An industry forum organised by retail tourism specialist Global Blue has issued a range of recommendations it says the government must implement to safeguard the tourism industry against European competitors.
More than 200 heads gathered at the event in London to hear industry leaders Gordon Clark, head of Commercial at Global Blue; Gavin Hayes, director of Let Britain Fly; Helen Dickinson, director general of the British Retail Consortium and Michelle Emmerson, CEO of Walpole, discuss what the new government needs to do regain tourism spend growth and secure the UK’s position as a leading visitor destination.
International spend growth in the UK has slowed, and following a year of political unrest and economic decline in key spending nations, total tax-free spend in the UK dropped for the first time in 2014, down -3%, according to Global Blue data.
However, the external factors did not have as big an impact on top European competitors. Global Blue figures reveal France saw growth of +8% in 2014 and Italy was unaffected with 0% change YOY. The organisation claimed the figures prove the UK needs to find solutions to barriers that are hindering UK tourism and the economic opportunity these visitors bring.
“The decline in international spend in 2014 while France and Italy remained unaffected should sound alarm bells, and with spend up just +4% YOY to date for 2015 action must be taken to facilitate visitors’ journeys and drive the economic potential they bring while here,” said Gordon Clark, head of Commercial of UK and Ireland at Global Blue. “Tourism VAT, the visa application process, airport capacity and Tax Free shopping solutions have been on the agenda lacking progress for too long and it is vital the Government takes the necessary steps now before the UK loses out further to European competitors.”
Global Blue’s recommendations to the government include:
Cut tourism VAT to 5% on visitor accommodation and attractions. The British Hospitality Association states that a reduction would increase revenue to HM Treasury by £529 million over the first five years and £4.4 billion over the first decade. UK, Slovakia, Lithuania and Denmark are the only EU member states without a reduced Tourism VAT rate, and Lithuania will now reduce Tourism VAT in 2015. Tourism is the UK’s sixth largest export-earner and the only export subject to VAT. A tourism VAT cut will stimulate growth in tourism and the wider UK economy significantly.
Facilitate Chinese visa applications: UK China Visa Alliance (of which Global Blue is a founding member) estimates that the UK loses up to £1.2 billion annually from Chinese tourists as they choose to visit our European neighbours instead. Last year, the Home Office accepted the proposal from the UKCVA Alliance for the launch of a pilot of a new UK-Irish Chinese visa agreement that sees the creation of a one-stop shop with Belgium to allow Chinese travellers to apply for both a Schengen and UK visa at the same time. The pilot was confirmed by the Home Office on 18 June and confirmed to launch on 1 July this year. However, Belgium issues only a small number of visitor visas in China each year (16,000 compared with 390,000 UK visitor visas in 2014) so there is still significant need to push roll out in larger Schengen countries to put the UK on the same playing field as France.
UK digital tax-free solution: All parties agree the need to digitise Tax Free shopping in the UK, following the pilots in France, Italy and Austria. The decision reached the final stages of moving towards a tender for the launch, but the Treasury has now confirmed the project has not yet received Cabinet approval and is, again, being delayed. The Government must push approval from the Cabinet office to get the tender started so that the UK does not fall behind European neighbours.
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