The surge in UK summer holidays last year was not enough to save thousands of tourist businesses, despite increased domestic bookings to popular places such as Cornwall and the Yorkshire Dales.
A Tourism Alliance survey of 1,927 tour operators, hotels, attractions, language schools and other travel and hospitality companies serving foreign tourists found that 11% believe they are “very likely to fail” by 2022, and a total of 41% believe they will. they are “probably going to fail”.
The first three months of 2022 look bleak, with cancellations skyrocketing in the wake of the Omicron variant. Nearly a third of companies surveyed have lost at least half of their domestic holiday bookings between January and March this year.
With much less government support available after the leave scheme ended, a quarter of those surveyed said they were out of cash reserves, and just over half said they would run out within two months.
Crowded beaches and sold-out resorts last summer, but that masked an overall decline in domestic tourism outside the coastal and rural areas, according to Kurt Janson, director of the Tourism Alliance. The alliance includes more than 60 trade associations representing 303,000 UK travel companies.
“There has traditionally been a huge amount of domestic tourism in cities, and a lot of business trips and conferences, and those sectors have done very poorly,” Janson said. “Companies that depend on international travel have done poorly – language schools, events, conferences. And because the booking times for these things are longer, the recovery takes longer.”
Janson was particularly concerned about tour operators serving foreign visitors. “They are responsible for around 60% of the UK’s overseas visitors and if they don’t promote the UK as a destination, inbound tourism will take a long time to recover. We need them there, fighting for our corner of the market.”
An indication of the problems facing the tourism industry came last week, when the Hungarian government said it would again postpone a scheme that would have brought as many as 60,000 students to the UK this summer.
“It would have been a huge boost,” said Huan Japes, membership director of English UK, the trade association for language schools. “We used to have 550,000 students, but since the pandemic we have barely risen above 100,000 a year.”
Janson said the figures showed the government’s tourism recovery plan was unlikely to meet its targets. It hopes to see a return to domestic tourism levels in 2019 by the end of the year and overseas tourism levels by the end of 2023.
The UK became less competitive as an international destination, Janson said. Visitors could no longer reclaim VAT on departure, other countries spent more on marketing and EU visitors now needed passports to enter the UK.
Tourists from China and Middle Eastern countries were eager to shop in places like Bicester Village, but now opted for France because they could get tax refunds when they left. (The UK scrapped the VAT recovery scheme at the end of 2020.) “The government has basically told those visitors ‘don’t come here – go to Paris instead,'” Janson said.
He said the government urgently needed to promote the UK as a destination. Ireland spends £33 million. Australia will spend £250 million over the next three years and the US is about to approve a £185 million budget to rebuild the tourism industry.
Joss Croft, chief executive of trade association UKinbound said: “These figures expose the devastating impact the pandemic continues to have on the inbound, outbound and domestic tourism industry, along with the entire supply chain. We are seeing green shoots, but crippling border restrictions and ever-changing government guidelines continue to choke the recovery.”
From April 1, hotels, restaurants and other hospitality businesses will have to start paying business rates again, as well as VAT at the full 20%, after the reduction to 12.5% during the pandemic.
UKHospitality chief executive Kate Nicholls said maintaining the reduced rate would bolster tourism trade, rather than increase prices for staycationers and foreign tourists.
“The main driver for inbound tourism is price, and travel to the UK is very price sensitive,” she said. “A 1% decrease in the cost of a holiday in the UK means a 1.3% increase in inbound tourism revenues for the economy.”
Bernard Donoghue, chief executive of the Association for Leading Visitor Attractions, said: “Tourism was hit first, hardest hit and will take the longest to recover, and those attractions and businesses that tend to rely heavily on inbound tourists, which been absent for nearly two years will take the longest to recover of all, our industry lost an average of £200m a day in 2021.”