Latest Insights from the TA Tourism Research Briefing
27th September 2016
There was a powerful line-up at the Tourism Research Briefing at ABTA’s offices in London on the 13 September. Organised by the Tourism Alliance, it was an opportunity for the leading experts at the ONS and Visit England to shine a light on and drill into the detail of the International Passenger Survey, Satellite Accounting and the latest pre and post Brexit vote sentiments and market trends.
Post Brexit impacts
Bernard Donoghue, chair of the TA, kicked off proceedings with the TA’s work to assess the impact of the Brexit vote – a topic which has dominated their agenda since June. The TA has already published findings of a industry survey of likely impacts and this is helping to focus the TA’s response. Three key issues have emerged which the TA will be addressing:-
- The UK’s dependence on migrant workers (the example of Pret a Manger was given where 92% of employees are from European countries in the rest of the EU).
- The potential damage to the image of the UK and the need to reinforce PR messages about the UK as a welcoming destination.
- The dependence on and loss of funding for tourism from EU Cultural and Rural programmes.
Later on the agenda Kurt Janson, Director of the Tourism Alliance, provided further insight into the TA’s impact research. The key headline was that businesses dependent on the domestic market are generally feeling more confident than those heavily reliant on customers from overseas – mainly a reflection of the short term benefits of the exchange rate. Similar findings emerged from TA members covered by a recent CBI post Brexit vote survey. A majority felt the impact of Brexit would be positive in the short term but views became more negative over time. When asked about longer term impact, 50% of the sample said it would be negative compared with 18% positive. In other words, there is an appreciation that the exchange rate benefit will probably be short lived and that some big issues lie ahead post Brexit.
How the International Passenger Survey works
The International Passenger Survey is the primary source of data on overseas visitors to the UK and overseas visits by Brits heavily relied upon by government, tourism organisations and businesses alike. Giles Horsfield, lead researcher from the ONS, explained what is involved in delivering one of the most comprehensive surveys of its kind. Key headlines:-
- International visitors are interviewed when arriving and leaving from 22 airports, 5 tunnels and 22 sea routes. 90% of all visitors have a chance of being interviewed – passengers on cruises originating in the UK, the Irish Border and some smaller routes are not covered.
- ONS employs around 200 interviewers who work shifts from 6am to 10pm over a range of periods, interviewing according to a set protocol. Paper questionnaires are still used to achieve a response rate of 80%. To overcome the language barrier issue, which does impact on refusal rates and partial completions, ONS use language cards in 9 languages. Weightings are used to offset under representation in some markets.
- The overall sample size is 110,000, of which 45,600 were departing in the 2015 sample. It is from the departing sample that most data is derived equivalent to circa 2% of all overseas visitors.
- It takes 6 weeks for the outline results for the UK to be released. Quarterly data comes out after 3 ½ months followed by the full annual tables and breakdowns 7 months after the end of the year.
On the question of confidence levels for regional and more local breakdowns, Giles reiterated that IPS is meant to inform national policy. Whilst the ONS releases regional breakdowns, the confidence levels are at least + or -10% and greater below that level. There was a suggestion that IPS breakdowns might be able to show whether government policy to spread overseas visits beyond London was working.
Giles conceded that attempts to overcome language and cultural barriers probably mean that some overseas markets are under-represented. ONS use weighting methods to address this issue but they aren’t a perfect solution.
The Economics of Tourism – an insight into Satellite Accounting
The Tourism Intelligence Unit was set up in 2008 within the ONS to answer the fundamental question - how much is tourism worth in the UK? Sean White, who with DCMS funding has been running the TIU since its inception, has pioneered Tourism Satellite Accounting to answer the question. Whereas the national tourism surveys track demand side expenditure i.e. the spending of visitors across the economy, Satellite Accounting addresses the supply side i.e. the turnover and related jobs of businesses engaged in providing for visitors.
Sean explained the challenges involved simply in defining the business sectors engaged in tourism. Most tourism businesses are used by local people to varying degrees i.e. pubs and restaurants and a proportion of visitor spend goes on ‘non - tourism’ services such as transport, fuel and retail. In their work on the national Tourism Satellite Account, the TIU in selecting industry classifications and introducing additional inputs has attempted to take account of these complexities but limitations remain. The retail and fuel /transport sectors, for instance, are not properly accounted for. Nevertheless, TSA’s have been produced at national and regional level and further local area analysis is planned.
The latest figures were released in August 2016 for 2013 and 2014 and can be downloaded from the TIU/ONS website.
Market trends and expectations - before and after the Brexit vote
Sharon Orrell, Head of Research at Visit England, used her presentation to compare domestic tourism trends leading up to the Brexit vote with market sentiment after and what this could mean in the longer term. The headlines were:-
- 2015 figures from the national surveys indicate that holiday taking by Brits in the UK and overseas is the highest in a decade but business tourism is flat. Sharon talked about a societal change that might be driving this growth. We are no longer content with working 50 weeks a year for a two week holiday and want more breaks more often.
- The length of stay on domestic holidays continues to fall – from an average of 3.65 nights in 2006/07 to 3.35 nights in 2014/15. Related to this is the continuing growth in short breaks. City breaks in particular at any time of year are showing rapid growth.
- VE research post Brexit found business confidence at a record high. Expectations are more positive in relation to the domestic rather than overseas holiday market.
- The change in the Exchange rate post referendum is thought to have had a small influence on the growth of the staycation – 1 in 5 say their plans were affected although this was likely to have meant a change in destination or reduced spend rather than a switch from an overseas to a domestic holiday.
- Personal consumer confidence has also taken a dip and this is starting to slow holiday spending.