Partners for England

1
Partners for England

• Questionnaire Responses
• Impact of the Downturn
• 25th March 2009

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Background

• A questionnaire was sent to all P4E forum
  participants
• This asked for comments on the impact of the
  economic downturn on tourism businesses,
  including
• Domestic travel
• Business travel
• Inbound travel
• Employment and staffing
• Marketing activities
• Support needed
• In total, we received 19 questionnaires back
  many thanks to all who took the time to complete
  these!
• The comments we received are summarised in this
  document

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Overall Summary Emerging Trends

• More domestic visitors due to falling pound and
  economic downturn, but
• they are being more cautious with spend (demand
  for self-catering / free attractions)
• they have greater expectations of offers and
  value added services
• they are often booking at the last minute
• Weak pound has led to more visitors from Europe
  (and US holding up)
• with more demand for all inclusive packages
  emphasising value for money
• Business travel worse affected than leisure
• hit by declining volumes, cancellations,
  unwillingness to commit, teleconferencing
  replacing business travel
• Impact on employment recruitment freeze, pay
  freeze or headcount reduction
• Increased investment in marketing and PR (but
  this can impact short term yields)
• Businesses are seeking both financial support and
  advice / consultancy.

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Partners for England

• Detailed Results

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A mixed picture in past performance / future
expectations
Q1 How would you evaluate business performance
in the last quarter of 2008 Q2 How has business
been since the start of 2009 Q3 At this stage,
how are forward bookings for the rest of 2009.
Average
2.47
2.58
2.05
Total Sample 19 (Numbers add to less than 19
due to non-response)
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More negative than positive about the coming year
but again there is no consistent view
Q4 Compared to this time last year, how
optimistic do you feel about business prospects
for the rest of 2009?
Total Sample 19 (Numbers add to less than 19
due to non-response)
7
Some positives for domestic travel, though
spend-patterns are changing

• There has been an increase in domestic visitors
• The economic downturn has led to more people
  taking holidays within the UK, further supported
  by the weakened pound
• Last minute bookings are also an emerging trend
• Consumers are seeking more offers / better value
  for money
• There has been an increase in demand for offers
  but without compromising on service and quality
• Visitors expect more value added services
• The rise in the number of visitors to free
  attractions also indicates that more emphasis is
  being placed on value
• They are also reducing spend and seeking to cut
  costs
• The decrease in disposable incomes has led to
  people being much more careful with their money,
  for example taking their own food on day trips
• This trend is also highlighted by the increased
  demand for caravan holidays

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Business travel seems to be more challenging

• There are significant drops in business volumes
• There are fewer bookings
• Events have been cancelled e.g. a trade event
  cancelled as suppliers not interested in
  attending (or not able to afford it)
• There is much uncertainty and a reluctance to
  commit to advance bookings
• Even regular clients are cancelling or
  postponing
• Advance bookings are weakening significantly,
  and business is coming in very much at the last
  minute
• Like consumers, businesses are trying to save
  money and are seeking value
• Some businesses are trading down, and using
  budget hotels to reduce costs
• There has been a reduction in overseas business
  travel, which has been replaced by
  teleconferencing
• Even when businesses are booking / going ahead
  with booked events, they are cutting back on
  secondary spend
• though there are some positives
• Smaller scale public sector events holding up,
  and in some areas increasing

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There are also positives and negatives in the
inbound market

• Positives
• There is an increase in demand for all inclusive
  packages - emphasising the value for money factor
• Comments that visits from North America are
  holding up while visits from the Far East are
  affected the most (IPS estimates show NA down 13
  year on year in 2008, North East Asia down 20)
• The decline is value of the pound has seen a rise
  in visitor numbers from within Europe (IPS - down
  1)
• Negatives
• Flight operators have cancelled some routes to
  save money, though the more profitable routes are
  holding up
• Last minute dumping of packages combined with low
  budget airline fares has NOT seen a rise in last
  minute bookings

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Over half are aware of business closing and/or
strained by cashflow
Q6.a Are you aware of any businesses having to
close or go into administration. Q6.b Have you
had any comments that businesses are being
strained by cash flow or availability of
credit. Q6.c Are you aware of businesses
reducing investment or delaying capital works
that could impact visitor experience.
Total Sample 19 (Numbers add to less than 19
due to non-response)
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Specific impacts on local businesses

• Businesses closing down
• Local restaurants and pubs have been widely
  impacted, and many have closed down or gone into
  administration
• Publicly funded facilities are feeling pressure
  due to budget cuts at the local authority level
• Corporate events market severely affected due to
  budget constraints across various businesses
• Cash Restraints
• Lack of financial help from banks and lack of
  availability of overdraft facilities has affected
  many tourism businesses
• Staff overheads have been reduced
• Decrease in property values has also affected the
  overall value of leisure businesses
• Investment
• Responses show a mixed picture
• Many think that investing to improve current
  facilities might help their business through the
  downturn e.g. major visitor attractions
• While others are being more cautious with their
  spend, for example postponing refurbishment and
  expansion projects

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with implications for staffing and employment

• The general trend is towards either headcount
  reductions, or at best a recruitment freeze
• This can be precautionary i.e. by reducing
  staff, profits can be protected even if there is
  a downturn in business ahead
• Staff are accepting pay freezes or working fewer
  hours
• Small companies are not replacing staff
• Businesses are recruiting more locally
• There is a slight change in the available labour
  pool many workers from Eastern Europe have
  returned to their own countries as they were
  concerned that they wouldnt be able to earn
  enough through the recession
• The fall in the value of the pound also makes the
  UK a less attractive place to earn money
• Again, its not the same for all businesses, and
  there are some positives
• There is an increase in short term jobs like
  contract catering, restaurants and some other
  travel services
• Some businesses have claimed to record no changes
  in staffing

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Businesses are already using a range of survival
tactics

• Enhanced Marketing and PR
• Additional investment in Marketing and PR
  activities to target those staying in the UK
  (especially self-catering) though this can eat
  into the yields of the businesses concerned
• Businesses, including branded hotel chains, doing
  more grass roots marketing (e.g. working more
  closely with TICs) and becoming prominent in the
  local tourism sector
• Businesses are working with regional marketing
  bodies like DMOs/RDAs to enhance occupancy and
  visitors
• Offering promotions
• Many are providing special discounts
• BUT offers such as 2 for 1 will enable
  businesses to keep up visitor numbers but might
  affect profits in the long run
• Reducing Operating Costs
• Businesses needing additional working capital to
  survive the economic downturn will try to make
  cuts in their costs
• Reducing the opening hours of the business
• Renegotiating previously agreed rates with
  suppliers to protect profit margins and
  tighten costs
• (as well as reducing staff costs)

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Suggested Measures to Support Tourism

• Financial support should be provided
• Businesses are looking to get more financial
  support during the time of the recession
• Make more funds available to stimulate growth
• Contain QA costs and reduce regulations
• Provide fiscal incentives
• Advice / consultancy / information would also be
  valued
• Provide necessary training and skills to enhance
  Marketing and PR activities.
• Ensure businesses have access to skills provision
• Training on how to attract customers and identify
  routes into the market
• Keep businesses updated on current market
  conditions and findings through research and
  insights
• Now is the time to improve the tourism product
• Improvement is transport infrastructure would be
  beneficial in the long term for tourism
• Innovation around product and quality will
  provide a better customer experience
• Better co-ordination is also needed
• Coherent relationship is needed between Local,
  Regional and National organisations in promoting
  tourism

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Partners for England

• Questionnaire Responses
• Impact of the Downturn
• 25th March 2009