Importance of Tourism in London

The World Tourism Organization (WTO) defines tourism as “the activities of persons traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business, and other purposes.” James Mak (2004) found that about 62 percent of international travel is leisure travel, 18 percent business travel, and the remaining 20 percent is for other purposes. Regardless of what the reason for travel may be there is a direct linkage of tourism and the economy.

According to the latest provisional data from the International Passenger Survey in the first quarter of 2010, London welcomed 2.96 million visitors. “Tourism is a vital contributor to London’s economy, generating approximately £10.6 billion of overnight visitor expenditure in 2009” (Visit London: fact sheet). Evidently tourism represents a relevant source of foreign exchange earning a significant income, benefiting the London economy. This paper will attempt to explore the importance of tourism to the London economy focusing on different aspects in the industry that relate to the economic situation of London.

In 2002, Mayor Ken Livingstone devised a massive plan to encourage tourism and thereby improve the economic conditions of the country. He saw tourism as an industry with great potential and therefore intended to benefit the economic situation by improving the efficiency of the system. Since then much of the ‘Mayor’s plan for tourism in London’ has been revised and improved upon by the present mayor Boris Johnson. In Livingstone’s foreword to the publication he stressed that “tourism is vital to London’s prosperity. Ours is a world city with unrivalled appeal” London has assumed increasing importance as a premier tourist spot especially after turmoil from other “rivals’ that deter tourists from visiting their country. For instance popular tourist spots like Luxor, Alexandria and Sham Al Sheik are now looked upon as hostile environments after the ousting of president Ben Ali in Tunisia and the massive street protests that followed. In an article posted by the Euronews (2011), a Spanish traveller told reporters he had decided to leave Egypt “because the situation is getting complicated and dangerous.” He added: “We can’t go anywhere and we have three little daughters.” This unrest in rival tourist countries makes the politically stable and hence ‘safer’ London a prime tourist destination.

It is evidently clear that London is ranked highest for international tourism. London is a city of proud historic tradition, authentic architecture, an entertainment capital as well as an important financial and business centre. Many foreign dignitaries besides attending to their official duties also take time to experience the city as tourists. “Leisure activities have more flexibility and there is usually a range of places where particular leisure activities can be undertaken, and far less temporal constraints on their enjoyment, even if individuals are still bound by obligated, biological and work related time” (Shaw and Williams, 2002)

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The Economic Development Strategy for London recognized that tourism and hospitality sector as one of the most significant forces in the London economy. “Tourism and leisure are also important elements in labor markets, with tourism accounting for more than one million jobs in the UK alone.” (Williams and Shaw, 1998) The London Tourist Board’s Tourism Strategy for London has calculated that the number of jobs created by tourism in 1985 is around 275,000 full-time job equivalents. This accounts for some 8 per cent of all London’s employment. This calculation includes day visitor spend which is estimated to add 10 per cent to the total (25,000 jobs) Since then, the plan stresses on the fragility of the key economic statistics on London’s tourism as the structure of employment in the industry has changed considerably for example in the advancements of the information and communication technologies as well as part-time employment and capital investment. However, tourism is set to grow with this increasing rate of tourism it will inevitably bring profit to the economic situation in London.

The Draft London Plan forecasts that growth in employment in hotels and catering will be second only to financial and business services. Technical Report Thirteen on hotel capacity and demand predicts a 3.4 per cent annual increase in overseas visits to London between 2000 and 2020. “The service sector has increased in importance, in both absolute and relative terms, in most economies in recent decades.” (Knox and Agnew, 1998) As the service sector benefits greatly a multiplier effect comes into play which creates inter-firm linkages which all have much ado with the economy. “The geography of the production of leisure and tourism services does share many features with other sectors” (Agarwal, 2000). Shaw and Williams (2002) found that catering held strong links to the agricultural sector and also that there was coherence between inter-regional transport firms, as well as some forms of furniture producers. It is this “multiplier effect that concerns the way in which expenditure in tourism filters throughout the economy, stimulating other sectors as it does so” (Pearce, 1989) Although this may represent profit within the economic sector of the city Smith (1995) argues that “regrettably, the abuse of multipliers often seen to be as frequent as legitimate uses – thus contributing further to the industry’s lack of credibility.” This pessimistic view holds certain truth as corruption is well within the tourist industry, however the extent to this is not as severe as to cause a significant downfall in the economy.

Another point stressed by the mayor is London’s success in the global tourism marketplace of which had a major impact on the performance of the UK tourism economy. The mayor has restated his commitment to ensuring that London continues to contribute to the wider interests of the British tourism industry. The visionary plan fittingly called ‘Visit London’ will seek to sustain London’s international profile and status as a world city as it has long been established as the international gateway to the UK, according to the Tourism Company (2002), with 59 percent of overseas visitors arriving via one of London’s airports. Over half of overseas visitors spend time in London, many of whom travel by rail car and coach. This leads me to my next point, which is the importance of the travel infrastructure.

Geoff Muirhead, CEO of an airport group, stressed the importance of the aviation industry in the UK economy “four group airports generate more than 3 billion pounds for UK plc, and support thousands of travel and tourism related jobs. Inbound tourism is clearly good news for the British economy, while overseas travel allows UK citizens a well earned break in a sunnier climate. We need to find ways of supporting both these aspects of tourism much more effectively, given their importance to the UK economy as a whole.”

The hospitality and leisure development is also greatly interlinked with the development of an efficient travel infrastructure. Whitbread Chief Executive Alan Parker explained that “the hospitality industry depends heavily on the infrastructure of air, road and rail links, which transport clients to the hotels. If infrastructure does not keep pace with growth, then business and tourism could drift away from the UK to other markets on the continent.”

In conjunction with the 2012 Olympic and Paralympic games more than 11 billion pounds of investment is set to flow into the capital between now and 2012, much of this funding goes into a range of various developments for the reconstruction of East London, particularly the transport system. Accessibility is an important aspect in tourism as tourism requires a journey, “similarly the view through the car windscreen has also had significant consequences for the nature of the visual ‘glance’, enabling the materiality of the city or the landscape to be clearly appreciated” (Larsen, 2001) Hence the mode of transportation is essential in creating an efficient tourist experience which undoubtedly brings revenue into the country. WTTC Chairman Geoffrey Kent commented on the infrastructural plan and said, “the government must put a long term infrastructure plan with at least a 15 year horizon. The 2012 Olympic Games will provide the platform, focus and budget for this long-term plan, which will drive the forecasted tourist demand.”

The Olympic Games is not the only highly anticipated major sporting event going to be held in London as it also plays host to mass events such as tennis at Wimbledon, cricket at Lord’s and the Oval, and rugby at Twickenham all representing pull factors that attract the tourists. Apart from sporting activities London is also rife with entertainment, art and music scenes renowned for edge and creativity. The cultural diversity and authentic music spots such as the ever so eclectic Camden Town is just one of the many interesting places tourist visit and due to consumerism succumb to marketing ploys that inevitably benefits the city’s economy. An article on “Late Night London” (2002) reports that 500,000 young people are estimated to go ‘clubbing’ in London on a Saturday night, the club scene again gains lucratively especially as in contrast to the United States the legal age to consume alcohol in London is 18 and hence teenagers deprived of such an experience in America can enjoy in London.

Tourism has brought exceptional to the city of London in terms of the economy and hence benefits the living standards of Lodoners of which become increasingly apparent. In reference to the Mayor’s plan, the quality of life of the locals increase tremendously with both leisure and employment opportunities. With all the development of travel and industry that is essential in fostering an efficient tourist system, in hindsight it also greatly benefits the locals, as accessibility is improved. The tourism sector accounts for 12 per cent of London’s Gross Domestic Product (GDP) and supports 13 per cent of London’s workforce. Growth in the tourism benefits London economically and crutially distributes that benefit across London’s sub-regions, communities and businesses through direct and indirect means or expenditure.

In conclusion, it is evident that tourism is important to London’s economy. It is not only the source of all job opportunities but it also requires development of less industrialized areas and hence benefits not only the economy but also society. For instance the concern of addressing Canary Wharf’s, located in London’s financial district, deepening infrastructure constraints, which according to a ‘world travel and tourism council’ press release is jeopardizing economic prospects and seriously affects the experience of millions of travelers across the world. The development of travel infrastructure is also essential as to portray London as a “Gateway to the UK” and also as the travel industry is one that holds many job opportunities that can be readily distributed within the population thus increasing the quality of life of the local Londoners.