Make the most of your holiday. You may not get many more like it

Tourism is a huge industry – and it is changing at astonishing speed


If you are abroad on holiday right now, or about to head off, ponder this: you are one of a billion. Just over one billion people took a foreign holiday last year and the numbers this year are running ahead of that. For something like 300 million people holidays mean work: one in 12 jobs in the world is in some way dependent on tourism.

If you add in everything associated with tourism – the airlines, the hotels, the entertainment and so on – it is the world’s biggest industry, accounting for 9 per cent of global GDP. For some countries it is massive. France is the world’s largest destination, receiving 83 million visitors last year – the French themselves don’t go abroad very much but having such a gorgeous country you can’t blame them. The US, No 2 in arrivals at 67 million, does however rank top in receipts, earning $126bn last year. Even for the UK it is a big business, for though we were only No 8 last year with 30 million visitors, thanks to the business element associated with tourism, London has the largest number of people flying through its airports and is the city second highest number of hotel rooms, after Las Vegas.

But while it is a huge industry it is one that is changing with astonishing speed. Some of the changes are unsurprising. Now that China has become the world’s second largest economy, the Chinese have become the world’s largest spenders on foreign tourism, at more than $100bn last year, having leapt ahead of both the Americans and the Germans. The great thing about the Chinese is that they are not stingy. The average spend per shopping visit by the Chinese at Harrods last year was £3,500. We clearly need to do something about our visa access programme.

Other changes in the industry are more subtle. Within Europe there has been a gradual shift to having more breaks but shorter ones, which is a function partly of budget air travel and partly of changes in work patterns. Thus people working in other service industries will tend to get time off in short bunches rather than a three-week wodge, and for the growing numbers of self-employed a short break is less disruptive to their business. The semi-retired also have much more freedom to choose the time of vacation. So what was a one- or two-shot annual vacation has become three- or four-shot one.

There is a further trend. This is the blurring of the distinction between holiday and work. For business-owners and the self-employed it can be quite hard to distinguish where work ends and holiday begins. Broadband has a lot to do with it; on-screen workers can in theory be anywhere in the world. But more than that, you learn by observing, and in service industries different countries provide different lessons. An obvious example: Scandinavian hotels are brilliant at delivering high-quality service without using many people to provide it. Anyone involved in the hospitality industry will learn from Scandinavia.

But there remain large differences in the industry worldwide and it will be intriguing to see whether these narrow. Perhaps the most important is the difference in leisure patterns in the US and Europe. US holiday allowances remain at two or three weeks, whereas in Europe they have become five or six weeks.

So a question: will US holidays become longer and European holidays shorter? The reason for the difference is partly social but also a function of higher marginal tax rates in Europe. The higher the tax rate the more efficient it is to pay people  in time (which is not taxed) rather than money (which is).

A generation ago the two sides of the Atlantic were much closer – indeed if you go back to the 1950s the positions were reversed, for Europeans worked longer hours than Americans. I suspect convergence will happen, which will encourage Europeans to use their holiday time more intensively – a trend already in place. A billion people can’t be wrong, can they?

So is it boom time? Not quite yet...

Those of us who have argued that UK economy has been growing faster than the figures suggest will be not at all surprised by the sudden shift of mood. We have gone from fears of a triple dip to booming Britain in three months flat. Except that we haven’t.

All that triple dip stuff was a politicised reaction to misleading statistics. Indeed expect even the second dip to be revised away when the GDP figures finally catch up with the real world. What actually happened was that there was  indeed a flat period in the first  half of last year, and there has  been a gradual recovery from then on. That recovery was always there but it just was not obvious. Expect all this to be confirmed in the  new Bank of England Inflation Report out today.

Now a word of caution. The present recovery, while real enough, is not necessarily going to continue at an above-trend pace. It has been boosted by strength in the housing market, which is artificially supported by very low interest rates. We still have a huge fiscal deficit to crack, and the squeeze on public spending  has barely begun. And we are vulnerable to further ructions  in Europe. The rise in optimism  is welcome but the long climb up the debt mountain.

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