Cash-strapped Britons hit by recession and a weaker pound are expected to holiday at home in rising numbers this summer. But is the UK tourist industry ready to reap the dividend?

While economic pundits predict a summer of gloom, business leaders in the UK tourism and holiday industries spot a glimmer of hope emerging from the financial cloud caused by the downturn. Expectations are high that many families hit by the credit crunch will forego a fortnight in Fuerteventura for two less expensive weeks in Torquay, and that more visitors from the US and the eurozone will be lavishing their holiday budget, boosted by a favourable exchange rate, in a UK destination.

After the washout of the past two summers, this could be a make-or-break year for some companies, but what the industry really needs is a sustained increase in revenue rather than a one-off bumper season. There can be no assumption that a weak pound will bring foreign visitors in their droves, or that the domestic holiday scene is the only alternative to expensive Mediterranean resorts. It is factors such as quality of tourist product and standards of customer service that will determine the number of visitors to UK destinations and whether they decide to come back again. The question is, will the UK tourism industry be able to cope?

The national tourism business is a consortium of regional industries—each one, through tradition, culture and location, attracting different sectors of the domestic and international market. London is consistently ranked the top UK destination by overseas visitors, and when it comes to quality, value and service, David Hornby, commercial director of tourism agency Visit London, believes that the capital ticks all the boxes. "Across every element of the tourist visitor experience, from their choice of transport and accommodation, to the attractions and entertainment, London is blessed with a top-quality product," he says. "Where else can you visit the Houses of Parliament in the morning, ride the London Eye in the afternoon, and see a wonderful West End show before deciding which of the city's many global cuisines to sample in its restaurants?"

But there is no sense of complacency, and London's tourist industry has been working hard to ensure that it can not only cope with an anticipated influx of overseas visitors but leave a lasting impression that will encourage them to come back. Standards of customer service in the capital have improved massively, assisted by the London Development Agency setting aside a budget of more than £2m to improve skills in the hospitality sector.  

Of the city's 100,000-plus hotels, says Hornby, the majority are either working on or have completed upgrades, while some of London's landmark hotels such as the Savoy and the Four Seasons have been refurbished, reopened and have reinvented themselves.

Efforts to attract more foreign visitors were boosted by London mayor Boris Johnson's recent announcement of a new £2m international marketing campaign, which is expected to deliver an additional £60m worth of benefits to the capital's economy by the end of this year. The campaign theme was developed from research findings produced by Visit London. The study into the city's key visitor markets found that people were keen to come to London but wanted to be stimulated by the capital's offering at a good-value price.

"Research really is the key. There is no point in spending money unless you know what will stimulate people to come to London," adds Hornby.  Even with a targeted approach, the recession has made funds for reinvestment much scarcer and put added pressure on businesses. Recently, London First, a business membership organisation that promotes the city, wrote an open letter to the government asking for support. Its members include big businesses with large fixed costs whose brands rely on tourist revenue.

Like many business leaders in the sector, Lawrence Alexander, chief executive of easyHotel, doubts it will be forthcoming. "Hotel companies and tour operators have always put money into campaigns and other initiatives to attract the dollar and euro spend," he says. "Given that the government has provided funding to help other industries, there is an understandable sense in this sector of 'why not us?' These are industries suffering huge job losses, so it is doubtful that a sector such as tourism and hospitality will receive any extra financial help from the government."

EasyHotel itself has been hit by the downturn, curtailing plans to expand its six London hotels to 20 to a modest 12 or 14. Launched three years ago, the fledgling chain is perfectly positioned in what Alexander calls the "super budget" end of the market, using the halo effect of the easyJet brand, with its no frills and great-value outlook, to attract tourists with an eye on affordable quality.

"A key driver will be the cost of travel and accommodation, both of which have remained low in terms of the cost to international visitors. It will be a challenging year in terms of movement of rates, but we are optimistic," adds Alexander.

Away from the capital, other traditional destinations are looking to boost their market share this summer. In the north-west, the tourism industry contributes around £11bn to the economy, with destinations as diverse as Blackpool to the spectacular fells of Cumbria and the Lake District.
James Berresford, director of tourism at the Northwest Regional Development Agency (NWDA), is optimistic.

"We can't assume that families who don't take their usual foreign package holiday will opt for a two-week holiday here," he says. "Where we believe we can score is in the weekend break market. The north-west has an excellent product and for the reasons that European breaks became so popular, a favourable exchange rate and low-cost travel, I expect to see incremental gains in terms of European visitor numbers."

Other tourist regions, including the south-west, are already seeing these gains. Mark Seward, owner of Sidmouth Hotels, a small group of four hotels in the Devon resort, says: "When the pound was at its strongest a year or so ago, the number of tourists from France, Germany and Holland coming to the south-west fell, but as sterling has weakened against the euro, they are starting to come back in increasing numbers."

Seward's biggest concern this year has been falling interest rates and their impact on the large numbers of pensioners who visit the seaside town. "Sidmouth attracts a lot of older people," he says. "The drop in interest rates has impacted on their savings and their income, and our main worry was that they wouldn't be able to afford to come on holiday."

But his fears appear to be unfounded, with forward booking figures suggesting a busy summer ahead. As president of the Sidmouth & District Hospitality Association, Seward is well aware of the need to deliver on quality, customer service and value for money in order to keep customers coming back.

"Local holiday businesses have the support of a proactive town council and chamber of commerce, both of which understand the importance of tourism to the local economy," he says. He is also optimistic about the long-term future. "This is not going to be the champagne-and-oysters summer many hope for, but if we get the quality, service and pricing right, we can create something to build on for many summers to come."

One sector that sees real cause for optimism is the "outdoor holiday" industry. Confidence levels began to rise at the start of the year when a report published by the Outdoor Industries Association (OIA) revealed that almost half of the British population was now more likely to book an outdoor break during 2009 due to the downturn, with 49 per cent of adults surveyed stating that the credit crunch made them more inclined to go on such a holiday in Britain rather than head abroad.

At the Camping and Caravanning Club, which operates 109 sites and certifies a further 1,300, summer bookings are 26 per cent up on last year. Marketing director Matthew Eastlake says: "It is difficult to say whether the increase is due to regular customers booking early or new customers booking for the first time, but every campsite is fully prepared for extra visitors."

Camping is cheap and entails only a modest outlay in terms of equipment, so people are more likely to give it a try. "They may not choose camping for their main holiday every year, but as long as their first experience is good, they are likely to camp regularly on weekend breaks, which presents scope for growth," says Eastlake.

Regardless of location, local attractions and amenities, factors such as travel can affect holiday and tourism businesses across the board. David Hornby insists that London's transport infrastructure is as good as that of any capital. "From the visitors' perspective, most come from places where there is nothing like the London Underground or the Heathrow Express, and our annual visitor satisfaction surveys consistently show that they are impressed by London's transport services."

The north-west, too, has benefited from improvements to transport and the region is now well served by airports in Manchester, Liverpool and Blackpool, the recent high-speed rail upgrade to Virgin's West Coast line and extensive motorway access. "There is still scope to improve public transport services, particularly to remote areas such as the Lake District, but on the whole, getting here is no longer an issue," says the NWDA's Berresford.

One crucial factor that could influence business this summer is the weather. According to a survey of campers by the Camping and Caravanning Club, only 20 per cent felt that the weather would influence their plans. But in traditional tourist locations operators have focused on providing high-quality, indoor all-weather alternatives.

Blackpool has long been seen as a dry-weather location. Today, the resort's top indoor attractions, such as the Tower and the Sea Life Centre, are being promoted as heavily as its trademark beaches, piers and promenade. Alan Cavill, assistant director of enterprise and business development at Visit Blackpool, says: "It is the unpredictable nature of the British weather that affects trade in Blackpool. When the sun shines, people come here on impulse, with numbers likely to vary by 15 to 20 per cent on any given weekend."

The resort attracts around 10m visitors a year, 70 per cent of whom come from outside the north-west. Local businesses are looking to win a greater share of the conventional holidaymaker market. Cavill explains: "Some hotel chains are taking advantage of Blackpool's tourist offerings and packaging them to offer family holidays inclusive of travel, accommodation and passes to the main shows, events and attractions. The aim is to mirror the traditional overseas holiday package, where families know how much they are paying in advance."

It remains to be seen whether there is a noticeable rise in tourist numbers this year, but the UK industry believes the investment it has made in being prepared for this summer will ensure returns for years to come.