Inbound tourism into Britain is due to grow at 3.8 per cent every year until 2025. Britain has successfully grown markets such as China and India, and yet 70 per cent of the inbound market continues to be from Europe. Some of the biggest growth rates in visit numbers have been among Eastern European markets. From 2002 to 2015, visits from the 13 EU accession countries grew from 677,000 (3% of all visits) to 4.2 million (12% of all visits). The average visitor from these markets spends only £330 per visit, just over half the average of all visitors.
But there is still an underlying challenge if we adjust for this change in market composition. Average spend per visit from all other countries was £649 in 2015 and £651 in 2002 (adjusted for inflation); average spend per visit has not risen in real terms. This is despite a long term increase in levels of affluence in most markets during this period.
Several consumer and structural reasons will have contributed to this:
- A squeeze on living standards – it is well documented that in the United States, for example, the median income level (the income of the middle person in the income distribution) has not increased in real terms for a generation with the gains in mean income accruing disproportionately to those at the top of the income scale.
- A radical change in consumer mind sets and behaviours that was triggered by the financial crisis and the sluggish rate of recovery in the subsequent years. The trend of Maximising – the consumer’s desire and ability to use all means at his or her disposal to maximise their value for money from as many purchase decisions as possible – has been a prominent feature of the consumer landscape in the past decade.
- Growing use of new technology – first, the internet in general and more recently mobile internet, apps and social media – means that today’s traveller has never been better empowered to locate value for money and control spending on their trip. The sharing economy is a recent manifestation of this.
Looking to the future, continued growth in mobile technology and the sharing economy will ensure that maximising behaviours retain momentum. History suggests that encouraging each visitor to spend more in Britain is a greater challenge than growing the number of visitors. But this is also an opportunity; there could be large rewards if the sector can win the battle to increase the average value of each visitor.
Domestic holiday visits also continue to see strong growth, but many of the issues remain similar to those faced from international visitors. These issues include bookable product, accessibility, city gateways, and digital booking opportunities. The customer demographic of domestic tourism offers opportunity too with the growth of the so-called ‘Millennial’ market, there is a way to market and build product in new and different ways.
Tourism has some of the fastest developing technology of any industry. New methods of booking, hosting, travelling and experiencing product is driving new digital skills and operational methods which previously were unknown. SMEs now need to compete in a global environment and digital reach is more important than ever