In a survey conducted among its members, the European Tour Operators Association (ETOA) has discovered that a major slump in leisure tourism bookings is underway.
At the end of October 2011, ETOA canvassed 38 operators who move more than two million people annually to London. They revealed that they were expecting a significant downturn throughout 2012.
This looks like it will be extremely severe in July and August, where operators are currently seeing a 60percent shortfall in bookings, becoming acute during the period of the Olympic Games where bookings are running at 95 percent below where they would normally be. Bookings for the rest of the year are running at 20percent below this time last year.
“This is still very early in the booking cycle,” said Tom Jenkins, Executive Director of ETOA, “And only reflects what our normal leisure customers are doing. We always see a decline in demand for a destination during an Olympic year.
Clients tend to think that a city has priorities other than being a place to visit for a normal holiday, so some of this was to be expected. But this tendency is becoming absolute as the hotel rates climb in July and August. During the Olympic period itself, there is currently almost no demand from regular tourists. For foreign visitors there is near total displacement by the Games.”
“One of the main reasons for the drop is that the hotels believe that they are going to be full. London appears to have priced itself out of the market in July and August,” said John Boulding, President of Insight Vacations, a leading luxury tour operator, ”Insight has won a Queens Award for Export, but we have had no choice but to remove London from our best-selling European ‘Panorama’ tours in July and August. Each one will start and finish on the Continent. They are selling well, but they are selling without the UK.”
These figures represent only current trends in leisure tourism. These may change. They do not account for what corporate business may come, or for those people who are coming for the Olympics. But bookings for London will have to strengthen enormously to make up for this shortfall: London has 125,000 hotel rooms to fill. Foreign Olympic visitors averaged no more than 25,000 people per night in Athens. And July and August are normally the two busiest months for inbound tourists: they usually represent 22% of foreign visitor arrivals.
London is a gateway for the rest of the UK. If the UK as a whole suffers an equivalent decline, then £3.5billion of business will be lost to the British economy as a whole during July and August alone.
The problem for the tourism industry is that, even if London does fill with Olympic enthusiasts, they do not behave as normal tourists. Their presence is determined by their interest in an atypical event. They do not come to shop, to sightsee, or to attend the theatre.
“We anticipate a significant decline in business in July and August 2012 for London theatres and attractions,” said John Wales, Managing Director of Encore Tickets, one of London’s leading theatre ticket agencies, who sell over 2 million tickets annually, “At present I anticipate sales from tourists to be at least 40percent down on last year, so we are looking urgently at alternative customers to the traditional inbound visitor that has been displaced.”
“We know that there will be a large drop in demand next summer,” said Nick Palan, owner of Golden Tours, a major sightseeing operator in London,
“and this is having a major impact on our capital investment plans. Furthermore, such is the projected disruption on the roads; there is a major concern whether any tours in London can be operated at all during the Olympic period.”
This does not bode well for the legacy of the Games. Scaring away customers, on the assumption that they will gratefully return is an unconventional sales tactic. “The long-term trend implications are huge,” said John Boulding, “The UK has traditionally been part of a visit to ‘Europe’ for long-haul visitors. But they can then save time, avoid high visa costs, and benefit from Schiphol’s or Charles de Gaulle’s freedom from APD if they avoid the UK. The Olympics is now making them do so. The legacy of this example is not a happy picture for the UK.”