Written evidence submitted by London & Partners

DCMS Select Committee Inquiry – Promoting Britain Abroad

London & Partners’ submission

December 2021

About London & Partners

1.              London & Partners (L&P) is the business growth and destination agency for London. Since we were founded in 2011, we have added £2.6 billion GVA to London’s economy, inspired 142 million people through visitlondon.com, attracted 2,554 events, created or supported 73,615 jobs and supported 2,209 overseas companies to set up or expand in London. 

2.              In 2021/22, we published a new strategy with the aim of helping power London’s reinvention during its recovery as well as maintaining and enhancing its position as a global city. Our renewed mission focuses on delivering resilient, sustainable, inclusive growth.

3.              L&P is a social enterprise, funded by grants, partnerships and our portfolio of profit-making ventures.

Executive Summary

4.              L&P is delighted to contribute to the Department for Digital, Culture, Media and Sport (DCMS) Select Committee’s Inquiry into Promoting Britain Abroad. We hope the findings will include insights and lessons we can bring back into the organisation to improve our performance on behalf of the greatest city in the world.

5.              Fundamentally, it is critical to the tourism, culture, hospitality and retail industries that the Government and Tourism Boards do all they can to encourage the return of international tourists to the UK.

6.              This approach should be collaborative, building on the successful approach to domestic tourism over the past twelve months where central government has worked closely with the industry, local authorities and business improvement districts.

7.              L&P supports the industry’s calls for funding that would back an international marketing campaign. However, consideration needs to be given to the positive role that London as the UK’s capital and a global city can play not only in attracting tourists in its own right but also acting as a gateway for tourism to the rest of the UK.

8.              It is crucial that any actions taken to encourage the return of international visitors focuses on fast-tracking the international visitor recovery by 2023, one year ahead of current forecasts.

9.              The Government must be mindful of the competition the UK faces in this market and recognise the sector’s overall contribution to UK plc, including as an export.

10.          More broadly, the Government should consider wider reform of the tourism sector and, in particular, implement the De Bois Review in full.

11.          The below submission is set out in accordance with the Committee’s Terms of Reference.

What needs to be done to re-establish the UK as a holiday destination for international travellers?

• What should Government and the tourism boards be doing to support the inbound tourism industry in its recovery?
• What will the impact on the UK’s hospitality, cultural and heritage sectors be if inbound tourism is slow to recover to pre-pandemic levels?

Leisure Tourism

12.          The stakeholder landscape across the tourism industry is wide, with differing levels of collaboration and shared strategic goals. Where possible, L&P works closely with DCMS, VisitBritain (VB), UK Inbound and our own tourism partners including Trade Associations and Business Improvement Districts.

13.          It is important to note the significant role that London plays in the overall UK tourism sector. London is the 3rd biggest driver for people visiting the UK (behind visiting a new country and history and heritage) and accounted for 53% of the UK’s international visits in 2019.[1]

14.          However, as a global city, London was disproportionately affected by the pandemic. This was in large part caused by the significant reduction in footfall to the Central Activity Zone (CAZ) both domestically but, crucially, because of the city’s reliance on international visitors. This is demonstrated by the Centre for Cities data which shows that London’s footfall recovery is only 53% as of November 2021 compared with Birmingham (79%), Manchester (73%) and Glasgow (64%).[2]

15.          That disproportionate impact is demonstrated by the fact that a higher proportion of London visitor spend comes from international markets. In 2019, 84% of overnight tourism spend in London came from international visitors, compared to 37% for the rest of Great Britain.

16.          Looking at the UK more broadly, there were 11.1 million inbound visits in 2020, a 73% decline from the visit levels seen in 2019.  The majority (63%) of the visits to the UK were in Q1 (Jan-March). Visits in Q1 were down 16%, Q2 96%, Q3 80% and Q4 87%, compared to 2019. In 2020 inbound visitors to the UK spent a total of £6.2 billion, a decline of 78% on 2019 results.[3]

17.          This represents a loss vs the counterfactual pre-COVID forecast for 2020 of 31.0 million visits and £24.1 billion spending.[4]

18.          The figures available so far for 2021 show that were only 195,000 inbound visits to the UK in Q1 2021 – down 96% compared to Q1 2020. Spend was down 94% year-on-year (YoY) with inbound visitors spending £248 million in the UK during Q1 2021. In total 10.4 million nights were spent in the UK by inbound visitors during Q1 2021, down 75% year on year.[5]

19.          For Q2 2021 the UK received 277,000 visits in Q2 2021, 97% below Q2 2019. There were 471,000 inbound visits to the UK in the first half of 2021 – down 97% compared to the same period in 2019. Visitors spent £386 million in Q2 2021, down 94% on Q2 2019. The first half of 2021 saw £634 million spent by overseas visitors to the UK.[6]

20.          It should be noted, however, that the above figures are limited both because of the low base sizes and the fact that the data is collected from air passengers only.[7]

21.          Therefore, it is crucial to understand that any recovery plan for inbound UK tourism must also support London – not only because of the disproportionate impact but also to leverage London’s status and draw as a springboard for tourism to other parts of the UK. There is significant potential to capitalise on London’s position as a gateway for wider tourism. Those visitors that go on to spend time elsewhere in the UK contribute £641m to the local economies they visit.[8]

22.          This comprises 10% of the nation’s international visitors and any recovery plan should aim to significantly increase that number with London working in conjunction with the devolved nations and other areas of the country.

23.          A slower recovery for London’s international tourism market will therefore inevitably have a negative knock-on effect for the rest for the rest of the UK.

24.          Without intervention L&P estimates that London’s international visitor recovery will take at least 4 years (including 2021), resulting in a loss to the economy of £21.3 billion, the equivalent of 192,000 FTE jobs.[9] 

25.          We believe the solution is an international marketing campaign aimed at bringing international tourists to London and driving them to other parts of the country, which would have immediate and long-term effects on London’s recovery and future strength, as well as bringing important income to the wider UK. 

26.          Whilst London would benefit from a campaign promoting the UK to international visitors, the latest Visit Britain sentiment report[10] shows that 40% of international visitors to England would consider visiting London in the next 12 months. This is a significant decrease compared to London’s 2019 56% market share of visitors to England.

27.          The industry is completely aligned on the need for a marketing campaign to promote London to our international audience but the funding necessary has not been secured yet.

28.          Post pandemic recovery also comes at a time when there is a huge level of global competition. For example, London has been losing market share despite the number of international visitors continuing to increase – international visitor numbers rose by 3.7% over the past ten years but the global tourism market grew by 4.7%.[11]

29.          It is also important to set the challenge in terms of the amount other global cities spend on promotion. Although the following figures are taken from a 2014 London First report[12], they are the most up to date like for like comparison that L&P are aware of:

•         Hong Kong - £253m
•         Singapore - £201m
•         Paris - £40m
•         Berlin - £38m
•         NYC - £22m
•         Toronto - £17m
•         London – 15.6m

30.          Furthermore, a recent Tourism Alliance paper (Rebuilding Britain’s Tourism Industry)[13] considered the scale of country-wide international marketing spend and suggests that as they rebuild their inbound tourism industries:

• Ireland has announced an additional £33 million for Enhanced Tourism Marketing &    Product Development.
• Australia has announced marketing expenditure of £250m over the next three years to rebuild its tourism industry.
• The USA is finalising a one-off appropriation of £185m for additional tourism marketing to rebuild its tourism industry.

Business Tourism

31.          Whilst the Committee’s question pertains to leisure tourism it is also important to understand the role business tourism plays in the sector and industry.

32.          The case for intervention in this sector is less, primarily because the difficulties faced are in the most part as a result of travel restrictions. The pipeline of activity remains strong but the below overview may be of interest to the Committee as it considers the wider tourism ecosystem.

33.          This is an area that has also understandably suffered throughout the pandemic, but L&Ps recent research shows that London meetings and event venues increased the number of events they ran by 231% in September 2021, compared with August 2021. London hosted an average of 12.6 events per venue in September 2021, compared to an average of 3.81 in August 2021.[14] 

34.          Event planners are also increasingly confirming forward bookings in London, with the data revealing an average of 8.4 confirmed bookings per venue in September 2021 compared to 5.31 in July 2021, an increase of 58%.[15] 

35.          Event planners choosing London are met with a range of new hotels, venues and innovations following the pandemic. According to new research from the London Convention Bureau, London has opened 18 new hotels in 2021, offering event planners an increasing range of accommodation, meeting and event space options.[16] 

36.          Allied to this is the role Major Events play, with L&P research showing that the industry adds more than £600m to London’s economy every year and can be a huge catalyst towards London’s recovery from the pandemic.[17]

37.          The total contribution of all major events between 2017 and 2020 is estimated to represent an injection of £2.51bn to the London economy. This includes £2.27bn generated by visitor spend on accommodation and non-accommodation expenses such as food and drink, as well as an estimated £238m spent by event organisers.[18] 

38.          Positively, existing data suggests that visitors return swiftly after a health scare but, we should be mindful that, post-recession, tourism reflects the longer time horizon for economic recovery. 

39.          It is hugely important, therefore, that consumer confidence in travelling to London remains high. Being seen to have had a ‘good recovery’ will materially affect sentiment and, conversely, should the situation in relation to Covid worsen significantly again, then meaningful recovery will, of course, be delayed.

40.          In turn, this makes the case for intervention to speed up the recovery all the stronger. A short-term intervention, allied with ongoing support, would allow for the best chance of success.

41.          Visit Britain’s most up to date forecasts for inbound tourism in 2021 is for 7.4 million visits, a further 33% decline on 2020 and 18% of the 2019 level; and £5.3 billion to be spent by inbound tourists, a decline of 14% on 2020 and 19% of the 2019 level. This is a downgrade from the previous forecast, run in May.[19]

42.          The Committee may wish to note that industry analysis suggests that output will not recover to 2019 levels until 2024.[20]

Does the Tourism Recovery Plan go far enough to support the industry’s recovery from the Covid-19 pandemic? 

• What are the biggest challenges to delivering the plan?

43.          The Tourism Recovery Plan was a very welcome piece of work. L&P understands the need to have created the plan at speed given the critical nature of the threat the industry has faced during the pandemic. However, as a consequence, there was much less chance for consultation with the industry.

44.          This has meant that some of the goals stated within the plan are ambitious considering the level of funding that will be necessary to achieve them and where the source of that funding will come from.

45.          In addition, the focus of the plan is on domestic recovery. It is now the right time to consider solutions to international tourism.

46.          As above, however, any recommendations made by the Committee should, in L&P’s opinion, be based on the ambition to fast to fast-track the international visitor recovery by 2023, one year ahead of current forecasts.

47.          The biggest challenges to delivery, as based on the evidence above, can be summarised as follows:

(i)             A resurgence of Covid and the necessity to postpone recovery plans.

(ii)           A failure to be ambitious enough in our ambition to attract international visitors and to underestimate the global competition the UK faces. This should include a clear vision that differentiates the short-term need for footfall with the longer-term approach to drive a change of perception.

(iii)          A failure to leverage the UK’s assets, creating a joined-up approach that benefits the entire industry. It should be recognised that London is one of those assets and can help drive the recovery if utilised correctly.

What should the UK be doing to maintain its status as a ‘soft power superpower’ and further promote its culture and heritage on the global stage? 

• How can the UK capitalise on its exit from the European Union?
• What are the biggest threats to the status of ‘soft power superpower’?

48.          The UK’s and London’s profound strengths should not be taken for granted.  As a country and as a global city, the UK and London have traditionally deployed far lower resources towards promoting our city than our international peers. The international promotion bodies of Paris, Berlin, New York and Singapore, amongst others have significantly higher annual budgets.  That said, the strength in partnership of L&P working closely with other representative groups, central and city government and with industry has allowed us to over perform.

49.          It is important that we guard against the notion that the industry will recover on its own. We cannot be complacent. As outlined above the tourism sector has taken a significant blow that risks having long term and profound effects. 

50.          Brexit creates risks which have to be carefully managed, and opportunities we will need to be strategic to deliver. Broader industrial and innovation trends have to be responded to.

51.          The soft power that the tourism sector wields should not be underestimated. From a business tourism perspective, it is not only the value of trade transacted at events that is important but also the convening power and knowledge exchange. For leisure tourism, there is an intrinsic link, through our cultural offer, to inward investment more broadly. Culture as a driver for talent is widely recognised in maintaining London’s attractiveness as a global city.[21]

52.          The tourism and cultural sectors, particularly in London, need to be placed in the context of the wider economy in order to fully understand it’s importance and the role it plays in UK plc.

53.          We often, for example, exclude tourism from discussions about trade, investment and global growth. This is a profound mistake. Tourism and the sectors it supports – retail, culture, hospitality and leisure – account for 1 in 5 jobs in London.  It is also a major exporter with £10.3bn exported by the Cultural Sector in 2019 representing 3.3% of UK service exports – an increase from 2.8% in 2015.[22]

54.          More broadly, it is important to note that London’s culture and heritage is seen as a driver of talent to the UK, cited in recent reports by Deloitte[23] and the City of London Corporation[24] as a pull factor for investment.

55.          Therefore, even without recognising that tourism funds the cultural offer which keeps London a leading centre for Foreign Direct Investment (FDI), it is a profoundly important export sector in its own right.

56.          From a strategic perspective then (and as the recent De Bois DMO Review[25] observed) there is deep value in an agency able to provide a coherent London brand stretching across business growth and destination, reflecting the fact that many investors will experience London as a tourist before making their decision on business location.

57.          L&P wholeheartedly endorses the De Bois Review and would encourage the Government to implement its recommendations in full.

58.          To maximise opportunities, it is also important to understand that the pandemic has potentially accelerated some tourism trends. Tourism and travel may well be beginning a period of change and it is critical that the UK monitors and reacts to those shifts and develops its offer accordingly.

59.          L&P is confident that any investment into the tourism sector will result in a sizeable return on investment. The industry is an asset to UK plc and, if the Government’s aim is to remain a world leader in tourism and harness the soft power of the sector on the global stage, support is needed to maintain, let alone increase, our market share.

60.          In summary, any tourism plan should look further than simply demand generation and understand that investing in the UK’s tourism infrastructure and offer is an important economic lever that can be used for the benefit and competitiveness of the entire country.