• New Deloitte report reveals Visitor Economy is worth £114 billion, far larger than previously thought
• Visitor Economy has potential to grow to £188 billion by 2018
• But industry growth faces numerous real threats unless action is taken

A new report from business advisory firm Deloitte has revealed that the total economic contribution of the Visitor Economy to Britain is £114 billion, or 8.2 per cent of total GDP. This is far higher than previous estimates, taking into account the direct and indirect impact of travel and tourism in the economy. The report also reveals that the sector directly employs more than 1.3 million people.

The report, jointly commissioned by VisitBritain and the Tourism Alliance, shows the vital role that the Visitor Economy plays in Britain. But it also shows that while the sector has the potential to continue to grow strongly, it faces a series of short-term and longer-term challenges as international competition increases and the world economy deteriorates. It highlights a number of areas where public sector policy challenges may also be harming the industry.

In the longer terms it predicts that the sector’s economic impact could grow to £188 billion by 2018 although still accounting for around 8 per cent of GDP. The London Olympics in 2012 in particular is expected to provide a significant boost to tourism and travel revenues.

The report however details a number of risks to the sector that would prevent it delivering that target. These include the very real potential for a recession in 2008 and 2009 and a further increase in international competition. Deloitte suggests that – although the longevity and depth of a recession remain unclear – over the next three years, Gross Value Added for the Visitor Economy could be £11 billion lower with 114,000 fewer jobs created as a result of the global economic downturn than would otherwise have been the case.

Deloitte highlight a number of what it calls Market Failures and Policy Barriers that it says “could prevent the Visitor Economy from optimising its potential”. These include a lack of information about what is on offer for visitors, skill shortages, transport difficulties and overcrowding. The report also highlights areas where government policy could also risk the success of the Visitor Economy, such as transport infrastructure investment, the high cost of taxes and visas to enter the UK and Climate Change legislation.

The report comes as the British Tourism Framework Review (BTFR) is nearing completion. The review, commissioned by the Secretary of State for the Department of Culture, Media and Sport is examining the entire infrastructure surrounding the Visitor Economy to ensure that spending is directed as efficiently as possible and is leading to a restructuring of VisitBritain to separate VisitEngland with its own CEO.

Christopher Rodrigues, chairman of VisitBritain and also chairman of the BTFR, commented: “This is a thorough and hugely important report from Deloitte that shows just how significant the Visitor Sector is within Britain’s economy. It also highlights the enormous opportunities, but also the risks that our industry faces in the next few years. With proper Government attention and support the Visitor Economy will grow strongly over the next few years. But if market failure is allowed to continue and policy barriers are not addressed, the economic impact could be considerable.

“The recent fall in sterling and the approaching Olympics in 2012 give us a tremendous opportunity to promote Britain’s attractions as a destination to the world, provided we are given the appropriate financial tools and policy support, but the onset of the global recession makes our work and the support we receive from government ever more critical. The world travel and tourism market is highly competitive, and Britain needs to invest and support this sector to maintain our market share. We believe the BTFR, when complete, will go a long way to support the industry but no single organisation can do it alone. There needs to be wide-ranging backing from the highest levels of Government for the Visitor Economy to achieve its potential.”

Rashid Bashir, the author of the report and a senior economist at Deloitte, said: “The Visitor Economy is critical to Britain and should not be taken for granted.  Neglecting the travel and tourism sector could lead to competitive disadvantage and diminished economic outcomes for UK PLC. The current downturn highlights the need for a diversified economy to maximise employment and enterprise opportunities for people at all skill levels.

“Effective support and investment now will position the sector to take advantage of the next upturn, which could gain extra momentum from London 2012. Combined, these two factors could act as a major boost to the UK economy.”

For more information visitor www.deloitte.co.uk/visitoreconomy.

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About VisitBritain
Media enquiries relating to VisitBritain should be directed to Elliott Frisby on 020 8563 3035 or 07951 996241. VisitBritain is responsible for promoting Britain as a world class tourist destination and for developing England’s visitor economy. It has representatives in 36 countries around the world and has expanded into India, China, throughout Eastern Europe and Southeast Asia.

Figures for 2007 indicate there were 32.8 million visits to Britain, +0.2% up on 2006. They spent £16.0 billion in the UK: a -0.3% decrease on 2006.

Further information: www.visitbritain.com

About Deloitte

In this press release references to Deloitte are references to Deloitte & Touche LLP, which is among the country's leading professional services firms.

Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu ('DTT'), a Swiss Verein, whose member firms are legally separate and independent entities.  Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTT and its member firms.

The information contained in this press release is correct at the time of going to press.