Tourism and the visitor economy in the national news.

Posted on

Four items with my comments that impact on tourism the visitor economy and destination management and economic develop:

1. The demise of Jamie’s restaurant chain grabbed the headlines earlier in the week, with closures directly impacting on a number of popular destination Cities and towns. https://www.bbc.co.uk/news/business-48352026 .

Less high profile where reports over the weekend based on industry analysis that suggests that growth in the casual dining sector has not just stalled but the sector is now in decline: https://www.alixpartners.com/insights-impact/insights/market-growth-monitor/. A subsequent Sky News article covers both aspects and highlights some of the existing pressures and new trends that continue to impact on this significant sector; a sector than has seen an alarming cumulative number of its higher-profile players fail in the last 24 plus months; https://news.sky.com/story/is-britain-losing-its-appetite-for-casual-dining-11725658

Comment: The loss of any good quality product is always a blow to a destination. More worrying for me though is my firm belief that casual dining and, in particular, the larger groups have between them acted to take up much of the high street slack, in both terms of filling, often premium, premises and generating additional footfall.  I hope I am wrong but rather than compensating for falling retail demand, as I believe it has been doing, the casual dining sector could now be adding to the core problems of vacant prime, premises and of fewer reasons to visit, as popular consumer habit apparently shifts more towards fast food, drive through dining and third-party home delivery.

2. Thomas Cook, a stalwart of the UK travel industry, is fight back in an effort to convince customer of their liquidity, as news of its underlying financial difficulties looks set to unnerve customer confidence and damage trade for the key summer period, potentially making a difficult but recoverable situation far worse: https://www.bbc.co.uk/news/business-48336449 .

In common with other travel agents, travel companies and airlines it has experienced difficult trading conditions in the UK, prompted by a range of issues from Brexit uncertainties through to last year’s good main summer season UK weather: https://www.proactiveinvestors.co.uk/companies/news/216470/tui-shares-jump-as-morgan-stanley-ups-rating-after-share-price-tumble-216470.html . Unlike Ryanair and others facing headwinds https://www.bbc.co.uk/news/business-48332849 Thomas Cook has the additional burden of a particularly well-established bricks and mortar presence in the UK high street.  Last year it closed 21 stores and many more of its remaining 566 could now close depending, in part, on how the planned divestment of its own airline proceeds.

From the prospective of many UK destinations, the most immediate concerns shouldn’t necessarily be for Thomas Cook’s significant, largely outbound travel business but for its possible impact on the UK high street, as yet another ubiquitous British brand struggles with high fixed cost, compared the new and emerging online competitors. Alongside the recent news of Debenhams, Marks and Spencer and other big names it is alarming to hear again that Boots probably the most ubiquitous of all British high street brands is still struggling: http://www.execreview.com/2019/05/boots-profits-plunge-as-high-street-slump-hits-chemist-chain/ .

Comment: Radical changes are needed that makes existing retail more sustainable, that supports new sustainable business uses for surplus retail capacity and that helps repurpose parts of the traditional high streets to create new reason to visit and spend.  If nothing is done soon it isn’t that hard to imagine a scenario where significant number of built destinations of different types and scales will have little or nothing but empty units, discount shops, temporary traders, local services (nail bars, hair dressers etc.) and charity shops left to attract local residents, domestic day and domestic and international staying visitors.

A number of well-established destinations and, in particular, coastal destinations have successfully passed through a similar cycle of slow business decline and slow but steady recovery following the near fatal changes in UK holiday taking patterns from the mid-1970 onward. Having fought their way back over the last 25 plus years is not something they or indeed any other established and newer destination should have to face, particularly, if it can still be avoided by timely, strategic intervention.  A fairer system of business and sales taxation that didn’t serve to actively penalise traditional bricks and mortar based businesses would be a good starting point.

3. HMRC are apparently continuing to look at Uber’s historic VAT position. If successful and HMRC recover the estimated £1bn Uber have so far potentially avoided it would be a significant windfall for the UK Government. Whether the full amount could ever be recovered is an interesting question.  As is what the future impact of any finding in HMRC’s favour would be on the Uber business model; a model that currently deems the individual drivers, most earning below the VAT threshold, liable for any VAT due.  It is conceivable that even if Uber was liable for future VAT payments much if not all of it would be offset or recovered ultimately the bulk of it from the individual customer.  The change if anything would result in higher prices and a levelling of the competitive advantage that being an enabling platforms gives Uber over more traditional models. A bigger issue is whether a successful case against Uber would lead to changes to the tax and VAT position of other major GIG and sharing economy platforms in the UK: https://britishdestinations.net/tourism-the-sharing-economy-and-its-wider-implications/gig-economy/ .

Meanwhile there have been a number of articles in the UK press in the last week about consumer issues with either sharing accommodation and review platforms.  The underlying theme being that these platforms are keen to keep issues and problems in-house, thus, avoiding negative PR, public scrutiny and limiting the potential for calls to regulate to ensure adequate levels of consumer protection and safety. The online versions of the articles are subscription only so I have referenced open source, source reports on the following Britishestinations.net page:  https://britishdestinations.net/tourism-the-sharing-economy-and-its-wider-implications/

Comment:  The GIG and sharing economies are an established fact and are here to stay until the next generation of business disruptor appear.  They have gone from zero a decade ago to, in many cases, market domination and they have done so by ripping up the established rule book.  At some point Government, the consumer or both are going to call to re-establish a measure of control and if necessary regulation, to limit the excesses of the platforms, their business users and increasingly even the consumers themselves.  The issue is just how long can the platforms put that off for?  And consequentially just how big or how alarming the nature of the failings needs to be before public opinion forces appropriate Government reaction?

4. And finally…..  A head of EU regulation that bans and limits a wide range of single use items and packaging  across the EU from 2021 Defra announce restrictions on the sales of plastic straws (drinking and cotton bud) and a ban plastic stirrers from April 2020, Wales and Scotland are also considering their own positions on these and other single use plastics: https://www.bbc.co.uk/news/science-environment-48358002

Comment: It is still conceivable that the much wider EU restriction could still be adopted voluntarily or by regulation in the UK depending on either the timing or the nature of any withdrawal agreement reached between the EU and the UK. It is important to note the obvious but largely unstated that it’s the material of manufacture and not the items involved that are being restricted. So stand by to continue to deal with a rash of straw and stirrers in the waste and litter stream, just more sustainable, less environmentally damaging waxed paper and wooden ones. The reduction, capture and recycling of single use plastics has significant popular public support and therefore political appeal, so also stand by for much more around Return Deposit Schemes, reduced use of plastic packaging materials, the online driven switch of plastic and other packaging material from the commercial into the domestic waste streams and a raft of other much needed measures to reduce plastic usage and to switch more of its disposal from dumping or burning to reuse and recycling.

Advertisements

Please do share your thoughts and comments

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s