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Tourism and the Credit Crunch

18 November 2008Tourism And The Credit Crunch,coin in the palm of a hand

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Conflicting Messages are being heard about the impact of the credit crunch on travel and tourism. Some industry pundits insist that everything is ‘business as usual but others are predicting a bout of belt-tightening.

But leading figures on the responsible side of tourism are more upbeat, predicting that an economic downturn may prove an opportunity to develop and promote sustainable travel – with a growing UK trend towards holidaying at home.

The World Travel & Tourism Council (WTTC) predicted in January that the UK
travel industry would only be ‘moderately impacted’ by the effects of the global
economic downturn. WTTC president Jean-Claude Baumgarten admitted
challenges, but was positive about continued development in tourism worldwide. ‘Tourism growth has been particularly rapid in developing countries with the fastest average growth in tourism arrivals in the Middle East region,’ he said.

‘These countries are not only recognising the development potential of travel and tourism and therefore investing heavily in new infrastructure and facilities, but their citizens are also seeing rapid economic growth boost their incomes beyond the level where international travel becomes both a feasible and desired option.’

Indeed, some sources suggest that UK holidaymakers are not changing their travel habits as a result of the credit crunch. Earlier this year market research carried out by TNS Travel & Tourism found that only seven per cent of British adults would allow the credit crunch to influence their holiday decisions. Almost one fifth still planned to take at least two holidays this year. Tom Costley from TNS said: ‘This data highlights a number of trends that suggest the UK holiday market appears to be resilient in the face of the economic downturn.’

So what does this all mean for responsible travel?

Most of those participating in the TNS survey said they would be taking their holidays within the UK and Ireland. There are hints that economic insecurity may actually be encouraging British travellers to follow the recommendations of many environmental organisations: cut down on flights and holidays abroad. Last month it was reported that British skiers are turning away from more costly North American skiing holidays, preferring to take their winter breaks within Europe. Bookings to Europe have increased by up to 20 per cent despite those holidays becoming slightly more expensive, compared with the same time last year.

The chief executive of VisitScotland, Philip Riddle, sees great potential for promoting local tourism as Brits save their money by taking fewer trips overseas. He says people are nervous about the implications of the global economic crisis. ‘I think one of the things that will arise from that nervousness will be people considering staying closer to home for holidays. It’s a good time to capitalise on that.’

The tiny English county of Rutland is also enjoying the benefits to its tourism industry. County councillor Peter Jones said: ‘With the credit crunch, the uncertainty of foreign travel and the weakness of the pound against foreign currencies, the idea of a three-day break is much more attractive. ‘In some respects people are not going for a week abroad but instead choosing two- to three-day holidays. We’ve noticed a considerable increase in short-stay visits where people come to cycle, to walk and enjoy the countryside and to visit some of the many attractions.’

Tourism And The Credit Crunch, UK Beach Huts Justin Francis, co-founder of responsibletravel.com believes that as well as offering a richer, more authentic, more thoughtful experience for tourists, taking a more local and responsible approach to travel is actually a way in which holidaymakers can save money. ‘A myth has developed around the relative costs of travelling responsibly. This has been fuelled by the ethical sectors of other industries such as organic food. The truth is, it doesn’t cost more to stay in locally-run accommodation, it doesn’t cost more to eat in locally-run restaurants and it doesn’t cost more to use local guides. In fact, it costs considerably less to do all these things.’ ‘We’re all looking for something a bit more real, more authentic. Once the myth has been exploded that tourists only want cheap holidays in the sun, the demand will increase and the responsible tourism movement will grow very significantly.’ Just as travellers may find that belt-tightening and sustainable living go hand in hand, those in the travel trade are also being encouraged to take the worsening economic situation as a chance to embrace responsible tourism. Echoing calls within the finance sector for significant restructuring according to a long-term vision, Fiona Jeffery, chairman of the World Travel Market, has called for tourism businesses to consider the financial benefits of the forward-thinking approach. ‘It’s untrue that responsible tourism cannot help companies to achieve a good financial return. Making a profit from responsible tourism is the new way forward, yet many simply shy away from it with something approaching embarrassment,’ she said.

Travel Foundation chief executive Sue Hurdle also urges travel companies ‘not to lose their conscience in the credit crunch.’ At the recent ABTA Convention she pointed to the logic of improving energy efficiency while global fuel prices are on the rise, saying that ‘with rising commodity prices, smart businesses are concerned about recycling and cutting waste. ‘At a time when the “thrift agenda” is dominating the news, we all need to work together to keep sustainable travel and the environment front of mind,’ she added.

Harold Goodwin, director of the International Centre for Responsible Tourism expects responsible tourism to be part of the strategy for survival of a significant part of the industry. ‘Responsible tourism is a form of non-price competition – attractive in a recession,’ he said. ‘Responsible Tourism is not primarily about money. Many of the most interesting and successful initiatives are about changes in management rather than about philanthropy. Established firms already use their “responsible” approach to build customer loyalty. ‘Responsible Tourism also enhances the experience – a responsible tourism experience is a better experience; and as consumers take shorter or fewer holidays they will want to get more out of them.’

Ashley Toft, managing director of this year’s Responsible Tourism Awards Best Tour Operator winner Explore, which runs small-group adventure holidays around the world, has not yet seen any impact on their sales. ‘That gives me confidence that people like the way we do it, at least,’ he notes.

‘And for many people, having an adventure that gets them right under the skin of the country they are visiting, is right up there as a spending priority. And our kind of trip is not in four or five-star hotels. Getting good value is part of the whole ethos of this kind of travel.’

Top photograph by Kay Wilson

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