PROSPECTS FOR TOURISM 2008
10th January 2008

At this annual meeting organised by the Tourism Society, a panel of industry experts and tourism professionals came together to discuss the prospects for tourism in 2008.

Geoffrey Lipman, Assistant Secretary General for the UNWTO and chairman of the event kicked off the proceedings with the positive WTO forecast of a global 5% growth which is likely to continue for 2008. Growth in the UK and Europe is likely to be more limited, with higher growth rates in developing countries. Factors which might hinder this positive prediction in 2008 include the global economic situation, currency exchange rates, natural and man-made disasters and war/terrorism.

He fed back findings from the Tourism Society survey of member predictions for 2008 which found that forecasts tended to represent a further extension of current trends. Details of the findings can be found within the associated Press Release.

Nick Cust, Joint Managing Director of Superbreak predicted that the first half of 2008 will be tough for the hotels sector, although the London market will remain significantly stronger than that of the provinces given factors including the new Eurostar link from St Pancras, events at the O2 Arena, blockbuster exhibitions and new London theatre shows. As a result, the provinces are predicted to lose natural share with a need for public sector investment in destinations and improvements in transport infrastructures (Nick particularly raised the issue of resulting falling occupancy rates on Friday nights). Improvements in the second half of 2008 are likely given some favourable comparisons with the latter half of 2007. Overall, he predicted that holding turnover at 2007 levels could be seen as a success with increasing focus on providing value for money.

Stephen Dowd, CEO of UKinbound explained that the negative issues in 2007 including APD and VISA cost increases, the pound reaching US$2, terrorist activity, airport chaos and flooding, Foot and Mouth, VisitBritain's budget cuts, and the new biometric VISAS (he stressed this was a major issue with particular impact of conferences) were all barriers to the UK effectively selling its tourism product internationally. Stephen predicted a downturn of visitor numbers by 1-2% to 32 million to the level of 2005 and revenues are expected to decrease by 4-5%. Although he predicted growth from the Euro Zone as a result of a more favourable exchange rate, he also stressed that the impact of over-capacity would be extreme pressure on price. British Tourism Week in March will enable the UK tourism industry to promote itself and lobby the government to revoke the APD and VISA charges.

Tom Jenkins, Executive Director of the European Tour Operators Association (ETOA) focused on the online market, discussing the continued growth in the volume of online bookings (although recognizing that 'big ticket' items still remain the domain of other channels) and the growth of bookings direct with suppliers rather than online travel agents. The main issues to have an impact in 2008 are predicted to be the reform process for the Passenger Travel Directive and Tour Operators Margin Scheme.

Vanessa Cotton, MD of the Conference and Events Division at the Excel Centre had a positive outlook for the business tourism sector which Vanessa described as an exciting, resilient and growing market sector which generates a quarter of all tourism business in the UK. With the predicted economic downturn, she predicted a trend towards shorter, more impactful events with only lean, mean operations surviving. Vanessa predicted that a new standard called BS8901 would be very important in the coming year for sustainable event management. She also praised the increase in sporting and cultural events, particularly in London which has enhanced our image to business. She recognizes the huge opportunity of 2012 but awaits the DCMS strategy for delivering an Olympics legacy with interest. The Excel centre is predicting a 20% increase in turnover in 2008 through occupancy and yield.

Barry Humphreys, Director of External Affairs at Virgin Atlantic predicted that 2008 would be an interesting year for airlines; 2007 saw little evidence of a downturn in the business market, although the higher oil prices and APD saw the leisure market grow at a slower rate. IATA have released a new industry financial forecast estimating a global industry profit of US$5.6 billion in 2007 falling to US$5.0 billion in 2008. (www.iata.org). The environment will continue to be a huge issue and Virgin are part of 'flyingmatters'; a coalition set up to contribute to a balanced and informed debate on aviation's contribution to climate change. Virgin will be focussed on new technology in 2008 and are due to fly the first plane on biofuel. The government consultation into the expansion to Heathrow is underway which Barry suggested was vital for the UK economy and tourism industry. The Open Skies agreement will see new and increased services from the EU to the US from Heathrow; stage 1 starts in March and stage 2 in the summer, resulting in increased price competition.

Steve Mills MTS
Director, BDRC