Introduction:
The United Kingdom is the world’s eighth largest tourist destination with over 36 million visitors in the country in the year 2015. Direct spending by tourists is estimated at over $22 billion, which is equivalent to about 2% of GDP. Most of the tourists to the United Kingdom are from mainland Europe, accounting for approximately 60% of all tourists. Despite this, the most profitable tourists for the United Kingdom are from the North American market consisting of the United States and Canada (Delloite, 2013). Although this segment accounts for less than ten percent of overall tourist numbers, it accounts for approximately 15% of all money spent by tourists. London is the country’s biggest tourist destination with the eye of London being the single largest tourist attraction with over 2.7 million visitors in the year 2015. Despite the largest number of tourists originating from mainland Europe and North America, more and more tourists are arriving from emerging markets such as china and other countries in Asia (Delloite, 2013).
Tourisms statistics in the United Kingdom:
Currently, the tourism industry as a whole is valued at over £130 billion in 2015, which accounts for about 9% of the GDP of the UK (Visit Britain, 2016). This value is set to increase to 257 billion by 2025. The industry also employs over 3 million workers, which is approximately 10% of all the working population. Tourism remains the fastest growing sector in terms of employment in the UK overtaking other sectors such as the financial sector and construction. At current growth rates, the tourism industry is expected to double in size in terms of worth to around £250 billion by the year 2025 with an additional 700000 workers expected to be absorbed into the industry at this time (Visit Britain, 2016).
It is estimated that each additional £54000 spent in the industry requires the creation of an additional job. This means that for every additional 1% of money spent on tourism, fulltime equivalent employment increases by 0.9%. These are very important figures for the economy as it is clear that tourism is one of the major players in the UK economy. Tourism brings in foreign exchange. Tourists come with money and spend it within the UK, which is good for the local economy. Tourism is also responsible for employment creation currently accounting for just fewer than ten percent of the total work force of the country. These are all important factors considered when rating the economic impacts of an industry (Visit Britain, 2016).
Benefits of tourism:
Economic stimulation:
Tourists will usually travel to a country for various reasons such as vacations, business, or even religious reasons. However, when they travel to a country, they bring money earned in a different place and spend it in the United Kingdom. Domestic tourists also spend money. The government stands to gain from tourism by charging direct charges and taxes (Delloite, 2013). For example, value added tax is charged on almost everything in the country. However, locals are not likely to spend their nights in hotels. Tourists will and when they do, the government earns direct revenue from the charges levied. This is amplified throughout the supply chain. As a result, tourism is one of the most important sources of revenue for the country. Without tourism, the government would find that its pool for revenues would be significantly lower. Currently, the tourism industry is the fastest growing sector in terms of employment creation in the United Kingdom. At this rate, more people will be employed in the tourism industry therefore reducing the number of unemployed people. The more people have jobs, the bigger the taxpayer pool for the government (Delloite, 2013).
Employment:
According to Visit Britain (2016), tourism is responsible for approximately 9% of all employment in the country. Tourism creates employment opportunities both directly and indirectly. People employed directly in the tourism sector are the people on the frontline. They are more likely to interact directly with the tourists such as hotel employees, tour operators and guides and many more people. Tourism is solely responsible for the employment for such people. However, tourism is also responsible for indirect employment. The tourism industry needs to be supported by other industries.
For example, locals source and deliver food for hotels. These establishments provide a ready market for local products and services. If tourism was not present, these products would eventually find a market but the terms would not be as lucrative as with tourism. Tourism is therefore felt throughout the local supply chain. When a person is employed, it means that they have a regular source of income. This means that their purchasing power is increased and they are therefore able to purchase other goods and services they need. Creation of employment by the tourism industry therefore manages to increase the spending power of locals who are employed either directly or indirectly by the tourism industry. This means that they are able to spend money and the effects of tourism are amplified throughout the economy. For example, the person would be able to spend more on entertainment, which would mean that local entertainment spots would also benefit although indirectly from tourism (Mason, 2015).
The tourism industry in any country is dependent on the local supply chain to supply it with products and services. This is a very important economic impact of the tourism industry in the country. Tourist destinations are located throughout the country and they require the local communities to supply them. This is especially true in the hospitality industry. Food products are mainly sourced from the local areas in order to support the industry. This creates income generating avenues for locals who would otherwise find it difficult to earn income. The use of the local supply chain in tourism is an example of indirect revenue earned by the tourism industry that benefits people who live in the locality of the tourist attraction. Services like transport also benefit from tourists (Moscardo, 2008).
Investments:
Tourism has attracted investments from both the private sector and the government. The government has made investments to improve transport, healthcare and other services as a result of tourism. Some transport lines would make little economic sense if it were not for tourism. This is especially true in the countryside where the local population is significantly less than in urban areas. Maintaining road, rail and air services to these areas would make little economic sense as the local population would not justify the costs. However, tourism has made it possible for the government to continue making investments in such areas. Another example of government investment is the Heathrow airport expansion program. This program is designed to increase the capacity of the country’s largest airport in order to accommodate expected numbers of visitors to the country. Tourism justifies the cost of such investments and returns from the industry make up a large percentage of the returns on investments in such projects (Mason, 2015).
The private industry has also invested heavily because of tourism leading to creation of new jobs in the industry. Scotland is the golf capital of the world and there are numerous golf courses in the country. Many of these golf courses have been developed using private investments. When such investments happen, they not only create jobs directly to workers at these facilities. In addition, they create jobs for the workers during construction and also provide opportunities for the local communities to supply them with goods and services. From this example, it is also possible to identify that the construction sector has benefited greatly from tourism. Construction and refurbishment of new tourist hotels and destinations has played a great part in the resurgence of the construction sector in the country. This is an attempt to keep up with other global tourist destinations with a wide offering for visitors (Mason, 2015).
Technology uptake:
With the changes in the technological world, tourism has been a leading factor that has influenced uptake of innovations in the country. With visitors coming from around the world, they bring experiences from their countries that force the industry to adopt technology in order to keep up. An example of such innovation is the uptake of innovations such as air BnB and Uber among other similar technologies. They were developed to make travel easier. Air BnB is an accommodation search site that allows ordinary homeowners to let out their properties to visitors. They have made it easier for tourists to find affordable accommodation where they want to visit. This means that individuals who could not previously earn directly from tourism have been roped in into the sector.
The uptake of these innovations makes it possible for tourism revenues to benefit the communities where the tourists visit. The uptake of these innovations also means that the government is able to raise more revenue from taxes charged to the companies behind the innovations. The use of websites like trip advisor has also made it easier for local establishments to position themselves in a manner that is more attractive to tourists. Such innovations mean that tourists can find attractions easily as well as organize their trips better. Uptake of such innovations has also increased employment opportunities for people working for the firms behind them.
Drawbacks of tourism:
Apart from the benefits, tourism has also had a negative impact on the economy. Tourists on average will be willing to pay more for various goods and services as compared to locals. This means that it is sometimes possible for tourism to make living costs unbearable for locals. A case in mind is about accommodation in London. Accommodation in London is among the world’s highest, a fact that can be attributed to the large number of expatriates working in the city. This has resulted in the demand for housing being much greater than supply. The foreigners are willing and able to spend more than the locals and therefore the locals are pushed out. This has also been felt in other areas with property owners more willing to rent to tourists who pay higher than the locals do. Tourism has also played a role in introduction of black market products, which lead to loss of revenue by the government from the legitimate products.
References:
Delloite. (2013) Tourism: jobs and growth. The economic contribution of the tourism economy in the UK. Retrieved 6/24/2016 from https://www.visitbritain.org/sites/default/files/vb-corporate/Documents-Library/documents/Tourism_Jobs_and_Growth_2013.pdf
Mason, P. (2015). Tourism impacts, planning, and management. London: Routledge.
Moscardo, G. (2008). Building community capacity for tourism development. Wallingford, UK: CABI.
Song, H. (2012). Tourism supply chain management (Vol. 23). Routledge.
Visit Britain (2016) Britain's visitor economy facts. Retrieved 6/24/2016 from https://www.visitbritain.org/visitor-economy-facts
