British Destinations

Where are the winds blowing?

Posted on March 11, 2022

At our last Teams Destination Managers’ meeting in the situation update I was musing about the extraordinary, indeed unprecedented mix of internal and external national factors that were making predicting where the winds might blow tourism and the visitor economy almost anyone’s guess.  Principle among these were Covid-19, the ramifications of “partygate” on the nature and direction of future critical policy decision making and of course potential international tensions at a level not seen since the end of the Cold War.  Seven short weeks later those tensions have become an international crisis of a proportion not seen in any of our lifetimes, with God forbid, significant potential for it yet to become something far worse. 

Assuming/praying that sense prevails, it is too early to say what will happen now in Eastern Europe but not too early to predict with a degree of certain a few headlines that could or should now influence contingency planning for the coming season and beyond.  None of this is particular cleaver stuff and I apologise if it sounds like teaching Granny….

Firstly, although, critical factors like Covid and Partygate’s influence on policy direction may have paled into seemingly insignificance, they have not necessarily gone away. Regardless of the course of the war in Ukraine, Covid has the potential nationally and internationally to continue to impact. That may be mildly, probably during next winter or it may mutate and come back with a vengeance, at any time. We can but hope it is the former. Partygate may have been forgotten by many but is still running and may or may not continue to have subtle or less subtle effects on the direction of policy decision making now or in the future. Ultimately it still has plenty of potential to influence the choice of governing party leader and, thus, potentially on the delivery of key policies yet to be fully delivered and others promised and under development.   This simply maintains if not builds on the current hyper levels of strategic uncertainty.

You don’t have to be genius to see the war in Ukraine is unlikely to come to a benign conclusion anytime soon. Nor to realise that if and when the war ends, whatever the outcome the massive array of negative worldwide impacts won’t also end overnight or indeed anytime soon thereafter. Issue like fuel, energy, staple food stuffs and critical material shortages and consequential higher prices and inflationary pressures will continue throughout 2022 and in all likelihood well beyond. An already fragile UK and world economy is set for a long and dumpy ride.

Again. it is too early to be specific about but not too early to say with some clarity what the known tourism effects of pressures on disposable income are, what historically high fuel prices do to travel patterns, or what instability (war or terrorism) even vaguely thought to be in “Europe” does to key international markets. The only unknowns are how when these things unusually take place concurrently they interact with each other and how, if at all, the change the core assumptions. Those assumptions include:

• Fewer, shorter holidays, in particularly fewer short breaks, treats and days out.
• Trading down, less expensive options, some shift from long to short, short to days out, days out to shorter more local activities etc.
• The “big holiday” may be sacrosanct for some.
• Lower income and higher committed incomes households, including young families generally most disadvantaged, as they already had less disposable income in the first instance.
• Some socio-economic groups may drop out of the holiday market entirely, if one or more of these groups are a mainstay, the impacts are far more acute.
• Shorter journey will be undertaken, potential benefiting destination in or close to major population centres and generally disadvantaging those more remote destinations including some popular coastal and inland destinations towns and more remote rural destination areas.
• Pressure on pre booked packages at pre crisis prices, including in and outbound international flights and cruises and domestic and international coach-based activities. 
• Previous pre pandemic cost hypes have historically precipitated cancellations, surcharges and in some cases business and operator failures.
• Increase in the price of domestic and in particular international packages yet to be sold. The greater the travel element the greater the likely increases in price.
• Overnight switching off of some/many (already shredded) international markets, most notable the USA which is particularly sensitive to security concerns.
• Added concern and uncertainty for some outbound international travel. Some possibly marked redirection of business as far away from Eastern Europe destinations as possible. Notwithstanding that long haul will be proportionately more expensive than short haul.
• Additional energy, ingredients and other cost pressures on attractions, accommodation and F&B and the absorb or pass on dilemma, particularly, in light of other mainly negative influences outlined above.

The uncertainties created by the Ukraine crisis on their own are significant and if not managed will be damaging to an already fragile domestic tourism industry, that is in any case still under threat from other external influences.  It may seem crass to even be considering what the impacts of a still developing international crisis may have on this coming season. Experience shows that not to do so as soon as practical in advance of the start of the fixed main season, can and will make a bad situation far worse for our industry.  You can’t change the situation but you can take action to prepare and mitigate against the worst predictable effects. I would welcome any thoughts on obvious or less obvious headline implications I may have missed and any thoughts on any new or amended asks of Government that result from them.

Meanwhile, assuming Government policy around strategies like levelling up are no derailed by the ongoing political machinations, I am becoming increasingly convinced that there has or at least there is going to be a seismic shift in importance of local authority engagement in tourism and the visitor economy.  Future funding for all in England now seems set to flow increasingly via combined authority, mayoral/governor arrangements.  Just as not all LEPs saw the relative importance of tourism, there is a real danger that not all combined authorities will do so, although, thankfully, most of the existing tranche do. If all future capital funding comes via the combined body and that body doesn’t prioritise tourism or tourism development, then where does that leave the visitor economy?

Each combined authority decides its own structures and own priorities but by their nature each individual authority within the combined grouping will need to agree or at least accept tourisms importance, if in turn the combined authority is to agree and give it due weight.  This is not to say local authorities need to deliver tourism services to understand it or support it. But it is to say those authorities still directly engaged are probably at an advantage and those that are not need to be warmly embraced by those that do now deliver tourism services or tourism and tourism development will no longer have direct access to centrally run and distributed funding pots.

This one of a number of topics to be discussed at our next hybrid destination manager, midday to 2pm on 24^th March at the VB/VE offices London, prior to the Tourism Industry’s Annual Parliamentary Reception 3pm to 5pm.  If you wish to attend both in person or the manager’s meeting online, please contact me ASAP. The full agenda will follow next week.