1 Business Plan 2012–2013 2 Contents Executive Summary 3 1. Our Business 4 2. The Context 7 Industry size 7 Britain’s image and competitive position 7 Priority inbound markets 7 VisitBritain’s contribution 8 Government priorities 9 Tourism landscape 9 Economic conditions 9 Access 10 Geopolitics 11 2012: the challenge and the opportunity 11 3. Our Activity 12 1. Inspiring travellers from overseas to visit and explore Britain 12 2. Delivering a global network to support tourism promotion overseas 14 3. Advise Government and industry on tourism – particularly on issues that affect our global competitiveness 15 4. Maximising public investment through partner engagement and commercial activity 16 Managing our business 18 4. Key Measures 19 5. Financial Information 22 Risk management 22 Summary income and expenditure budget 23 Appendix 24 Significant assumptions 24 3 Executive Summary 2012 is set to be a big year for Britain, a big year for DCMS and so a big year for VisitBritain. This year Britain will host the London 2012 Olympic and Paralympic Games, the London 2012 Festival and a whole host of other one-off cultural and sporting events, as well as celebrate the Queen’s Diamond Jubilee. This is Britain’s moment and the eyes of the world will be on us. Tourism is key to the Government’s plans to stimulate economic growth, create jobs and rebalance Britain’s economy. VisitBritain’s value rests on our ability to sell Britain effectively overseas. We secure partnerships which double the Government’s investment and extend our reach to bring in more international visitors who spend money here which delivers that growth and jobs. In 2011 Britain had its best year for a long time in terms of visitor spend - indeed we welcomed a record number of nearly 12 million holiday visitors - and our forecast for 2012 suggests that this will hold level - with 30.7 million overseas visitor arrivals expected in 2012, spending £17.6 billion. Maintaining current visitor levels would be a good outcome in a year that is proving difficult to predict due to the current global economic climate and the impact this may have in many of our key markets, our competitiveness and value against other destinations, and of course the impact that the hosting of the 2012 Games may have on the displacement of visitors. VisitBritain has a crucial part to play, and we will be judged on our results – what we deliver for Britain and the tourism industry, how well we leverage the Games-time opportunities and how we are valued by our stakeholders. Our key priorities for the year are:  The continued roll out of the GREAT Britain marketing programme, with an image campaign in key global cities, and a tactical campaign to encourage people to travel now  Securing and maintaining strong partnerships with businesses and organisations that extend our penetration and reach and promote Britain  Maintaining the financial contribution that retail makes to the funds of VisitBritain  The showcasing of Britain around the Games to ensure positive coverage in the world’s media  Continuing to research and provide analysis on Britain’s competitive position in all our markets Working in partnership with the industry, by the end of 2012-13, we aim to improve Britain’s global position as one of the world’s top destinations, generating media coverage with an advertising equivalent value of £400 million. We will also plan to produce a set of market strategies which identifies the barriers to increasing competitiveness, and a range of solutions involving VisitBritain and other stakeholders. Overall, in 2012/13 we aim to deliver £375 million in visitor spend to help generate jobs and rebuild the British economy. 4 1. Our Business VisitBritain is the national tourism agency, responsible for marketing Britain worldwide and developing Britain’s visitor economy. A non-departmental public body, funded by the Department for Culture, Media and Sport (DCMS), we work with partners in the UK and overseas to ensure that Britain is marketed in an inspirational and relevant way around the world. Our partners include government agencies, such as UKTI, FCO and British Council, airlines and operators, global brands such as Samsung and the English Premier League, as well as the official tourism bodies for London, England, Scotland and Wales. 2012 is set to be a big year for Britain, a big year for DCMS and so a big year for VisitBritain too. This year Britain will host the London 2012 Olympic and Paralympic Games as well as a whole host of other cultural and sporting events and celebrate the Queen’s Diamond Jubilee. Our key priorities for the year are:  The continued roll out of the GREAT Britain marketing programme, with an image campaign in key global cities, and a tactical campaign to encourage people to travel now  Securing and maintaining strong partnerships with businesses and organisations that extend our penetration and reach, and promote Britain  Maintaining the financial contribution that retail makes to the funds of VisitBritain  The showcasing of Britain around the Games to ensure positive coverage in the world’s media  Continuing to research and provide analysis on Britain’s competitive position in all our markets Our mission : to build the value of tourism to Britain, working in partnership with the industry and nations and regions to generate additional visitor spend Our vision: To inspire the world to explore Britain 5 Our consumer, trade and media websites reach a global audience, and we have a staffed presence in 21 overseas markets – those that offer the best immediate return and best future prospects for Britain. Collectively, these markets account for around 70% of inbound tourism spend. We use a range of traditional and innovative marketing approaches including brand and tactical advertising, digital and social media, press and PR activity and working with travel trade intermediaries. We also have a statutory advisory role, providing analysis and advice on tourism, in particular, the opportunities for, and the barriers to inbound tourism growth. In addition, we provide research, market intelligence and analysis to inform Government and the British tourism industry. Our Priority Markets Americas USA, Canada, Brazil Europe Austria, Belgium, Denmark, France, Germany, Italy, Netherlands, Norway, Poland, Russia, Spain, Sweden, Switzerland Asia Pacific, Middle East & Africa Australia, China, India Japan, UAE 6 Our four-point strategy aims to increase overseas visitor spend to all parts of Britain and improve Britain’s ranking on the destination wish-list for international travellers. Our strategy We will support the growth of Britain’s visitor economy in four key ways: 1. Inspire travellers from overseas to visit and explore Britain 2. Deliver a global network to support tourism promotion overseas 3. Advise Government and the industry on tourism, particularly on issues that affect our global competitiveness 4. Maximise public investment through partner engagement and commercial activity What we are working to achieve by the end of 2015 - £1 billion in PR coverage - 4.7 million visitors from overseas - £2.3 billion visitor spend - Around 60,000 new job opportunities - A measurable increase in positive perceptions of Britain and aspiration to visit - Partner support for our activities worth £52.5 million in cash and in kind - Recognition from Government that tourism is delivering on its economic growth agenda - A series of market strategies which identify the competitive challenges facing Britain, and their solutions, adopted by Government and industry as a blueprint for the development of international tourism to Britain 7 2. The Context VisitBritain operates within an ever-changing environment and many different issues have informed this business plan. This section explains the key parameters and influences that underpin our planning. Industry size Tourism is the UK’s third highest export earner behind chemicals and financial services. It supports 2.6 million jobs and over 200,000 small and medium-sized enterprises. It already contributes £115 billion (8.2%) to the UK’s GDP 1 and is set to be one of Britain’s best performing sectors over the coming decade. Spending by international visitors is forecast to almost double to £31 billion by 2020. Britain’s image and competitive position The United Kingdom is a strong nation brand, ranking 3rd out of 50 countries 2 . Research consistently shows that Britain’s key strengths are its heritage, culture, education, sport and London. It is weaker on welcome (12 th ), natural beauty (22 nd ) and value for money 3 . In 2010, we occupied sixth place in the international tourist arrivals league table and seventh place in terms of earnings from international tourism 4 . Germany and Turkey are now close on our heels when it comes to arrivals and Australia is not far behind us in receipts. These figures serve to illustrate just how competitive the global tourism industry is. We know we have stiff competition, not only in the form of traditionally popular destinations but from a growing number of emerging markets. China, for example, is now in the top three most visited countries. If first-time travellers from Asia, India, the Middle East and Latin America are to be attracted, we must do everything we can to make Britain an aspirational, welcoming and accessible destination in their eyes. The 2011 World Economic Forum ‘Competitiveness Index’ ranked us seventh out of more than 130 worldwide destinations. We are listed third in the world for ‘human, cultural and natural assets’, as well as for ‘access’, 11 th for ‘business environment and infrastructure’ and 21 st for ‘regulatory framework’ 5 . However, for ‘price competitiveness’ the UK is ranked 135 th out of 139 countries’ Priority inbound markets In 2010, our Market Investment Model (MIM), developed with Oxford Economics, helped us identify the best prospects for tourism to Britain. Our focus is on 21 priority markets - those that offer the best immediate return and best future prospects for Britain. Together they account for approximately 70% of inbound tourism spend. 1 Deloitte: The economic case for the visitor economy, September 2008 2 Anholt GFK Nations Brand Index 2011 3 Anholt GFK Nations Brand Index 2011 4 UNWTO 5 WEF Competitiveness Index 8 Priority Inbound Markets, visits and spend 2010 6 Market Visits (000s) Spend (£m) USA 2,711 2,133 Germany 3,004 1,193 France 3,618 1,142 Australia 986 951 Spain 1,809 824 Italy 1,472 722 Netherlands 1,758 717 Canada 686 513 Belgium 1,136 401 Switzerland 623 367 India 371 363 Sweden 758 357 Norway 649 355 Poland 1,101 313 UAE 213 312 Denmark 550 245 Russia 170 194 China 109 184 Japan 223 182 Brazil 177 160 Austria 288 155 Hong Kong 131 129 VisitBritain’s contribution VisitBritain’s makes a valuable contribution to the visitor economy - we inject revenue into the economy every year through the additional visitor spend directly and indirectly generated by our international marketing and our commercial activities, while our export platforms and business services achieve economies of scale significantly reducing costs for many of our partners and saving public money. We also help enhance Britain’s overall image as a country in which to work, invest and do business, thus contributing to the wider economy. 6 International Passenger Survey 2010 (shown in order of importance in terms of spend) 9 Government priorities The Government Tourism Policy, published in March 2011, has three main objectives:  To fund the most ambitious marketing campaign ever to attract visitors to the UK in the years following 2012  To increase the proportion of UK residents holidaying in the UK  To increase the productivity of the tourism sector, making us one of the world’s top five most efficient and competitive visitor economies in the world The successful delivery of this marketing programme is our primary focus and we have maintained a streamlined advisory function, providing advice to Government on issues which affect the UK’s international competitiveness. In November 2011, the Secretary of State confirmed that we would receive additional funds to help promote Britain in key overseas markets in 2012. The money is part of the 'GREAT' initiative launched by the Prime Minister in September to show the world that Britain is a great place to visit, to live, to invest and to do business with. Up to £39 million will be invested in this campaign which is a collective effort with UKTI, British Council and FCO who are all using the GREAT creative. VisitBritain’s allocation is £22.5 million. Tourism is key to the Government’s plans to stimulate economic growth, create jobs and rebalance Britain’s economy. VisitBritain’s value rests on its ability to sell Britain effectively overseas, to bring in more international visitors who spend money here that delivers that growth and jobs. We have a crucial part to play and will be judged on our results – what we deliver for Britain and the tourism industry, how well we leverage the Games-time opportunities and how we are valued by our stakeholders. Tourism landscape Tourism structures across England continue to evolve and develop. VisitEngland has secured additional funding from the Government’s Regional Growth Fund. This funding will ensure that the England domestic campaign will be amplified at a local level and will support destinations all over the country to grow tourism in their areas and create jobs. London & Partners, the official promotional organisation for London, has been formed with the purpose of attracting and delivering value to businesses, students and visitors. Tourism is a devolved matter and Visit Scotland, and Visit Wales remain the responsibility of their respective governments, and work closely overseas with VisitBritain. Economic conditions The global economy is currently in a period of turbulence, with the Governor of the Bank of England recently suggesting that a financial crisis as bad as that of the Great Depression was a possibility. While new technocrat governments in Greece and Italy have gone some way to easing market nerves, there remains a very real risk of further instability due to the scale of sovereign debt in a number of Eurozone countries, and whether or not sufficient political will exists to push through austerity measures. The latest forecasts suggest that France will re-enter recession and that growth will be minimal even in Germany. 10 The US economy has suffered not just from the continued downbeat property market, but also from the difficulties surrounding a political logjam in relation to raising the country’s debt ceiling. The fact that there is a Presidential election in November 2012 may further inhibit the implementation of plans to address the US’s economic difficulties. Uncertainty is a sure recipe for unpredictable movements in exchange rates, and this could be particularly important for prospects for inbound tourism to Britain should anything happen to strengthen or weaken substantially the value of sterling against key currencies such as the US dollar and euro. Exchange rates play a pivotal role in how competitive a destination is in attracting visitors and Britain has enjoyed a favourable rate against most leading currencies over recent years, indeed for visitors from Australia sterling is more affordable than at any time over the past quarter century. Were Greece, or any other member, to be forced to exit membership of the single currency zone there may be hefty shifts in relative sterling/euro exchange rates. Currently the central forecast for the price of oil during 2012 is $110 per barrel, but again if the Eurozone and North American economies do return to recession, it is likely that prices would fall unless demand was replaced by growth in Asia Pacific. A further economic risk in 2012 is that there will be on-going industrial action across Europe impacting on transportation, with this risk extending to the UK in light of pressure on wage settlements and job security, especially within the public sector. While there are some concerns over the Chinese property market and an expected slowing in the rate of economic expansion in Brazil, a number of developing economies continue to enjoy strong economic growth, thereby increasing the numbers able to travel internationally. Access There are the usual changes to route networks being announced for 2012, but with little space for increased capacity in the south east of England (most notably at Heathrow) possibilities for expansion are limited, although the increased use of Airbus A380s should allow for some growth in passenger numbers. One notable development in 2012 will be the advent of a substantial presence at Southend Airport by easyJet. A few plans worth noting are increased capacity between the UK and USA thanks to additional flights operated by British Airways from both New York and Miami, the UK and Moscow and Shanghai courtesy of British Airways deploying larger planes on the route and UK and China with China Airways starting flights into Gatwick and China Southern Airlines from Guangzhou to Heathrow. Air Passenger Duty increased by 8% in early 2012, while the EU Emissions Trading Scheme started in January 2012 - both likely to mean increasing fares for passengers. Visitors to Britain from some markets require a visa in order to visit. These include key markets for future growth, such as Russia, India, China and the United Arab Emirates. The visa application process, rather than the price, is more often the determining factor. This reduces the desire in visa markets to visit Britain, and perpetuates the idea that Britain is an unwelcoming destination. [...]... Measurement Tool Target Business generated The amount visitors spend in Britain that would not have happened had there not been VisitBritain interventions By surveying a random sample of those who have come into contact with VisitBritain over the specified time period, e.g as a result of marketing campaigns or those registering on our website £375 million (visitor spend in Britain) Image building Increased... who have not yet visited Britain Encourage prior visitors to return Provide a series of opportunities and incentives to visit Britain now, working in partnership with the private sector The campaign proposition is simple, compelling and versatile – “GREAT Britain – You’re Invited” and is a major part of a broader Government initiative to show the world that Britain is a great place to visit, to live,... of VisitBritain responsibilities in the Tourism Policy Reports, consultations and policies which referenced tourism by government departments 5 key departments demonstrate consideration A plan for each of VisitBritain’s key markets which identifies the barriers to increasing competitiveness, and a range of solutions involving VisitBritain and other stakeholders Finalised market plans 21 market plans... tourism and VisitBritain activity  Market plans for all VisitBritain’s overseas markets which identify a series of actions with milestones to address Britain s competitiveness (e.g improvements to product distribution and packaging as well as changes to government policy) and engagement on their delivery  Increased share of voice for tourism on the international stage and in the British business media... advisory function has a clear focus on international competitiveness, and the assessment of Britain s situation relative to our key competitors  Lead on the production of market plans for each of VisitBritain’s key markets which identify the barriers to increasing competitiveness, and a range of solutions involving VisitBritain and other stakeholders  Work with the Minister for Tourism and Heritage and... sentiment and interest in visiting Britain Monetary value of all editorial coverage generated by us based on cost of the equivalent advertising space Brand tracking research by Holden Pearmain In development By independent evaluation by Metrica of every piece of coverage generated by us £400 million Visits to family of websites The number of visits to any website with VisitBritain in the name By evaluation... GREAT Britain campaign (see marketing)  Work with key trade associations to provide a platform for SME’s to benefit from the “GREAT Britain – You’re Invited” programme Key outcomes  Raise £8.1m direct cash contribution  Raise £5.6m in-kind contribution Retail We also run a retail operation – a suite of online shops (www.visitbritainshop.com), offline retail activities and distribution of the VisitBritain... with oversight by Audit Committee, and Internal and external Auditors Fiscal impact undertaken for all new activity Tax impact of Business Plan assessed Treasury Management Policy in place 22 Summary income and expenditure budget £'000 2011/12 2012/13 VisitBritain VisitBritain Variances GIA - Core GIA - GREAT Funding GIA - Transfer (to)/from VE 26,980 10,000 (400) 24,592 12,500 400 (2,388) 2,500 800... UK businesses as a result of our interventions In development In development Industry satisfaction Levels of satisfaction in export platforms Questionnaires to partners post-activity 80% satisfied Delivering the Government Tourism Policy, and advising Government on policy making to support Britain s global competitiveness Implementation of Tourism Policy objectives (DCMS business plan) Delivery of VisitBritain... line with expected numbers in 2011, maintaining current visitor levels - actually a record number of holiday visitors - would be a good outcome in a year that is proving difficult to predict 11 3 Our Activity 1 Inspiring travellers from overseas to visit and explore Britain In 2012/13, VisitBritain enters into the second year of our four-year, £100 million public/private sector marketing programme . tourism and VisitBritain activity  Market plans for all VisitBritain’s overseas markets which identify a series of actions with milestones to address Britain s. of VisitBritain responsibilities in the Tourism Policy 5 key departments demonstrate consideration Market plans A plan for each of VisitBritain’s