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Travel and leisure industry - September 2007

Overseas residents made 15.32m visits to Britain in the first half of 2007, 3% up on the same period last year. The UK has under-performed the average world growth rate in inbound tourism over the past ten years. In a drive to improve security at ports and airports, 53 separate pieces of information on travellers to and from Britain could be provided to the Government. The UK is at the bottom of the EU league table in terms of paid holiday entitlement. Bell Leisure, the health club operator, has been placed in administration: Simon Halabi, the property entrepreneur who bought it in February, faces a potential loss of £150m. Next Generation Clubs is expected to rebrand most of its venues as David Lloyd Leisure after a £925m acquisition from Whitbread. There were dire predictions about the impact of the smoking ban on venues in which smoking is intimately bound up with the social experience after the ban started in England on 1 July.

The EU is considering setting up an electronic travel authorisation system to increase surveillance of visitors travelling to the EU without a visa. Beach towel "wars" have spread to Italy.

The US travel industry and its allies are pressing Congress for a marketing programme of $200m to help restore the US’s "brand image" with international visitors. Britons are more likely to seek help from their embassy in Thailand. The World Travel and Tourism Council says the number of inbound tourists to China is expected to rise from 50m in 2006 to between 150m and 180m by 2020, while the number of domestic trips is expected to reach 3bn by 2020: the country is one of the most sought after for some of the world’s leading hotel groups. Despite a strong New Zealand dollar, the country’s tourism industry continues to grow.

UK

According to the Office for National Statistics, overseas residents made 15.32m visits to Britain in the first half of 2007, 3% up on the same period last year. Visits by North Americans fell by 5%, but those by residents of the latest countries to join the EU went up by 20%. Spending was £6.96bn, a 3% increase on last year. VisitBritain, the national tourism agency, is trying to entice Americans back. It has launched a campaign extolling the virtues of different parts of the country, illustrated by its latest drive aimed at the US market called: Be a Brit different. Meanwhile, the agency has been forced to cut staff numbers and announce a number of redundancies in its London and European offices.

The UK has under-performed the average world growth rate in inbound tourism over the past ten years. The World Travel and Tourism Council predicts that over the next ten years the UK tourism industry will be one of the worst performing in the world. According to the Tourism Alliance, much of the decline can be attributed to an increased fiscal and regulatory burden and under-investment by the responsible Government department.

In a drive to improve security at ports and airports, 53 separate pieces of information on travellers to and from Britain could be provided to the Government. Airlines and ships will have to provide nine basic details about travellers. If airlines and ships have more information about their passengers, the Government wants them to hand it over so that it can be cross-checked against lists of criminals and suspects created by the security services, Immigration Service and police. A Home Office report says the "e-borders programme has at its heart a system of intelligent passenger management".

IDS, the researcher on employment issues, says the UK is at the bottom of the EU league table in terms of paid holiday entitlement. Although recent legislation will boost the number of paid holidays from 20 to 28 days by 2009, this is still the equal lowest in the EU, with the Dutch. The minimum in Germany is 39 days.

Bell Leisure, the holding company of Esporta, the health club operator, has been placed in administration. Simon Halabi, the property entrepreneur who bought Bell Leisure in February, faces a potential loss of £150m. Analysts tip the underbidders in the original Esporta auction as possible buyers. They include London & Regional, the owner of the Next Generation Clubs and David Lloyd Leisure chains, and MidOcean Partners, the private equity firm behind LA Fitness. Analysts expressed amazement at the rapid collapse of Esporta’s fortunes, suggesting a fall-out between Halibi and Société Générale, the French bank that had provided Halibi with £330m of debt financing, as a possible factor. Esporta Group itself is not in administration; its 54 clubs continue to trade normally. Separately, Next Generation Clubs is expected to rebrand most of its 18 venues as David Lloyd Leisure after a £925m acquisition from Whitbread. The deal creates a business with 89 clubs in the UK, Ireland, Belgium, Spain and the Netherlands, with a total of 470,000 members.

There were dire predictions about the impact of the smoking ban on venues in which smoking is intimately bound up with the social experience – bingo halls, for example – after the ban started in England on 1 July. Rank, which operates Mecca, the bingo chain, saw like-for-like sales at its Scottish bingo clubs fall 15% in the 40 weeks after smoking was banned in public places in Scotland. Admissions were 6% lower than in 2005 and spend per head was down 9%. Bingo is more exposed to the smoking ban than pubs because of the age profile and demographic of the clientele. Bookmakers are also concerned about losing revenue because regulars will constantly be going outside for a cigarette. Inspired Gaming, which operates 1,400 slot machines in Scotland saw total pub income fall 5% after the smoking ban took effect. While revenues may suffer a short-term dip, they should recover, as they did in Italy and Austria after smoking bans were introduced.

Europe

After a similar security measure was approved in the US, the EU is considering setting up an electronic travel authorisation system to increase surveillance of visitors travelling to the EU without a visa. The US measure requires travellers to register online and fill out a questionnaire before departure.

Beach towel "wars" have spread to Italy. Higher prices are forcing locals to take action to guarantee a space on Italy’s dwindling public beaches. Concerned authorities are levying fines of €1,000 on the culprits who, they claim, are "illegally occupying" beach space. One official says that families with young children arrive at the public beach at 8:30 only to find it already covered in towels whose owners are absent. At resorts along the Riviera dozens of holidaymakers have been fined, many of them old age pensioners, who are often early risers. Part of the problem is that umbrellas and deckchairs are increasingly expensive to hire, with charges of €20 per day, 6% higher than last year.

Rest of the world

The US travel industry and its allies are pressing Congress for a marketing programme of $200m to help restore the US’s "brand image" with international visitors. Despite sharp declines in the dollar that makes US travel a relative bargain, overseas visitor numbers are still below levels from before 2001. Industry leaders say the country needs to counter the perception of being unwelcoming to foreigners.

Figures from the UK’s Foreign and Commonwealth Office show that Britons are more likely to seek help from their embassy in Thailand. Although Spain tops almost every category for holidaymakers in peril – lost passports, arrests, in hospital, reported rapes, deaths, needing serious assistance – it attracts about 14m Britons every year. When the figures are adjusted to show the proportion of travellers affected, Thailand tops the list with 23.5 consular assistances per 10,000 visitors followed by Australia (12.5), India (10.8) and the Czech Republic (10.4). The least number of requests for assistance were from travellers to France (1.3) and Spain (4.1). Travel agents say the problems with Thailand arise from cheap flights and under-prepared travellers, while the high incidence of lost passports, arrests and hospital visits in the Czech Republic may be linked to the influx of hen and stag parties to Prague.

The World Travel and Tourism Council says the number of inbound tourists to China is expected to rise from 50m in 2006 to between 150m and 180m by 2020, while the number of domestic trips is expected to reach 3bn by 2020. China’s rapid economic growth coupled with a growing and affluent workforce is driving a new wave of investment into the Chinese hotels and leisure sector and making the country one of the most sought after regions for some of the world’s leading hotel groups. InterContinental Hotels Group (IHG) is on track to open 125 outlets by the end of 2008 and meet its objective of between 50,000 and 60,000 new net room additions, equivalent to opening one new hotel a day. Hilton Hotels is developing 25 hotels at a cost of £272m; Accor plans to open 80 hotels over the next two years; and Starwood is looking to open at least 12 new hotels in Shanghai this year.

Despite a strong New Zealand dollar, the country’s tourism industry, its largest export earner, continues to grow. In the year to March 2006, domestic tourism spending increased 3.5% and international spending went up 2.8%. Similar growth in expenditure was expected for the year ending March 2007. Meanwhile, the industry is expected to contribute A$100bn a year to the Australian economy by 2016, up from A$84bn at present, even if more Australians holiday overseas.

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