “global”.

Brits Abroad

In practice, the precise impacts of Brexit are likely to be difficult to predict and untangle. The National Travel Survey (NTS), conducted here at NatCen for the Department for Transport, sheds some light on this complexity. Even though air travel has expanded greatly among British people, there are still lots of people who hardly ever fly. The NTS shows that most people on lower incomes won’t get on a plane in any year. And it’s only when you get to people near the top of the income scale that you find a majority flying at least once in a calendar year with a significant minority flying several times. When it comes to Brexit then, the impact on travel may be felt quite differently by people across the income scale and, indeed, in some ways we may not have thought about. For example, might a weak pound, more overseas visitors and more staycations drive up prices for those people who traditionally holiday in the UK?

Other factors, such as increasing concerns on the impact of climate change (especially long haul flights), might also change behaviours. However, the case is less compelling. Research by the National Centre for Social Research, based on the 2014 British Social Attitudes Survey, suggests when confronted with the conflict between our opportunity to travel and concerns on climate change, many of us choose the former. Indeed, two thirds of us believe that people should be able to travel as much as they like by plane and only a minority of us disagree with this statement if it harms the environment or if new terminals or runways are needed.

Inquiry into the Impact of Brexit

The Culture, Media and Sport Select Committee launched an inquiry in September 2016 into the impact of Brexit on the creative industries, tourism and the digital single market.

The inquiry will look at a broad range of issues, including the potential impact on employment in tourism; concerns from the inward tourism industry around possible onerous visa requirements; whether UK industry is capitalising on the decline in the pound’s value; and the effects on companies and jobs in the outward tourist industry.

The evidence would appear to support an argument that Brexit represents an opportunity for the inward tourism industry but poses a challenge for the outward tourism industry and its associated jobs. For those policy makers who have strived over the years to close the gap between our expenditure abroad on tourism, compared with the amount overseas residents spend here, our vote to leave the EU may well bring fresh impetus.