E&Y warning for British tourism
The UK's popularity as a holiday destination is under threat as the strength of the pound and a saturated domestic market is driving leisure operators to look to Europe to expand, according to Ernst & Young analysts.
Hospitality and leisure players across Europe are set to invest £20bn over the next three years in the serious business of having fun, the E&Y report reveals, but economic conditions have halted investment in the UK.
The Big Five firm’s report highlights a slow down for UK investment despite domestic leisure companies investing an average of £110.6m compared to under £32m in mainland Europe.
The report, Leisure Development in Europe 2000, raises the spectre of a UK leisure industry crisis brought on by both foreign and UK tourists looking elsewhere to holiday because of currency strength.
The number of foreign tourists visiting the UK has dropped – latest available figures indicate an annual decline of 3 per cent – whereas UK residents visiting overseas destinations increased by 11 per cent over the same period.
Renata Drinkwater, Partner at Ernst & Young, commented: ‘The intensity of competition and market consolidation, particularly in the UK, is stiflingopportunities for investment in new ventures and new facilities. ‘The strength of sterling and the government’s indecision about when or if the UK should adopt the euro seems to be hindering inward investment into the UK.’
She added that the slow down was especially acute among continental Europe leisure companies, where only 16% intend to make any significant investment in the British market.
She said that UK companies are having to re-invest funds into existing local facilities and seek new opportunities overseas.
‘For example, 41 per cent of UK companies have plans to invest in Germany but only 14 per cent of German companies are looking to invest in the UK.’, she added.