A Rebalancing of British Tourism
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While the tourism industry in the UK has been hit hard by the Covid-19 pandemic, there are reasons to be optimistic about the medium and long term prospects for the industry. The crisis has likely accelerated trends that saw British holiday makers opting to stay in Britain for their holidays. Before the Covid-19 pandemic outbound tourism was stabilising, while domestic tourism was growing, this was largely driven by environmental concerns around air travel and a weakened pound.[1]
Of course, now the world has been completely turned on its head by the Covid-19 pandemic, which has seen governments across the world enact strict lockdowns and travel restrictions to help prevent the spread of the virus. The shutdown of borders, airlines scaling back services, as well as consumer fear and anxiety, and the reduced capacity among accommodation providers has meant that international travel is suffering from both a demand and supply side shock.
There will likely be winners and losers from this, as Skift, a leading research company in the tourism industry, has pointed out. They see a world in which countries that spend more on overseas travel than incoming tourists spend, as winners in this current situation. In Europe, this largely falls along a north-south divide. German, Scandinavian and British tourists flock to the beaches of Southern Europe every year, while these countries send back relatively few tourists. Tourism from the Americas and Asia, while substantial, does not fill this gap.
Looking at the UK in 2018, outbound tourism spend was £45.4 billion, and inbound tourism spend was £22.9 billion.[2] While it would be unlikely that this £22.5 billion difference is all spent on domestic tourism, it shows that there is strong demand from British tourists, that until now was filled by overseas destinations. There will be winners and losers domestically too.
London will be hit by a downturn in inbound tourism on two fronts. Firstly, business travel has been almost completely halted in the short term, and moving forward, business travel will be seen as a luxury many companies will be unwilling to spend on. Secondly, London serves as a gateway to both the rest of the UK, and Europe, particularly for North American tourists. To a lesser extent most big cities in the UK may suffer from similar dynamics, while business and international tourism re-builds. Domestic tourism is unlikely to replace inbound tourism for cities, as British holiday makers look to go to beaches, mountains and the countryside.
To expand on this, we can see a future in which regions such as the South West of England, Wales, Yorkshire and the Scottish Highlands, where nature is the main attraction, see more visitor growth than cities where social distancing is problematic.
As for Scotland, the short-term will be difficult, however over the medium and longer term there will be opportunities to take advantage of these large disruptions. With less people flying due to reduced flight capacity and perceived risks of exposure to Covid-19 at airports, more people will take their holidays within Britain and get out of big cities.
To position themselves for this new reality, Scottish tourism businesses will need to continue to harness trends that were already shaping tourism before the current crisis, such as increased awareness of environmental impact and the search for experiences rather than just relaxation, while also looking to cater for new markets and ‘tribes.’ As with every consumer facing industry, digitalisation will play an important role in transforming the customer journey. Lastly, there will be opportunities to work with new partners and fill gaps in the market where others have left permanently.
The short term will undoubtedly be a rough ride, but with this major disruption there are reasons to be optimistic for businesses who can make it through and prepare themselves for the new normal.
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[1] https://www.finder.com/uk/outbound-tourism-statistics
[2] https://www.visitbritain.org/2018-snapshot