This submission examines the impact of Covid-19 on Coastal Tourism. The key points covered in the evidence are:
The National Coastal Tourism Academy, based in Bournemouth, was originally established with Government funding from the Coastal Communities Fund Round 1 in 2012. We have become the recognised and respected voice of coastal tourism directly supporting more than 35 coastal destinations across England, and in excess of 2,000 tourism businesses.
Over the past seven years, we have worked in partnership with destinations, industry, academia and Government to create economic growth and address seasonality in coastal communities. We have focused on delivering research, business support, training and development projects across the coast as well as attracting new domestic and international visitor audiences.
Information contained in this submission is based on business surveys, national data and NCTA research.
Prior to the outbreak of Covid-19, Coastal Tourism spend in England was valued at £13.7bn and across Great Britain £17.1bn. Although some progress has been made towards reducing seasonality, 32% of all visits still occur in July and August alone, and 29% of businesses generate more than half their annual turnover in July and August. Overall, 84% of all visits take place between March and October. International Visitors to the coast account for 12% of overnight visits, but 37.6% of visitor spend.
The timing of the Covid-19 outbreak could not have been worse for coastal tourism businesses; at the limit of their overdrafts having survived the winter season, many hospitality businesses had generated little or no income in 2020 before lockdown commenced. At the time of this submission, 74% of businesses are temporarily closed, 7% have permanently closed and 8% have partially reopened since the easing of restrictions in May (for example offering a takeaway service).
Based on the above data and current expectation that hospitality businesses will reopen on 4th July, the NCTA forecasts that the economic impact for coastal tourism in England will be a reduction in tourism spend of £7.96bn for England in 2020 and £10.35bn for Great Britain.
In order to implement the current social distancing criteria of 2m and increased hygiene measures, coastal businesses will need to operate at between 40-60% capacity over the peak summer period and only 57% of businesses believe they will be able to reopen under these conditions once permitted. 25.2% of businesses believe that it will not be commercially viable to reopen and 36.8% are unsure they can reopen on this model.
Operating at between 40-60% capacity for the peak summer period, many businesses will still need to cancel customer bookings for the summer period and make significant changes to the product offer and customer experience. Access to PPE and costs of implementing such changes is proving to be a barrier for many small and micro businesses.
The loss of the coach and groups market has already had a significant impact on coastal communities, while International Education, a key sector in many resorts, has been decimated. 20.7% of businesses are rethinking their product proposition and seasonal opening to recoup financial losses to date, but 14.7% are planning on reducing their season in order to minimise costs and allow the business to survive until 2021.
Conferencing and Business Events are also a major concern for larger coastal destinations like Bournemouth, Brighton, Blackpool and Torquay.
The longer the situation continues, the higher the chance that businesses will not be able to survive – if permitted to reopen on 4th July, 76.4% of coastal tourism businesses say it is likely or highly likely their business can survive, if the situation continues until September this drops to 41%.
Most coastal communities have between 15-20% of employment directly in tourism, but according to the recent Centre for Towns Report it can be as high as 50%+ in places like St. Ives, Exmoor and Newquay. According to NCTA research, a third of coastal businesses plan to reopen at reduced staffing levels as a result of Covid-19 and therefore there is highly likely to be an increase in unemployment in coastal communities, though this may not be realised before the end of the Job Retention Scheme.
On a more positive note, the BVA BDRC consumer sentiment tracker and the VE VB Consumer tracker show an increased appeal in visits to rural coast and seaside towns by UK residents. However, realising that demand may be a challenge if businesses are operating at a reduced capacity. Alongside this, consumer confidence is low with advance bookings significantly reduced and consumers waiting to see what opens, when and under what terms before booking, this also alleviates consumer fears of the insolvency of a business and the consumer’s ability to receive a refund. The availability of a 100% refund cancellation policy is now a top consideration for consumers when considering booking a UK break.
A large number of independent businesses have managed to move consumer bookings to 2021 rather than cancel, with two-thirds of businesses saying that at least 40% of bookings have deferred – although this presents future challenges with a lack of new-cash coming into the business.
Coastal businesses are urgently asking for clarity on the reopening timetable for hospitality so that they can prepare to reopen their businesses.
More than four out of ten (43%) of coastal tourism businesses say that the Government schemes have made a significant difference between survival and collapse. Many businesses have fed back to the NCTA that the delivery mechanism for claiming has worked well and local authorities have efficiently and swiftly dispensed discretionary grants and other funds.
21.6% have accessed the Self-employment Income Support Scheme and 48% have accessed the Job Retention Scheme. Seasonal recruitment is on hold or cancelled.
However, there is a great concern that if businesses are not able to open in time for the peak summer season, or if social distancing at 2m remains in place for the rest of 2020, coastal tourism businesses will need ongoing support to survive the winter season 2020-21. 78.4% of businesses feel ongoing Government support (beyond existing measures) will make “a significant difference between survival and collapse”
All businesses are currently eagerly waiting the launch of the Visit England / VisitBritain Covid secure Industry Standard and Government guidance on reopening. Businesses need time to prepare for re-opening and are urgently seeking clarity. For example, following the announcement on 10th June that zoos could reopen from 15th June, many frantically worked to reopen their sites, but Blackpool Zoo for example, anticipates the earliest they can open is 26th June.
It has been well documented by the recent Centre for Towns Report and others that coastal destinations were already struggling with a high-dependency on tourism (more than 50% in some towns like Newquay, St Ives, Minehead, Whitby or rural areas like Exmoor) prior to Covid-19.
The Institute for Fiscal Studies report into the impact of Covid-19 highlighted that there “is no longer a north-south, or urban-rural divide” but that “coastal areas are notably vulnerable to both the health and economic impacts of the crisis”. Among the places most affected across all indices listed were Torbay, the Isle of Wight, Blackpool, Dorset and Northumberland, and many of the thirty-six local authority areas most severely impacted across health and economy were coastal.
A Hotels Solutions Report (May 2020) indicates an expected 20-25% loss of accommodation stock in coastal communities as result of Covid-19 – which will have a significant impact on the look and feel of coastal towns.
Many businesses state that even if they are able to reopen on 4th July, for 67% it will take up to a year before they can return to a profit and 41% believe it will take up to two years. The longer businesses are closed, the longer it takes to return to profitability. If the reopening of hospitality is delayed until September, 90.4% of coastal businesses say it will take up to a year, 66% say up to two years and 24% say it will be more than two years before they are profitable again. For the Night-Time Economy and some cultural and historical venues that are particularly affected by social distancing measures, 79% say it will take more than a year before they are profitable again if they are unable to reopen until 2021.
Many coastal businesses, local authorities and destinations state that 2020-21 is about surviving, 2021-22 will be recovery and it will be 2023 at least before they are back to pre-Covid levels and there is any public or private investment in coastal tourism - assuming there are no further outbreaks.
At destination level, many Destination Management Organisations (DMOs), and organisations like the NCTA that rely on commercial income, may fail – these are critical structures to support businesses through recovery and rebuilding of the sector and this needs to be addressed.
Another significant concern for a few key areas of the coast, is the impact on air, ferry and cruise business. Destinations such as Dover, Hull, Portsmouth, Plymouth and Poole may see reductions in ferry business, which drives a significant part of the economy. In Sussex, the impact on reductions in services from Gatwick will be significant and for many ports across the country, but most notably, Southampton and Dover, the suspension of cruise line operations will be substantial.
However, Covid-19 also presents opportunities for the sector and businesses are diversifying – there are many entrepreneurial and innovative businesses on the coast – for example a museum café has converted into a shop selling local produce, B&Bs switching to self-catering, vineyards offering a drive-in cinema.
This is also an opportunity to really tackle seasonality as 20% of coastal businesses plan to open for longer this season to recoup the losses to date. NCTA research pre-Covid identified market opportunities that would enable the coast to tackle seasonality. Many of these audiences have been identified through consumer research during Covid as key for supporting recovery, providing they have the right product development and investment. For example, health and wellbeing and sustainable tourism could be key opportunities for the coast to rebuild.
In the long-term, the current situation could give tourism businesses and coastal DMOs an opportunity to focus their strategies on marketing plans, quality of the product and environmental sustainability and with support there is real potential for structural changes in coastal communities.
To support the recovery of coastal tourism the following support is required:
Coastal Businesses request ongoing support of the furlough scheme and hospitality grants to cover the winter season and they would also like to see a reduction in VAT. Many small and micro businesses would like grants to support costs to install PPE and social distancing measures. Longer term, businesses would like to see a review of a safe, fair and legal playing field considering the conditions under which businesses such as Airbnb are able to operate.
For coastal Destination Management Organisations there are calls for the review of the structure of the Visitor Economy in England (led by the Tourism Society), support for core funding for DMOs to ensure they can focus on supporting recovery rather than fighting for their own survival and support for Government funding of domestic marketing and creation of a domestic tourism strategy.
KEY to the recovery of the coastal visitor economy is investment in a programme of support until 2023-24 to build back better and get the economy back to pre-COVID levels. The NCTA, working across businesses, destinations and other key stakeholders, have developed a recovery programme to support coastal tourism in England that would work alongside and compliment the ambitions of the Tourism Sector Deal. Specifically, the programme would:
2021 – Coastal Recovery: focus on rebuilding the economy and communities
2022 – Coastal Reimagining: focus sustainability, environment and culture
2023 – Year of the Coast – a celebration of the UK’s coastline
To deliver this and ensure the future prosperity of our coastal communities across England and off-set the loss of £7bn in 2020, the National Coastal Tourism Academy requires much-needed funding of £200k to kick-start activity for 2020-21, followed by £450k per year in 2021-22, 2022-23 and 2023-24, a total for the whole programme of £1.55m. The NCTA has proven success of delivering Government funded projects of this scale including the Coastal Communities Fund and Discover England Fund.
Whilst the current pandemic has dealt a devastating blow to the coastal visitor economy, the NCTA believes that with swift and urgent Government intervention, our coastal communities can plot a route from survival to recovery and limit the long-term impact of Covid-19.
The awareness of the importance of the Visitor Economy has become more evident within Government and arms-length bodies as a result of Covid-19 and this is positive news for the sector. On the whole, to date DCMS and arms-length bodies have responded well to the situation and made themselves available to support the industry.
In recent weeks there has been some frustration among businesses and destinations on the coast at the lack of transparency surrounding national recovery plans, the proposed industry standard and reopening guidance, and feedback to the NCTA from the industry is that they would like to be more involved in shaping national recovery plans to ensure connectivity with their own local recovery plans.
As we continue to move through the stages of this pandemic, urgent and clear decisions on reopening and ongoing support and investment in the sector is now required.
Overall, it feels too early to accurately assess the response to the pandemic. Scheduling time to reflect again on the situation towards the second half of 2020 or into early 2021 (when hopefully the industry is fully re-open) would be useful to fully review the lessons learnt.
Before Covid-19 there was a significant interest among businesses and coastal destinations to deliver real impact and change in response to the climate crisis. Many coastal destinations were in the process of reviewing their Destination Management Plans; supporting sustainable tourism and addressing the climate crisis were a key feature of the emerging strategies.
There had also been some success in reducing seasonality, which in 2012 saw 36% of all visits taking place in July and August and by 2019 had dropped to 32%. Covid-19 presents a significant opportunity to truly address seasonality, to build back better to create a more sustainable and resilient sector.
Delivering these two aims though will take leadership, joined-up working and investment. It will require support for small and micro businesses to apply global research and insight to their business context, the sharing of knowledge and best practice for the advance of the whole sector. We recommend support for an innovation and product development fund that specifically addresses seasonality and the development of sustainable tourism, to benefit both small businesses and destinations.
DCMS can also support this by providing access to world-class research and resources to all businesses and enabling academic research to be applied to real-world scenarios in micro businesses. This is work that has been undertaken by the NCTA for the last seven years, in collaboration with leading academics and more than 35 Destination Management Organisations (DMOs) across England, but it is now at risk of being lost due to the commercial funding structure of the NCTA and DMOs.
In order for the sector to evolve, a review of the funding, structure and delivery mechanisms needs to be undertaken. There are existing models of working across the DCMS sectors that could easily be applied to the Visitor Economy – for example – replicating the National Portfolio Structure used in Arts Council England. Due to the fragmented nature of the Visitor Economy, there needs to be a rigorous communication and delivery structure to support a thriving eco-system and Covid-19 has exposed the challenges that the sector currently faces. Tourism is not a statutory responsibility, yet in coastal communities a significant proportion of the product offer relies on the public realm (such as the coastline and beaches) which is at risk due to financial constraints in local authorities. Our recommendation would therefore be a review of the funding, structure and delivery of the Visitor Economy in England.
DCMS can also support and encourage greater collaboration and sharing of resources and knowledge. Since the outbreak of Covid-19 there has been an increased willingness for businesses and destinations to work together at local, regional and national level but this requires coordination and facilitation often by an independent body. The NCTA has led this role for the coast for the last seven years and makes its research, best practice case studies and marketing resources freely available for the advancement of all coastal communities – supporting this type of activity ensures efficient use of time and resources.
The NCTA has worked proactively across a wide range of coastal stakeholders to develop a recovery programme to support coastal communities to rebuild their visitor economy. DCMS could support this programme by providing the much-needed funding to deliver this programme of change.