Executive Summary

• DOMESTIC MARKET
• OUTBOUND MARKET
• INBOUND MARKET

The domestic, outbound and inbound markets constitute the three main market sectors for the UK travel and tourism industry. In 1996, collectively they accounted for a total 199 million tourist trips excluding domestic day visits, over 1.1 billion bed nights and a total expenditure including fares estimated at £53bn.

DOMESTIC MARKET

The domestic market accounts for 65% of tourist trips excluding domestic day trips, 39% of bed nights and 25% of expenditure of the total travel and tourism industry. In 1996, there were an estimated 128 million trips, 432 million bed nights and expenditure of £13.2bn made by UK residents on domestic tourist trips excluding day visits.

Between 1992 and 1996, the volume of domestic tourist trips excluding day trips, increased by more than one third, while average duration fell from 4.1 nights to 3.4 nights. In real terms, expenditure rose by 12% over the period, slightly more than the number of bed nights, which rose 8%.

Business visits are increasing their share of the domestic market, up from 10.7% in 1992 to 12.5% in 1996, while the share taken by holiday visits declined significantly from 62.7% to 54.7% over the same period. The major reasons for the growth in the domestic market is the number of visiting friends and relatives (VFR) visits, which increased by 69.9% between 1992 and 1996.

The British Tourist Authority (BTA) forecasts that domestic tourism trips will grow by an average of 2.2% per annum over the next 5 years, with a corresponding growth in expenditure of 6% per annum. There are indications that the strong value of the pound in 1997 will encourage more UK residents to take their main holiday abroad, but many consumers are taking more day trips and short breaks to supplement their main holidays.

OUTBOUND MARKET

The outbound market accounts for 22% of tourist trips, 42% of bed nights and 43% of expenditure of the total travel and tourism industry. In 1996, there were an estimated 43.5 million trips, 458 million bed nights and expenditure of £16.7bn made by UK residents on outbound tourist visits including day visits.

Between 1992 and 1996, the volume of outbound visits increased by 28.7%, while the average duration fell from 12 nights to 10.5 nights. In real terms, expenditure rose by 34.6% over the period, almost double the growth in the number of bed nights, which rose by 12.8%.

Business visits are increasing their share of the outbound market, up from 14.2% in 1993 to 16.3% in 1996, while the share taken by holiday visits declined from 68.4% to 63.5% over the same period. The major reasons for the growth in the outbound market is the number of miscellaneous visits, which increased by 145.3% between 1992 and 1996. This is due to an increase in day trips fuelled by inexpensive shopping trips by ferry to France and Eurostar services.

In the first 3 months of 1997, the number of UK residents visits abroad was 15% up over the corresponding period a year. This was partially but not fully explained by an early Easter in March. The figures indicate that the outbound market will grow significantly in 1997, which is being fuelled primarily by a strong pound.

According to the BTA, world tourism is forecast to grow between 4% and 6% a year over the next decade. Growth in the outbound market has been running a slightly higher rate than this in recent years. Key Note forecasts that the number of outbound trips will increase by 24.1% between 1996 and 2001.

INBOUND MARKET

The inbound market accounts for 13% of tourist trips, 19% of bed nights and 32% of expenditure of the total travel and tourism industry. In 1996, there were an estimated 26 million trips, 234 million bed nights and expenditure of £12.7bn made by overseas residents on inbound tourist trips including day visits.

Between 1992 and 1996 the volume of inbound visits increased by 40.4%, while average duration fell from 10.2 nights to 9 nights. In real terms, expenditure rose by 45.9% over the period, nearly double the growth in the number of bed nights, which rose by 23.8%.

Business and holiday visits are increasing their share of the inbound market, up from 24.1% to 25.1% and 42.9% to 44.2% between 1992 and 1996 respectively. These increases in share were compensated by a decrease in share of VFR traffic from 21% to 19.5% over the same period.

In the first 3 months of 1997, the number of overseas residents visits to the UK increased by 3% over the previous year, but this included Easter traffic. The British Incoming Tour Operators Association (BITOA), the official trade body representing incoming tour operators believes the industry is currently facing the most challenging time since the Gulf War. The last quarter of 1996 recorded the smallest increase in tourist arrivals in 5 years, and the first quarter of 1997 recorded the first drop in tourist arrivals on a like-for-like basis since 1992. The major reason for the downturn is the strength of Sterling, which is making the UK a more expensive place for overseas residents to visit.

The BTA forecast that the average annual increase for inbound tourism trips to the UK over the next 5 years will be 4.9% and an average increase in expenditure of 8.3 % per annum. Key Note forecasts that the number of inbound visits will increase by 23.1% between 1996 and 2001. Although this is a slightly lower rate than the growth in outbound visits, Key Note forecasts that the balance of trade deficit in tourism will narrow.

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