Size and Structure of the Tourism Industry in the UK - Assignment Example

Tourism is the world’s largest industry and vital to the global economy. It is difficult to define the tourism industry as several allied businesses fall within this industry. Tourism is primarily a service sector industry, which includes hotels, restaurants, theatres, monuments, fairs and festivals, pubs and bars, aviation and transport, tour operators, and ground handlers. Business tourism too has become an important and integral part of the industry. Conferences, seminars and incentive tours have contributed to the growth and development of the industry. The UK tourism industry is hence, extensive and the Tourism Society defines tourism as ‘the temporary short term movement of people to destinations outside places where they normally live & work, and their activities during their stay at these destinations’ (Tourismnetwork, n.d.). Tourism offers the opportunity for rest, relaxation, adventure and entertainment. It helps bring friends and families together and improves the quality of life. At the national level, it helps generate wealth, creates jobs, promotes entrepreneurship, provides social and environmental benefits and promotes cultural traditions. This paper will describe the size and structure of the tourism industry in UK and discuss its importance to the national economy. It will also highlight the likely impact of the London 2012 Olympic, which is expected to boost the industry as a whole. There is no doubt that tourism is a great contributor to the economy in UK and the sources used here are authentic private and government sources. Service sector has been receiving increased attention in the last few years. The service sector covers the wholesale and retail trades, hotels and restaurants, transport and communication, financial services, real estate and business activities and government and other services (ONS, 2000). The overall growth in the Gross Domestic Product (GDP) was 1.8 percent over 2004 and the output of service industries is estimated to have increased by 0.9 percent in the last quarter of 2005. The output within the distribution, hotels, and restaurants increased by 1.2 percent during the same period. (National Statistics, 2006). The government recognizes the economic importance of tourism and its contribution as job generator. According to the Caterer & Hotelkeeper (2005), the tourism industry in UK is worth approximately £ 81.2 billion based on the report of British Hospitality Association. It employs more than 2.1 million people (StarUK). This implies that over seven percent of the population work in the tourism sector. In 2005, UK attracted a record 30 million visitors, which is equal to the combined populations of Belgium, Portugal and Sweden (DCMS). Besides, 86% England’s tourism income is derived from the domestic sector. Coach operators and pub landlords are also indirect contributors to the industry. The tourism industry comprises of about 127,000 diverse businesses like these. About 80% of such businesses have a turnover of less than £250,000 per annum. It is very difficult to measure the impact of tourism on the economy and without accurate measurement, it is difficult to resource funds. With so many diverse businesses attached to the main industry, the multiplier effect has to be ascertained. The money spent by visitors is not merely on the transport, hotel or food. Indirect businesses like local shops also benefit from tourists but it becomes difficult to measure the impact. The size of the industry can be measured both in terms of the number of visitors to the country as well as the amount that they spend. The tourism industry comprises of numerous small and big businesses providing accommodation, food, transport and other services. Because of its growing economic importance, it commands the attention of the government. Tourist boards and regulatory government authorities are necessary to control, providing marketing and serve as a platform to voice issues affecting the industry. As such, there are four Tourist Boards in the UK and they report to a government department. VisitBritain reports to the Department for Culture, Media and Sports (DCMS), VisitScotland to Scottish Executive, Northern Ireland Tourist Board is a part of the Department of Enterprise, Trade and Investment for Northern Ireland (DETINI) and the Wales Tourist Board reports to National Assembly for Wales. VisitBritain has the major responsibility to market Britain overseas, hence all other boards maintain close links with VisitBritain. Apart from these, Department for Transport (DfT) is in charge of railways, aviation, road and the London Underground. Consortium of Independent Tour Operators (CITO) and People 1st are the two regulatory bodies dedicated to the improvement of the tourism industry. CITO is an organization with nationwide membership for which the benchmark is excellence in service. People 1st are the Sector Skills Council (SSC) for the hospitality, leisure, travel, and tourism sector in UK. They serves as the voice of this industry representing employers’ views on skills issues, helping to direct the existing government, and developing the right standards for qualifications. The Tourism Alliance represents the industry views to the government. According to VisitBritain, the body responsible for promotion of Britain abroad, the tourism industry accounts for 3.5% of the economy in UK as of 2003. As per the National Statistics Report, 27.8 million overseas residents visited UK in 2004 and spent £ 13 billion. Considering inflation there was seven percent increase in spending by overseas visitors between 2003 and 2004. The year 2004 was a record year for UK’s tourism industry. Despite the statistics and the figures with which the government has been trying to impress people with, the fact is that the growth rate in the tourism industry is far below the global average. The Tourism Minister has stated to Travel Trade Gazette UK & Ireland (2005) that there is gap between what the UK residents spend abroad and what the visitors spend in UK. Britons spend £ 15 billion a year more. According to him, the deficit will increase by 2010 and even though the inbound figure is expected to grow by 3.1% or 3.2%, it is below the global growth. He felt the standard of accommodation needs improvement. Better co-ordination between the industry and the government is also needed. Even though tourism is crucial to the economy of UK, the deficit has worsened since 1997. Caterer & HotelKeeper (2006) reports that according to DCMS, the difference in tourist spending in the UK and what UK residents spend abroad has grown from £ 4.6 billion in 1997 to £ 17.9 billion in 2005. The tourism sector employs over 2.1 million people but it has not been able to attract the domestic workers. Employment is at an all time low, the economy is buoyant, yet the recruitment and retention issues are crippling the industry. People 1st (Campbell, 2005) report that as per British Hospitality Association, at any point of time there are 100,000 vacancies in the hospitality sector. This has promoted the sector to employ people from overseas. Between May 2004 and March 2005, 42,000 overseas workers have registered with the Home Department. The highest number of people comes from Poland. UK has not been able to attract the domestic workers because of the low wages prevalent in the industry apart from the irregular hours of work, seasonal demand, and insecurity of job. VisitBritain aims to grow the tourism industry in UK to £ 100 billion by 2010 (TourismNetwork). Various factors have been influencing the growth of tourism in UK, and are expected to contribute further to the growth of this industry. Ageing population, changes in work schedules, short-breaks popularity, and higher disposable income are some of the factors that would affect the future of the tourism industry. Apart from these, hosting of the London 2012 Olympic would be a great contributor to the economy as Tom Wright, chief executive of national tourism body VisitBritain, believes that extra £ 2 billion would be generated during this period (Frewin, 2005). Leisure and business visitors are expected to flock to Britain before, during and after the games. The British Airports Authority anticipates 500,000 visitors in 2012 alone; the Olympic Village will accommodate more than 17,000 athletes and officials. This itself would boost the tourism industry as a whole including the allied industries like the catering, laundry, restaurants and pubs, and transportation. These figures sound optimistic but management of London 2012 Olympic is a mammoth task. Mr. Tony Blair has been the subject of criticism for his enthusiasm to host the Olympics. Many are apprehensive about its positive contribution to the nation’s economy. As much as 67% vacancies are hard to fill due to lack of the right skills (People 1st). The London Olympic must act as a catalyst. The government, employers and education providers have to work together to ensure people are drawn to this industry. Publicity is equally necessary to attract more visitors to the country. The investment in training and development is also inadequate. The gap between the expenditure by UK residents and by the overseas visitors in UK has to reduce. This alone can help to maintain positive contribution to the nation’s economy and achieve its targets by 2010. References: Campbell L (2005), International Workers, People 1st, 21 April 2006 Caterer & Hotelkeeper (Oct 20, 2005): "Hospitality worth more than Government thinks." 10. British Council Journals Database. Thomson Gale. 20 April 2006 Caterer & Hotelkeeper (Feb 16, 2006): "Blair slammed for rise in UK tourism deficit." 11. British Council Journals Database. Thomson Gale. 20 April 2006 DCMS, Department for Culture, Media and Sport, 20 April 2006 Frewin, A (2005). "Olympic Games could boost revenue by [pounds sterling]2b." Caterer & Hotelkeeper (July 14, 2005): 10. British Council Journals Database. Thomson Gale. 20 April 2006 National Statistics (2006), First Release, 21 April 2006 Office for National Statistics (2000), The UK Service Sector, 21 April 2006 People 1st (2005), The 2012 Olympic Legacy, 21 April 2006 StarUK, Statistics on Tourism & Research, 20 April 2006 Travel Trade Gazette UK & Ireland (March 25, 2005): "Domestic tourism must sharpen act." : 24. British Council Journals Database. Thomson Gale. 20 April 2006 The Tourism Network, 20 April 2006 VisitBritain, Key Tourism Facts, 21 April 2006 Read More