Inbound Tourism Businesses Face Second Year With No Income

UKinbound, a leading travel trade association representing over 300 businesses, has launched a fresh call to save inbound tourism through the creation of a ‘Tourism Export Recovery Fund’ to help businesses wholly reliant on international visitors survive until the return of the market in Spring 2022 and support the UK’s economic recovery.

Since the start of the COVID-19 crisis, inbound tourism businesses that rely on international visitors, particularly intermediaries such as tour operators and destination management companies (DMCs), have seen revenues fall by at least 90%. As a result of the current overly cautious restrictions on international travel which have caused a collapse in international visitors to the UK, these businesses are facing a second year with no business and no revenue.

Previously profitable and sustainable, tour operators and DMCs (who as intermediaries bring in over 50% of the £28.4bn export earnings from inbound tourism) have been hardest hit by the Coronavirus pandemic as they are reliant on international visitors for business and have been excluded from crucial support schemes as they fail to recognise different business models that do not have an obvious shop window or high street presence.

With 2022 shining a global spotlight on the UK as it hosts and celebrates the Commonwealth Games in Birmingham, Festival UK 2022 and the Queen’s Platinum Jubilee, UKinbound is calling for further, targeted support to ensure that the vast economic, cultural and societal benefits of these events can be realised by ensuring a thriving inbound tourism industry is in place.

With a recovery for inbound tourism not projected until 2025[1], UKinbound has submitted a proposal to Treasury for a Tourism Export Recovery Fund which would allow tour operators and DMCs to apply for a capped grant award based on their 2019 revenue levels. This investment, totalling £47 million for the UK’s c. 230 tour operators and DMCs, would enable these businesses that are at the heart of the UK’s tourism supply chain to survive until inbound tourism can safely resume at sustainable levels and return to profitability in 2022.

The Tourism Export Recovery Fund will:

  • Allow the sector to rebuild and reconnect with inbound markets
  • Retain tens of thousands of jobs across the country, reducing dependency on Government support
  • Provide valuable export earnings
  • Retain a key driver of the UK’s economic recovery
  • Retain a key mechanism for supporting the Government’s levelling up agenda
  • Maintain the UK’s global competitiveness both as a destination and as an open and growing economy
  • Retain valuable skills, knowledge and individual relationships that are not easily replaced.

Alongside this, the Association is also calling for an extension to the Coronavirus Job Retention Scheme until April 2022. With 77% of tour operator and DMC staff still on furlough, and with no incoming business for the foreseeable future, the removal of the scheme from 1 October will have devastating consequences for the sector.

Joss Croft, CEO, UKinbound, said: “The UK economy is losing £78m a day in exports due to a total collapse in international visitors, and failure to support this industry will have a detrimental impact on our national economic recovery.

“Our borders have effectively been closed since March 2020, with previously profitable and sustainable businesses seeing their revenue drop by over 90% since 2019. These businesses have also been forgotten by the Treasury and left out of existing Government support schemes.

“It is essential that Government provides targeted support to the UK’s 230 inbound tour operators and DMCs to ensure their survival until the return of the market, so that UK tourism can make its vital contribution to our national economic recovery and maintain its position as a desirable and globally competitive destination.

“2022 presents a fantastic opportunity for the UK to showcase its world-class welcome, but the country will not be able to fully reap the benefits without a successful inbound tourism sector in place to convert pent-up demand and interest into bookings and funnel business and revenue to all corners of the country and through multiple sectors.”

Tom Jenkins, CEO of ETOA, added: “This is not rescuing unviable companies. It is offering help to commercial enterprises who are selling the UK in foreign markets. Anyone involved in this particular export business was hit with government interventions that prevented them from doing business. Those who tried to sell the UK for delivery in 2020 and 2021 will have suffered a total loss in their investment. They need specific help to start selling Britain again. As Europe opens up to American visitors, the UK has lost ground. As plans are being finalised for 2022 and laid for 2023, it is in danger of being an extended deterioration of market share.”

Bernard Donoghue, Director of ALVA, said: “”Tourism was hit first, hit hardest and will take the longest to recover, and the sector within the visitor economy which requires the most urgent help to recover now is the inbound industry. I know from my members that those attractions which are heavily dependent on inbound visitors and have therefore seen a massive fall in income last year and this year, are experiencing a long COVID which even the most successful staycation effect this summer will barely heal. We need investment in the recovery of the inbound tourism sector – one of our most important export markets – to save business and jobs and rebuild our global attractiveness.”

Kate Nicholls, Chief Executive of UKHospitality, said: ““Hospitality and tourism are interdependent and face a long process of recovery from the devastation wrought by the pandemic, and are crucial to national recovery, but inbound tourism will take time to revive. The lower rate of VAT for hospitality has been crucial in supporting reopening but as we look to longer term recovery a Tourism Export Recovery Fund, alongside lower VAT, would massively significantly safeguard the businesses and jobs at the very heart of the tourism supply chain, while also boosting our international tourism competitiveness. With the Commonwealth Games, Platinum Jubilee and Festival UK among next year’s events, our hospitality venues are set to host incredible celebrations that will showcase Britain to the world – to capitalise on those opportunities it’s vital to protect the vulnerable businesses that can help optimise inbound tourism to celebrate with us.”

[1] Projections made by Oxford Economics