The national tourism strategy – Tourism Scotland 2020 (TS 2020) – is nearing its end, making now an apt time to look at the fortunes of the sector.
Visitor and spend trends
There were 15.3 million overnight visitors and 137.8 million day trips to Scotland in 2018, a total of 153.1 million trips. The below chart provides further insight into the profile of these visitors.
Source: VisitScotland (2019)
International visitor numbers have been on the up, surpassing the three million mark in 2017 for the first time. Domestic (Scotland and rest of UK) visitor numbers haven’t been as positive, with numbers down 12% since 2011, as shown in the chart below.
Source: VisitScotland international visitor data and VisitScotland domestic tourism data
Total visitor spend in 2018 (incl. day trips) was £10.4bn. Overnight visitors contributed just under £5bn of this total. Trends in overnight spend are illustrated in the below graph.
Source: VisitScotland international visitor data and VisitScotland domestic tourism data
TS 2020
The tourism sector strategy TS2020 was launched in 2012 with the ambition “to make Scotland a destination of first choice for a high quality, value for money and memorable customer experience, delivered by skilled and passionate people”. TS2020 laid down a target of between £5.5bn and £6.5bn (in 2011 prices) for overnight visitor spend by 2020, an increase of a billion pounds from just over £4.5bn in 2011.
TS2020 is led by industry, with support from the Scottish Government and public agencies. The delivery is overseen by the Tourism Leadership Group, a partnership of public and private sector, and supported by the Scottish Tourism Alliance (STA).
The STA published a mid-term review of TS2020 in 2016. This review noted that while progress had been steady, the delivery of the headline growth target represented a steep challenge.
The most recent data, in 2011 real terms prices, suggests that this challenge was not overcome and the target won’t be met. Indeed, in real terms there’s been little growth in overnight visitor spend. From 2011 to 2018, overnight tourism spend has averaged £4.5bn. So, why will the target likely be missed?
In 2016, the mid-term review suggested one factor that may have constrained growth was that many of Scotland’s tourism projects are “relatively small scale and tactical in nature”. It was suggested that attention should be given to opportunities that have the potential to accelerate growth. Examples provided included global scale visitor attractions, like the Warner Bros. Studios, that increase the volume of visitors and help to combat the effects of seasonality.
Given that Scotland is a long-established mature destination, visitor numbers and spend are unlikely to increase significantly. This destination maturity is acknowledged in TS2020. Destination maturity can also be linked to capacity issues. However, these issues are unlikely to be evenly spread, across Scotland, causing regional imbalances. Thus, was a target circa £6bn over ambitious? Or, without the synergies created by TS2020, would current tourism spend values be lower? TS2020 may have safeguarded value that would otherwise have been lost.
A key theme throughout TS2020 is collaboration across the industry. This aspect has been successful, as there are now 28 destination strategies across Scotland aligned with TS2020. The STA and partners have started to look ahead to beyond 2020 with a review of TS2020 underway and a new strategy under development.
Government tourism spend
The below table summarises Scottish Government tourism related spend since 2010-11 in real terms. The tourism budget line is largely responsible for funding VisitScotland. The ‘major events and themed years’ budget line only appeared in 2014-15.
Scottish Government budget spend tourism, 2018-19 real prices (£m)
Financial year |
VisitScotland and Tourism special projects |
Major Events and Themed Years |
|---|---|---|
2010-11 |
50.1 |
. |
2011-12 |
46.2 |
. |
2012-13 |
54.2 |
. |
2013-14 |
56 |
. |
2014-15 |
60.9 |
2.6 |
2015-16 |
53.8 |
3.4 |
2016-17 |
51 |
2.5 |
2017-18 |
44.7 |
30.9 |
2018-19 |
45.1 |
36.8 |
2019-20 |
44.3 |
16.5 |
The 10-year trend in the tourism budget shows a peak in 2014-15 (linked to the 2014 Commonwealth Games in Glasgow, 2014 Ryder Cup in Gleneagles, and the Year of Homecoming) followed by a downward drift. In real terms, since 2010-11 to 2019-20 the tourism budget has decreased by 12%.
The major events budget line supports a range of major events and the Themed Years programme. In 2019-20 its allocations included: 2019 Solheim Cup, Scottish Open, Ladies Scottish Open, UEFA EURO 2020, winter festivals, and preparation for 2020 Year of Coasts and Waters. The decrease from 2018-19 reflects completion of the 2018 European championships. Thus, the major events budget can be sporadic, reflecting the profile of events hosted in Scotland.
Let’s look at how this spend compares to some of our near neighbours.
- The UK Government’s Department for Digital, Culture, Media & Sport (DCMS) allocated approximately £57m for tourism related arm’s length bodies (this included VisitBritain and VisitEngland) in 2018-19. This was forecast to fall by around £30m in 2019-20 due to the end of the Discover England Fund and transfer of funds to other departments. It should be noted that VisitBritain raises over £30m in income through commercial and partnership activities.
- The Welsh Government allocated £17.7m for tourism, marketing, and major events in 2019-20.
- Northern Ireland’s Department for the Economy allocated approximately £34m for tourism (Tourism NI £22m and Tourism Ireland £12m) in 2019-20.
- And the Irish Government assigned around £150m for tourism related spend in 2019.
Direct Government tourism-related spend equates to £12 on a per capita basis in Scotland. This is above the DCMS and Welsh Government per capita ratios (£1 and £6 respectively) but below the equivalent ratios for both Northern Ireland and Ireland (£18 and £31 respectively).
Scotland’s tourism future
Against a mixed backdrop of growing international visitor numbers, declining UK visitors, and stalled overnight real terms visitor spend, there’s a myriad of other issues for the sector to grapple with.
- The impact of Brexit will hurt tourism more than other sectors, given it relies on a supply of migrant workers.
- The economic uncertainty caused by Brexit has weakened Sterling, which is something of a double-edged sword. A weak Sterling makes Scotland and the UK more attractive to foreign visitors, but this could be offset by UK holidaymakers curtailing domestic holidays as household earnings potentially get squeezed.
- ‘Over-tourism’ where some areas experience pressure on infrastructure and negative impacts on local communities has been a recurring theme. Notable hotspots have been Edinburgh, Skye and the North Coast 500 route.
- Other factors in the tourism melting pot include the possible introduction of a Scottish tourist tax and the ramifications of digital disruptors such as Airbnb.
It will be interesting to see how the industry’s new strategy, due in autumn 2019, will address these factors and what vision and targets it will set for Scotland’s tourism future.
Alison O’Connor, Senior Analyst, Financial Scrutiny Unit