The Big Question: Why is Britain's tourism industry ailing, and what can be done to improve it?

(GETTY IMAGES)

Why are we asking this now?

The British Chambers of Commerce (BCC) published a scathing report yesterday on the state of the tourism industry in this country, which they say is performing poorly relative to other countries and is incompetently managed by government.

Written in conjunction with the hotel chain Travelodge, Backing UK Tourism: Destination Recovery, reflects wider concerns among business leaders that while in the midst of recession, Britain – which ought, given its exceptional heritage, to be a world leader in tourism – is losing out on the money generated by tourism, something our economy can ill afford.

So is tourism in Britain really in decline?

Last year saw the first drop in visitor numbers since 2001 – the year, as the BCC point out – of foot and mouth disease and 9/11, while the first six months of this year suggest a continuation of that trend. Between 1997 and 2007 there has been a 17.9 per cent drop in the UK's international passenger numbers. And the figures for the overall balance of trade in relation to tourism – the difference between the receipts from inbound visitors and expenditure by British citizens while overseas – is striking.

Britain is the second worst performing country in the EU in this regard. In other words, of 27 EU countries, 25 do better than Britain, and only Germany fares less well. There's nothing wrong with Britons spending money overseas, of course; it's just that other people aren't spending as much over here as we'd usually expect them to.

What's the gist of the criticism from the BCC?

This sharp and long-term decline obviously cannot be wholly attributed, the BCC says, to recessionary factors; rather, "the lack of heavyweight support given to the tourism industry within government", and "poor decision making and allocation of resources" by Whitehall, is where they believe blame lies.

The current level of funding support for the industry is approved, but a plethora of support organisations often leaves businesses confused about whom to go to for advice. And there are two other specific problems. First, not enough is being done to market Britain as a tourist destination; and second, the industry's co-ordination by the Department for Culture, Media and Sport is inefficient. The DCMS only directly funds about £50m of the £350m spent on support for the industry; the rest is filtered through several different departments, and is therefore deemed less accountable. The BCC think that tourism would be better represened by Lord Mandelson's Department for Business, Innovation and Skills (DBIS).

How big is the tourist industry in Britain?

Tourism constitutes the fifth biggest industry in this country, employing 1.4 million people directly and a further 1.3 million indirectly, or 2.7 million overall. These people generate over £86bn for our national economy each year, and a recent report by Deloitte suggested tourism was worth 8.2 per cent of GDP in 2007 alone. Around 200,000 small and medium-sized businesses – that is, organisations severely affected by the tightening of credit – are dependent on tourism for their income. The BCC says that even mild reforms could generate a further 164,000 jobs by 2018, allowing the industry to grow to an annual worth of £113bn. Those projections, however, make assumptions about long-term growth and recovery from the recession which must be susceptible to huge fluctuations.

But isn't Britain a haven for tourists?

It ought to be. Our nation's history and the cosmopolitan sprawl of our big, modern cities mean that, relative to its size, Britain has more to offer tourists than most countries in terms of heritage sites and tourist activities. And the impression in some of our city centres or cathedral towns on weekends is certainly that we're not short of foreign admirers.

But the fact is in terms of receipts from tourists we're on a par with Germany but lag behind France, Spain, and Italy, which is commonly thought to be explained, at least in part, by their milder climates.

And what about all those sport tournaments?

Indeed, Britain's tourist industry will have a massive (though sporadic) injection of visitors through the 2010s because of a series of international sports tournaments. The 2012 Ryder Cup, the 2012 Olympic and Paralympic Games in London, the 2013 Rugby League World Cup, the 2014 Glasgow Commonwealth Games, the 2015 Rugby Union World Cup and, potentially, the 2018 Football World Cup all offer huge potential to the tourism industry in Britain.

For the 2012 Games alone, 50,000 contracts worth £3.5bn have been handed to over 880 businesses, 45 per cent of them outside London. And a recent study by Oxford Economics suggested the Games would create 32 million extra visitor nights countrywide.

How has the recession affected tourism here?

It's very difficult both to quantify and to explain the specific impact of the global downturn on Britain's tourism industry, not least because distinguishing any reduction in numbers since, say, September 2007 (when the collapse of Lehman Brothers triggered a global financial crisis) from the broader, long-term decline is very hard to do. There is certain to be some benefit from the weakening of sterling, which increases the spending power of overseas visitors, and should also incentivise domestic tourism as British people find their money is not going as far in other countries so instead holiday at home. The UK Tourism Survey, published this month, estimated that the number of "staycations" taken this year by people in England was up by 13 per cent. The overall degree to which the weakening of sterling has been a benefit is not clear, but in any case it's likely to be outweighed by the cost of shrinking disposable incomes.

What are other countries doing better than us?

The main thing that many other countries do better than Britain is marketing. Here, VisitBritain, which is part of DCMS, spends around £50m on marketing Britain, and is considered by the BCC to mostly perform well. Yet its budget is being cut by 18 per cent, while other countries are boosting their marketing budgets hugely, conscious of the potential gains. Spain injected €400m (£345m), for example, while the Singapore Tourist Board invested $41m (£25m) encouraging international visitors.

What recommendations does the BCC make?

Cuts across the whole of government, aimed at reducing Britain's exceptional budget deficit, are certain to affect DCMS, meaning that improvements will have to be made without additional resources. The BCC recommends moving responsibility for tourism to Lord Mandelson's department, improving the robustness of work produced by the Tourism Statistics Agency, and boosting marketing, in line with other countries. Together, these efforts could help stymie the long-term decline that appears to have taken hold of our tourism industry.

Can Britain's tourism industry be modernised to boost visitor numbers?

Yes...

*The trend toward 'staycations' may prove addictive, and better value for money over the long term.

*A national and global recovery might mean a stronger pound but will also raise disposable incomes.

*A succession of high-profile sport tournaments over the next decade provides a steady stream of visitors.

No...

*Budget cuts will mean there is even less money for marketing Britain as a tourist destination.

*Keeping tourism under the control of DCMS may mean the industry lacks clout in Whitehall.

*If the recovery is slow and protracted, visitor numbers could remain low for several years.