Britain’s summer holiday boom last year was not enough to save thousands of tourism businesses, despite increased domestic bookings in popular places such as Cornwall and the Yorkshire Dales.
A Tourism Alliance survey of 1,927 tour operators, hotels, attractions, language schools and other travel and hospitality businesses serving overseas tourists found that 11% believe they are “very likely to fail in 2022, and a total of 41% believe they are “very likely to fail”.
The first three months of 2022 are shaping up to be bleak, with cancellations skyrocketing in the wake of the Omicron variant. Almost a third of businesses surveyed lost at least half of bookings made for national holidays between January and March this year.
With far less government support available after the furlough scheme ended, a quarter of those surveyed said they had run out of cash reserves and just over half said they would run out in the two months.
Last summer saw crowded beaches and sold-out resorts, but that masked an overall drop in domestic tourism away from coastal and rural areas, according to Kurt Janson, director of the Tourism Alliance. The alliance comprises over 60 trade associations which together represent 303,000 UK travel businesses.
“There has traditionally been a tremendous amount of domestic tourism in towns and cities, and a lot of business and conference travel, and those sectors have done very poorly,” Janson said. “Businesses that depend on international travel have done poorly – language schools, events, conferences. And because the reservation times for these things are longer, they will take longer to pick up.
Janson was particularly concerned about tour operators serving foreign visitors. “They are responsible for around 60% of overseas visitors to the UK and if they don’t promote the UK as a destination, inbound tourism will take a long time to recover. We need them there, fighting for our end of the bargain.
An indication of the difficulties facing the tourism sector emerged last week, when the Hungarian government said it would again delay a program which would have seen up to 60,000 students visit the UK this summer.
“It would have been a huge boost,” said Huan Japes, director of memberships at English UK, the trade body for language schools. “We used to bring in 550,000 students, but we’ve barely topped 100,000 a year since the pandemic.”
Janson said the figures showed the government’s tourism stimulus plan was unlikely to meet its targets. It hopes to see a rebound to 2019 levels in domestic tourism by the end of the year and overseas tourism by the end of 2023.
The UK was becoming less competitive as an international destination, Janson said. Visitors could no longer reclaim VAT on departure, other countries were spending more on marketing and visitors from the EU now needed a passport to enter the UK.
Tourists from China and Middle Eastern countries wanted to shop in places like Bicester Village, but were now more likely to choose France as they could get a tax refund when they left. (The UK scrapped the VAT reclaim system at the end of 2020.) “The government basically told these visitors ‘don’t come here – go to Paris instead,'” Janson said.
He said the government urgently needed to promote the UK as a destination. Ireland are spending £33m. Australia will spend £250m over the next three years and the US is set to approve a £185m budget to rebuild its tourism industry.
Joss Croft, chief executive of trade body UKinbound, said: “These figures lay bare the devastating impact the pandemic continues to have on the UK inbound, outbound and domestic tourism industry, as well as across the entire supply chain. We are seeing green shoots, but crippling border restrictions and ever-changing government guidelines continue to stifle the recovery.
From April 1, hotels, restaurants and other hospitality businesses will have to start paying business rates again, plus VAT at the full rate of 20%, after the reduction to 12.5% during the pandemic.
Kate Nicholls, chief executive of UKHospitality, said keeping the reduced rate would boost tourism trade, rather than raising prices for stay-cations and overseas tourists.
“The main driver of inbound tourism is price, and UK travel is very price sensitive,” she said. “A 1% drop in the cost of UK holidays leads to a 1.3% increase in inbound tourism revenue for the economy.”
Bernard Donoghue, chief executive of the Association for Leading Visitor Attractions, said: “Tourism was the first hit, the hardest hit and will take the longest to recover, and the attractions and businesses that generally rely heavily incoming tourists, who have been away for nearly two years, will take the longest to recover of all. Our industry lost, on average, £200m a day in 2021.”