Tourist trips outward from China last year grew by 78% (according to PATA) and China and the Indian sub continent are predicted to become major drivers of Tourism, maintaining global growth in this industry as well as increasing visitors to the UK. Visit Britain says, in relation to future tourist growth

“Over half of the tourism gains are predicted to come during the post-Games period (2013-2017), generated largely by higher numbers of visitors from emerging markets, representing £1.27bn for the whole of the UK. “

Visit London’s CEO James Bidwell said:

“London is already the number one city destination in the world and drives the UK economy”.

Looking at the period between 2002 and 2006, we can see that visits to Britain rose by nearly 30%, whilst if you look at the attached chart you will see that the increase in room numbers (if I am reading the figures correctly) was around a mere 4% overall. It is not a question of how many new hotels are being built it is a question of what is the overall increase in beds. With a 30% increase in visitors against only a 4% increase in available beds the reason for the continuing growth in achieved room and occupancy rates in London becomes self evident (incidentally I believe you would get a similar picture for New York). Continental competitors have also seen rates rising, but in most of those cities (particularly new destination cities like Berlin) the rate rises have been more subdued because of the number of rooms available, even in some instances an oversupply.

In my previous article I looked at some of the lessons to be learned from cities with 100% occupancy, in terms of declining tourist numbers, deteriorating service standards and a poor quality experience for the guest. If we are to maintain a strong and healthy industry we need more capital investment, and this gives a slight conundrum in that if we offer sufficient rooms for the demand then room rates will drop along with occupancy levels. This will give pause to the private investor in this market, as good returns may become more difficult to achieve. It may need city or government incentives for the investment to materialise (relaxation of planning constraints to reduce the design and build times for example). Berlin has seen some major groups abandoning the city in the short term because of their poor returns, but the growth of the city as a destination is strong and the long term outlook is good. In London we have strong demand from across the board. There is a search for new sites at all levels of provision, but history suggests this demand is not enough to compensate for those hotels being taken out of the market for use in other sectors of the economy.

If the government is to achieve the economic return from the industry that it has targeted (over £100 billion a year by 2012), and we are not to gain a reputation as a rip off destination, Government and Industry need to work together to ensure that the guest to our country receives a service at a price that brings them back in the future. If we can achieve this for the Olympics I will be surprised, but if we do then we can all be proud of our country and its reputation abroad as befits the worlds 5th most popular holiday destination. If we fail then like Norway we will see overseas tourism decline with commensurate damage to overseas earnings and the national wealth.

Patrick Goff