Economic Impact of Tourism on London - Coursework Example

Economic impact of Tourism on London Contents Introduction 3 Discussion 3 Conclusion 10 References 12 Introduction The following essay analyzes the economic impact of the tourism sector in the city of London. London is stated as one of the world’s leading financial centre in the world. It is stated as one of the command centres in the world economy. In the world the position of London is considered as 6th when considered with respect to the other cities. The estimated GVA or London in 2012 was £309.3 billion or $546.6 billion. The per capita GVA of London in the year 2012 was £37,232 or $65,768. It is found that the economy of London is roughly similar in size to the economy of Sweden or Iran. London is also considered as one of the most populous regions in the world. When it comes to the GDP of UK London is found to contribute 22% to the GDP. There are many private sector businesses that are existent in London many of which are small and medium enterprises. London is also found to be one of the most popular tourist destinations in the world. The city attracts almost 30 million visitors yearly and there are 26 million overnight visitors who come to London from different parts of Europe throughout the year. It is found that the tourism sector contributes about 10% to the total Gross Value added of London. It is also found that 13% of the working population in London works in the tourism sector. Thus it is found that tourism sector in London is one of the most important sectors of revenue generation. Over the course of the following essay the contribution of the tourism sector to the economy of London is analyzed. In this perspective the contribution of the tourists to the local economy is also analyzed. The contribution of the tourism sector to the economy of London as compared to other sectors is considered. Discussion London is one of the most attractive tourist destinations in the United Kingdom and in respect of the whole world. In the year 2012 there were 27.6 million visitors comprising of both domestic and international visitors who generated revenue of £ 12.9 billion. The total no. of visitors from international locations translated to 15.5 million who spent a total of £10.1 billion and stayed for 94.3 million nights collectively. The visitors also comprised of 12.2 million visitors who visited the country from within Europe and helped in generating revenues of £2.8 billion and stayed for 22.7 million nights (London and Partners, 2013). There are about 1218 hotels in the London area and together they provide about 117,000 rooms. The tourism industry of London is estimated to be worth £15.9 billion and supports about 304000 jobs. It is also found that London is one of the best connected cities in the world and there are about 330 direct links to London from a wide range of markets from where tourists may come. The hotel industry is also found to increase its capacity and there are about 42300 bedrooms that will; be added by the year 2017. Amongst the entire tourist destination that is present in the United Kingdom London is one of the major tourists’ destination (London’s Economic Plan, 2015). Amongst all the overseas visitors who come to visit UK 50% visitors visit or come to London. However the figure is poor when it comes to the estimate of domestic visitors. Of the total no. of domestic visits London receives only 10%. In the year 2012, the total number of overnight visitors to London is 27.6 million and the number of day visits accounts to 297 million. Combining these two figures it appears that London received an approximate number of 800000 visitors each year (Visit Britain, 2015). It is found that the total spend by the overseas visitors was £10 billion in the year 2012 was 55% of the total spend in UK. It was also found that the domestic spent a total of £2.8 billion. Analyzing the data means that out of the total spend by the tourists in London, 78 pence is done by overseas visitors. It is also found that as per the rankings of the most visited cities in the world London is listed as the third most visited city in the world (Kyte, 2015). If one lists all the visitors who arrive to London by purpose the number of visitors who comes to London for Lon accounts for the most visitors. It is found that total number of visitors to London for the purpose of leisure in the year 2012 was 11.8 million or represented 43% of the total visits to London. The total value of the visitor’s economy has found to increase by a total amount of 2.5 billion in the period between 2008 and2012. The rise has been from 10.35 billion in the year 2008 to 12.36 billion in the year 2012. This means that there has been an increase of about 24%. In the year 2013 the expenditure by the overseas visitors grew by 5.6 %. If one ranks the amount of expenditure made by different visitors depending on the purpose of their visit then it is found that overseas holidayers are the second most valuable segment in terms of spending thy incur. It is found that the no. of visitors who visit the country for the purpose of business is significantly lower than those visiting the country for holiday or for visiting their friends and relatives. However it is found that those visiting the country for business purposes are second most valuable segment after the list of visitors who visit the country for holiday purpose. This is because such a tourist spends almost double the amount that is spent by a leisure visitor. As compared to this it is found that the numbers of visitors who visit the country for visiting their friends or relatives spend much lower than other categories of visitors. This is because they do not have to pay for the purpose of hotel accommodation. It is also found that the overseas visitors spend 3 times more than the domestic visitors. This is mainly due to the fact that on an average the overseas visitors stay for a longer time than the domestic visitors. Over the period of 10 years from 2003 to 2013 it was found that London experienced a sustained growth in the number of international tourists. If the visitors are segmented on the basis of country of origin then it is found that about 80% of the total visitors originate from North America or Europe (Dwyer, Forsyth, Madden and Spurr, 2000). Amongst all the visitors arriving to London it is found that the visitors coming from Europe from the majority and comprises 2/3rd of the total number of visitors. The top 10 of the markets accounts for 60% of the total visitors to London. It is found that amongst all the markets USA is the largest and accounted for 1.86 million visits in the year 2012 which accounts for 12% of all the visits. It is also seen that French people account for 11% of the total visitors to the country (Dwyer, Forsyth, Fredline, Jago, et al. 2006). This is partly due to the fact that France has a close proximity to the country and there is no. of routes that connect the two countries thus making it easier for the visitors to visit the country. The other major economies in the Europe consisting of Germany, Spain, Italy and Netherlands together comprise 1/3rd of the total visitor count. It is also found that the no. of visitors who arrive to the country from Australia is on the rise (Dwyer L, Edwards D, et al. 2008). This is due to the fact that Australian dollar has appreciated in the recent times. The visitors count from other smaller countries is on the rise. It is found that one country which is leading the race and quickly improving the rankings (Fredline, Jago, Deery and Lundie, 2007). As of 2012 the number of visitors who arrived to the country from China was 100,000 or about 1% of the total number of visitors. Besides being the country from which maximum number of visitors arrives to the country USA is also the country whose citizens spend the most when they arrive to London. It is also found that the people of US origin spend twice as much as the total amount that is spent by the tourists coming from France to the country (Dwyer L, Edwards D, et al. 2009). Some other countries which are characterised by high level of spending are Saudi Arabia and Chinese market. Of the total no. of international visitors who come to London it is seen that the number of visitors who come for pure holiday were about 7.6 million in the year 2012. They comprise about half of the total number of international visitor to the country. It is also seen that the no. of visitors who arrive to the country for holiday purpose has increased by half a million to 2012 (Dwyer, Forsyth, Spurr and van Ho, 2003). If one analyzes the profile of international visitors on the basis of purpose then it is found that the number of people who visit London for the purpose of business has also shown a constant growth (Dwyer, Forsyth, and Spurr, 2004). The growth in the number of international visitors on the purpose of business visits was temporarily disrupted during the Olympics. However it is found that the tourists’ visits due to the purpose of business have shown strong revival and strong growth (Dwyer, Forsyth and Spurr, 2004). However the number of visitors who visited the country for business purposes was still short by about 50 million than the number of visitors who visited the country for the same purpose before the financial crisis (Dwyer and Forsyth, 2008). The visits who visit the country for business purposes account for about 27% of the total expenditure. The amount of expenditure of the business tourists are twice the level that is expended by the holiday visitors. The business visitors also spend for very less number of days. As compared to the tourists who visit for business purposes the visitors who visit for the purpose of visiting family and friends spend much longer time. The number of tourists who visit for the purpose of visiting the family and friends spends the lowest as they do not spend on hotel accommodations (Dwyer, Forsyth, P., Spurr and van Ho, 2006). It is also seen that people of all age groups visit London. However it is seen that amongst all the people visiting the city the age group of 25-44 comprises about ½ of the total overseas visitors count. It is additionally found that the no. of people who visit the country is at their peak in summer and their lowest level in the months of winter (Dwyer, Forsyth and Spurr, 2004). There are 5 airports in London and these airports collectively connect to about 330 destinations across the globe. It is therefore no surprise that air travel is mostly used by the travellers who are to arrive to the country. Amongst the total number of tourists who arrive to the country air travel is used by about 77% of the total number of tourists. It is also found that the share of other modes of travel like the channel tunnel which is combination of euro star rail and shuttle have increased in the recent years. The share of the channel tunnel as a mode of arrival has increased to 16%. As the no. of routes of train routes have been increased in the recent years it is estimated that the arrival of the tourists by this mode will increase further (Oxford Economics, 2015). As compared to the visitors who travel to London for other purposes the no. of tourists who are travelling to the city for holiday are more likely to use sea and channel tunnel as their mode of arrival (Dwyer, Forsyth and Spurr, 2006b). If one profile the domestic visitor arriving to the city then it is found that number of domestic tourists travelling to London in the year 2013 up to the month of June was 12.5 million. It is also seen that the domestic visitors spent £2.9 billion over a course of 28.4 million nights. In the year 2012 especially in the second half of 2012 the numbers of domestic visitors were boosted due to the London Olympics (Haley, Snaith and Miller, 2005). Amongst the domestic visitors the most was in the form of those who visited on the grounds of visiting their family and friends. However it was found that in terms of spending these categories of visitors spent the lowest when compared to the business visitors or the visitors for the purpose of holiday (Dwyer, Forsyth and Spurr, 2006c). It is found that London is one of the best connected regions in the United Kingdom. London is connected to 330 destinations across the globe through direct links. It is found that Heathrow is the busiest and the most dominant airport in the city. There are 70 million visitors who use the airport on an annual basis and represents 52% of the total visitors to London. The airport is used as the main hub for many couriers in the Europe and is used as the main entry point by most of the long distance flight into the country (Dwyer and Edwards, 2009). The other airport Gatwick accounts for about 34 million passenger and accounts for about 25% of the total London tourists passengers. Another airport in the city is the London city airport which is the newest addition to the list of airports in the city. The airport is in close proximity to the centre of the London and this means that most of the business travellers use this airport to travel to the city (Dwyer, Forsyth and Dwyer, 2010). It is found that there are 1218 hotel establishments in the autumn of 2013. The number of rooms that is provided by these hotels is approximately 117,000 rooms and this means that the numbers of rooms that are offered by the hotels are about 42.6 million nights per year. If it thought that there are average 1.75 beds that are provided per hotel room, then it comes out that 75 million bed spaces are offered to business visitors that total for 68 million nights for the visitors (Seetaram and Dwyer, 2009.). It is found that Tourism industry supported about 226,000 jobs in London in the year 2012. The number of jobs that are supported by the tourism industry is around 5 percent of the total employment that is provided in London (Dwyer, Forsyth, King and Seetaram, 2010). The number of jobs that were offered by the tourism sector in between 2005 and 2008 was about 7 percent. It is found that London accounts for 6.6 billion GVA of the total 34.3 billion nationally (Weaver and Oppermann, 2000). It is found that tourism has a number of positive economic impacts. It is found that the tourism industry is involved in the buying of goods and services from different businesses and pays most of the income it gets as wages and salary to the employees. It is safe to assume a multiplier of 2.0 for the tourism industry (Mbaiwa, 2003). This is to indicate the fact each dollar of direct sales that is produced by the industry ion turn generates an equal dollar in indirect sales. The secondary sales enable and help in the creation of additional income level and employment in the region. Thus the effect of tourism on the economic prosperity of the region is enormous. Figure 1contribution of different sectors to the GVA of London (Office for national Statistics, 2012) Conclusion After analysis of the tourism sector in London it is found that the tourism sector and the tourism industry is a major contributor to the economy of London. If one looks at the contribution of the tourism sector to the GVA of London then it is seen that it is one of the major contributor to the economic prosperity of the area. Also it is found that tourism contributes in the number of employment that it generates. It is seen that tourism has both direct and indirect impact on the economy of a region. It is estimated that the multiplier factor of tourism sector is 2.0 which means that for each of the dollar of direct sales there is an additional dollar of indirect sales. It is also seen that the future of the tourism sector for London looks bright. In fact it is one of the sectors which have shown consistent growth over the years. Another factor that can be noted is that out of all tourists that travel to the city most of them travel for holiday purpose. However in terms of value added it is seen that the number of tourists travelling for the business purpose provides more value added than the leisure or tourists travelling to meet family and friends. It is seen that amongst the tourists travelling to the city the number of tourists travelling from international destination is greater than the domestic tourists. Most of the international tourists come from North America or Europe. To conclude it can be said that the prospect of tourism sector in the context of London looks bright. References Dwyer L, Edwards D, Mistilis, N, Scott, N, Roman, C. and Cooper, C., 2008. Trends Underpinning Tourism to 2020: An analysis of key drivers for change. Sustainable Tourism Cooperative Research Centre, Gold Coast, Qld. 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