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Tourism

Tourism will accelerate as a major economic force in our big cities over the next 20 years

Tourism

The tourism industry contributed 3.7% of the UK's total GDP in 2017. The industry has historically played a pivotal role in directly and indirectly supporting the UK economy and this is set to continue.

The UK attracted approximately 39 million visitors from across the world during 2017 and tourism from overseas visitors in the UK has grown by 3% annually since 2010. The value of the sector is predicted to grow at an annual rate of 3.8% through to 2025 and beyond, as UK cities expand their global reach.

Whilst London consistently hits the top spot for drawing in tourists, a number of key regional cities have proved they are able to compete with and may even outperform London by 2040. Edinburgh, Manchester, Birmingham and Liverpool have impressed tourists with an array of cultural offerings ranging from iconic art galleries to legendary football stadiums. At night, these cities offer everything from Michelin-starred dining to leading venues for world class musicians.

56_tourism_pullquote_270x93These four regional cities drew in just over five million international tourists during 2017, featuring in the Office of National Statistics top five towns for total overnight stays, along with London. This suggests that – at least compared with their population – Edinburgh and Liverpool are outperforming cities. These cities have witnessed an impressive growth rate of visitors over the past 20 years, led by cities in the north of England such as Manchester and Leeds. While the annual growth rate for overseas visitors travelling to London has been just 2% since 1999, both Manchester and Leeds have seen an annual growth of 5% with Edinburgh and Bristol not far behind at 4%.

This is a strong indication of the direction of tourism we can expect by 2040. Sporting and cultural events (which we write about elsewhere) such as the 2014 and 2022 Commonwealth Games which took place, or will take place, in Glasgow and Birmingham respectively, are helping regional cities gain more exposure. Attracting spectators from across the globe, it’s no surprise that these tourists are amongst the most beneficial for cities; traditionally staying for longer, having a propensity to travel around the country and spending more money.

It is the overall level of tourism spending that makes the sector look particularly impressive. While the direct contribution of tourism in 2008 amounted to £52bn, it has increased to an impressive £71.1bn in 2017. According to the World Travel & Tourism Council, this will rise 1.9% pa to reach £92.3bn in the next 10 years alone.

Figure 1: Contribution of travel and tourism to GDP and employment, UK

056_Tourism_Figure-01_Graphic_746x630

Source: WTTC

Indirect contributions of travel and tourism, such as employment and other benefits to local communities, have also boosted the UK economy. The tourism industry directly supported 1,716,500 jobs (4.9% of total employment) in 2017, and indirectly another 2,339,000 totalling 11.6% of total employment. Employment levels will undoubtedly continue to benefit as visitors to the UK is set to increase through to 2040.

Over the next 20 years we are likely to see the tourism industry grow as a sector, with an increase in visitor numbers and spending, facilitated by cheaper air travel and an increase in destinations served by regional airports and high-speed rail, making it easier for overseas tourists to visit the UK. As we write elsewhere, the hotel industry is also set to benefit from this growth.

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Miles Gibson Head of UK Research

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