Written evidence submitted by Marketing Manchester

Evidence submitted by Marketing Manchester, supported by public and private sector members of the International Marketing Advisory Board

1.INTRODUCTION

Thank you for the opportunity to submit evidence to this inquiry. This submission from Marketing Manchester focuses on Greater Manchester, but also recognises that Manchester Airport provides an important international gateway to the wider North of England, North Wales and Scotland for many inbound markets.

Marketing Manchester is the official Tourist Board, Convention Bureau and Destination Marketing Organisation (DMO) for Greater Manchester. Marketing Manchester has regular communication with over 1200 industry partners across the city region. We work in partnership with Greater Manchester’s 10 Local Authorities, the Greater Manchester Combined Authority and related agencies, central government (and its Arm’s Length Bodies VisitEngland, VisitBritain and Arts Council England), Tourism Alliance, UK Hospitality as well as businesses and other destinations and organisations to deliver destination marketing, advocacy, inward investment and commercial insights to support the sustainable growth of the visitor economy across Greater Manchester.

As part of The Growth Company, Marketing Manchester’s activities are directed and overseen by the International Marketing Advisory Board, whose members, listed below, have contributed to this submission. This submission also has the support of key businesses from across the city-region’s visitor economy which play a proactive role in Marketing Manchester’s activities as partners and representatives of the GM TIER Group: these are also listed below.

1.1 The importance of tourism to Greater Manchester

Tourism across Greater Manchester before Covid-19 was worth £9billion to the economy and supported 100,000 jobs. The economic value of the sector had grown by 30% over the previous 6 years.

Manchester remains the UK’s third most visited city for international visitors after London and Edinburgh; yet Greater Manchester received just 1.89million international visits in 2019, spending £850million, compared to London’s 21.7million international visits and spend of £15.7billion. This equates to 4.6% of all international visits and just 3% of international spend to the UK. Our ambition is to support the overall growth of the inbound UK market, whilst also growing Greater Manchester’s market share.

We estimate that the pandemic has wiped out 70% of the value of the city-region’s visitor economy and it is not until 2024 that the sector expects pre-pandemic levels to return. International leisure and business (convention) travel have experienced the most significant falls in numbers and these two markets are expected to be the last to fully recover.

The Greater Manchester Tourism Recovery Plan (see Appendix 1) has been developed in collaboration with the tourism sector and sets out the actions needed to support the sector’s recovery following the pandemic. In addition, our recently refreshed International Strategy, aligned and developed as part of the Greater Manchester Strategy, highlights our growth priorities and challenges. We have set ourselves some ambitious targets which are only constrained by resources. We would welcome a partnership with Government to deliver these and to support the recovery of the visitor economy not only in Greater Manchester, but across the North.

2. KEY ISSUES

This submission sets out key issues followed by a range of interventions and support measures that the Government should consider which would re-establish the UK as an attractive visitor destination, particularly to high spending international visitors.

2.1 Disruption to International connectivity

Throughout 2021, the UK aviation sector has faced severe challenges as a result of Covid-related restrictions on international travel.

In 2019, Manchester Airport served 210 destinations, flying with over 70 airlines and seeing just under 30 million passengers travel through its terminals.  

The COVID-19 pandemic changed this, practically overnight. Aviation businesses were effectively closed. The Office for National Statistics has repeatedly confirmed aviation as the sector worst impacted by the COVID-19 pandemic.  

Each national lockdown reduced passenger numbers at Manchester Airport to 1-2% of normal levels (Figure 1).  At the peak, Manchester Airport had 75% of staff furloughed, and sadly now employs 30% fewer people than previously.  

International travel returned on 17th May 2021 but with only 3% passenger levels compared to 2019 (Figure 2). On the same day in 2020, passenger levels were at just under 1% of 2019 levels. ​

Manchester Airport had begun to see a recovery with over 1m passengers in Oct 2021 – the first time since Feb 2020. ​Passenger numbers had risen to around 60% of 2019 levels.

Source: MAG data. Confidential to DCMS Inquiry

Figure 2: Manchester Airport passengers, rolling seven-day average, thousands (2021)

2.2 Impact of Omicron

The arrival of the Omicron variant brought the re-introduction of restrictions on international travel. This included adding countries to the red list and re-introduction of Pre-Departure and Day 2 PCR testing.

The uncertainty of pre-departure testing has had a major impact on passengers’ willingness to travel. Manchester Airport saw a 13% week-on-week impact from the news around Omicron breaking, PCR tests and pre-departure tests being re-introduced. Passengers do not want to, and many cannot afford to, get stuck abroad and forced to quarantine, especially in the run up to Christmas. This has an onward impact for tourism and leisure businesses.

Aviation is back to high levels of uncertainty, high costs for testing and high stress levels for passengers required to take multiple tests and deal with an overly complicated Passenger Locator Form – all of which impact aviation’s wider supply chains.

Severe restrictions on the industry and very limited financial support have put the finances of airports under immense strain resulting in substantial amounts of debt and borrowing. The sector is in urgent need of a comprehensive and targeted support package.

On 5th Jan 2022 measures were updated and mean that the UK has returned to the pre-Omicron situation of vaccinated travellers needing only to take a Lateral Flow Test before the end of Day 2 after returning to the UK. This is very welcome news, however, other barriers still exist including ongoing confusion and uncertainty, and the need to complete passenger locator forms which can be different depending on the country of origin.

2.3 Britain’s Competitiveness

Britain is falling behind competitor destinations in its attractiveness to international visitors. Even before the pandemic, the UK was losing market share. Between 2010 and 2020, world tourism doubled, but the UK’s sector grew slower than the global average. According to VisitBritain, France welcomes twice the number of England’s international visitors: The UK has only one city in the Global 100 List of most visited cities.

Inbound tourism presents a huge opportunity to fast track our economic recovery. However, global competition is fierce, and the UK now faces an up-hill battle to restore and grow our inbound visitor markets due to the impact of the pandemic; Brexit and associated negative perceptions as being unwelcoming.

The budget for the national tourism body, VisitBritain, has reduced in real terms over the past decade and has also had to accommodate inflation and variations in currency exchange to the point where the organisation is no longer able to deliver the marketing expectations of Government or the tourism industry it represents. As the country comes out of the current pandemic, there is a real need to equip VisitBritain with adequate resource to kick start the sector’s international recovery.

2.4 Aviation Route Development Support

We are deeply concerned that VisitEngland, VisitBritain and England’s major Gateway Cities do not have the resources necessary to stimulate our international markets, re-initiate international connectivity and recover inbound tourism, the UK’s 5th largest export sector. Competitor destinations outside the UK have already committed to significant increases in their marketing budgets in order to re-ignite their markets. For example, Ireland has announced an additional £33million to support the country’s promotion to visitors.

We would like the Government to support an In-bound Visitor Recovery Plan, with a focus on regional hubs, and specifically on Greater Manchester as the international gateway to the North. We are proposing a partnership with government to respond to the long term damage that has been inflicted on the travel sector by providing direct, targeted route development support in order recover our inbound markets through our Gateway airports, inbound travel operators and DMOs. We must act now in order to encourage re-engagement and an uplift in international arrivals in 2022.

Specifically, we would like Government’s support to enable us to deliver more high-profile marketing activities to drive inbound visitors through Manchester Airport as a gateway to the North and Britain. We have plans which are ready to be implemented that build on our proven track record of success: for example, after two years of direct flights between Manchester Airport and Beijing, our support demonstrated levels of growth in trade, tourism, and knowledge exchange between the North and the Far East that outstripped the national average and inbound visitors from China grew by 38%.

Manchester Airport has a significant role to play as the primary gateway to the North of England, Wales and Scotland and airline connectivity after almost 2 years of interruptions and being grounded will require support to build back. We would welcome an opportunity to work with government on a 3-year Route Development Funded programme in order to attract back our major international connections and promote Manchester as the Gateway to the North.

2.5 Visitor Visas

The UK's visitor visa product has fallen behind that of the Schengen Area both in its offer and its application. In terms of spending by international visitors the UK’s Electronic Visa Waiver (EVW) Scheme available to visitors from four of the six Gulf Cooperation Council (GCC) States is now less attractive than the Schengen product.

The Schengen EVW can be applied for at any time and allows multiple entry during a six-month period. The UK equivalent is only single entry and must be applied for at least 48 hrs before departure. This makes it easier and more attractive for high spending visitors from GCC countries to fly to Paris than to London. At a round table held by the Association of International Retail (AIR) held with ambassadors and embassy representatives from the six GCC states in October 2021, the diplomats described how this issue was affecting the destination choice of many of their citizens.

In 2022 the EU plans to launch a new European Travel Information and Authorisation System which will be valid for three years, multi-entry and cost just 7 euros. This will put the UK offer even further behind.

The British Government has always committed to matching the Schengen visitor visa system. Having accepted the principle of EVWs for these states, it would be a cost-free measure for the Government to introduce these minor changes to restore parity with Schengen.

In addition, there are a number of other cost-free changes to the UK’s visitor visa system that would help boost the UK's attractiveness to high spending visitors such as:

• Extending the EVW to other high spending markets, for example, China.
• Introducing a standard 10-year visitor visa, as countries like the USA have done, for Chinese visitors, and as was promised by David Cameron during President Xi’s visit in 2015.
• Introducing a visa for the families of international students studying in the UK that lasts as long as the student visa to encourage parents to visit their children multiple times during their studies. Parents of international students are likely to be high net-worth and have an additional reason for multiple visits to the UK, but the current limited visitor visa acts as a barrier.
• Expanding the joint Schengen/UK visa application process in China – currently a pilot with Belgium - to Schengen countries with larger numbers of visitors, such as France, Italy and Germany.

2.6 Tax-Free Shopping

Britain is now the only European country that does not offer tax-free shopping to visitors from outside the EU. The OBR estimates that this will lead to a drop of 38% in retail sales to non-EU visitors compared with 2019. That direct loss of £1.2bn of retail sales makes it even more difficult to meet the Government’s ambition of returning international visitor spending to 2019 levels by 2023.

However, there are also likely to be indirect losses as high-spending visitors travel to the UK less often and spend less time here, preferring instead to visit countries where they can buy goods for 20% less than in the UK.

New consumer research on visitors from China and the Gulf States was published by AIR in October 2021. In 2019, visitors from these two regions formed just 4% of all international visitors to the UK (EU and non-EU) but were responsible for around 60% of all tax-free shopping spending. This high level of spending was also reflected in their spending on hotels, restaurants, culture, travel and entertainment. The research showed that over 50% of Chinese visitors and over 60% of visitors from the GCC would reduce the number of times they visit the UK and the length of time they spend here as a direct result of ending tax-free shopping.

The cessation of Tax-Free Shopping will have a significant impact on Manchester’s appeal as a destination for high spending, long haul visitors. For example, the direct Beijing to Manchester flight route led to a 94% increase in the average spend per visit in the North West to £2,167. This was in part driven by Chinese tourists’ access to the VAT Retail Export Scheme (VATRES) and sales of goods airside.

With the reopening of international travel, the Government has a real opportunity to attract high-spending visitors and also divert sales away from the EU with a genuinely competitive tax-free shopping regime.

Given the potentially negative impact of the withdrawal of tax-free shopping both on British businesses and HM Treasury’s tax revenues, we support the call of the Chairman of the Treasury Select Committee for an independent assessment of the full impact of this measure.

2.7 Implementing the Recommendations of The de Bois Review of DMOs

In September 2021, the government published a comprehensive and independent review of Destination Management Organisations in England which was commissioned by DCMS.

The report recommends that a small number of Strategic DMOs, called Destination Development Partners (DDPs), are established from current organisations and are provided with centrally funding for core activities that align to and deliver against Government priorities such as sustainability, skills, place shaping, inclusive tourism and levelling up. The national tourism body VisitEngland would be charged with coordinating this new structure.

We believe that this new network including strategic DDPs will provide the robust structure and rigorous implementation required to deliver the targets set out in the Government’s Tourism Recovery Strategy and its’ ambitions for a Global Britain and to level up the UK economy. Moreover, a new portfolio of DDPs, building on the strength of our existing organisations, would be well placed to leverage private sector investment to support the sector’s recovery and strengthen private-public partnerships across England’s main destinations.

2.8 Building on the Government’s Successful Discover England Fund

Prior to the pandemic, the Government invested significantly in a pioneering Discover England Fund which, under the management of VisitEngland, successfully supported the development of bookable products which were then taken to market by the international travel trade. The Fund is widely recognised as bringing a step change to the way that England is promoted internationally, generating increased profile and a 3rd party multiplier effect for English regions in travel trade itineraries. The Fund was delivered by DMOs and supported many new small businesses and created strong collaborations across destinations as well as with travel trade. However, the pandemic has delivered a major setback to this innovative approach and the reintroduction of a Discover England programme would ensure that the investment, learnings and successes are not wasted, and these relationships are re-ignited.

3. RESPONSES TO THE INQUIRY’S KEY QUESTIONS

The submission above sets out a range of measures which, we believe, will lend significant support to the recovery of the UK’s vital inbound tourism markets. These measures also provide in most part the answers to the questions set out by the Inquiry, namely:

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

-          There needs to be an urgent Tourism Recovery Delivery Plan which sets out regional targets, actions and milestones for recovery and clearly identifies the mechanisms and resources available to ensure these are achieved.

-          Significant additional resources are needed to allow VisitBritain to promote Britain’s key destinations and gateways effectively in key international markets. This should include resources to support the inbound travel trade who have extensive client bases and can provide immediate routes to market.

-          Implement the de Bois review with resources to empower DMOs to deliver national priorities at a local level. The de Bois Review revealed that currently there is no connection between national tourism priorities and local delivery and implementation.

-          Reprise the Discover England Fund to develop and support local bookable product and work with international travel trade.

3.2   What should Government and the tourism boards be doing to support the inbound tourism industry in its recovery?

-          The Government should review the visa procedures and costs for international tourist arrivals and offer a solution that is equal to, or better than, Schengen.

-          The Government should reverse the decision around tax-free shopping and make the UK a tax-free destination for key markets.

-          The Government should connect national and local delivery through DMOs

-          DMOs should coordinate and deliver local and regional plans

3.3   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?

-          The government’s target date for recovery of the sector will not be achieved.

-          There will be ongoing economic consequences in terms of revenues; jobs; investment.

-          Some venues will find it more difficult to sustain themselves as viable businesses, with the possible impact being they may have to close their doors permanently.

-          Perception of the UK as a visitor destination will continue to be less positive than in prior years, which will also have an impact on a less attractive place for investment

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

-          Following the impact of Omicron on the sector, the targets for recovery are no longer achievable within the timescales set out in the Tourism Recovery Plan.

-          The Tourism Recovery Plan does not set out details of how the Government’s ambitions will be delivered or funded.

-          The Tourism Recovery Plan also fails to set out targets for regional recovery: the Plan should set out clear targets for how the spread and impact of international visitors will be rebalanced beyond London.

-          There needs to be better cross-Government Department collaboration of policy and its implementation to support international connectivity and to reduce the barriers for recovery (as outlined above).

3.5   What are the biggest challenges to delivering the plan?

-          The Plan does not identify the actions, resources or organisations which will be supported to make the Plan succeed.

3.6   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?

-          Continue to facilitate the attractiveness of the UK as a destination for international students.

-          Support the cultural and digital industries in the UK to produce content that promotes the UK globally e.g., recognise the power that popular music, film and TV features can make on awareness and perceptions of the UK.

3.7   How can the UK capitalise on its exit from the European Union

-          The UK should offer visa arrangements that are better than those offered by Schengen.

3.8   What are the biggest threats to the status of ‘soft power superpower’?

-          Complacency, ambivalence and a lack of understanding within Government of how competitive the international market for high spending visitors is.

-          International perceptions of the UK’s handling of Brexit, and Covid which is impacting the appeal of the UK as a place to visit.

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