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VisitBritain Nurture Project March 2014
Executive Summary
VisitBritain is the strategic body for inbound tourism to Britain – a non-departmental public body funded by the Department for Culture, Media and Sport – it is responsible for promoting Britain worldwide and developing its visitor economy.
The Nurture Project involves VisitBritain working closely with partners to make strategic but low cost interventions to support tourism growth in countries which are showing strong tourism growth potential and are priorities for HM Government, but where VisitBritain does not have a staffed presence.
It aims to provide a model for VisitBritain respond to global opportunities with ease and confidence, delivering growth and helping achieve the ambition to attract 40 million visitors by 2020. The GREAT campaign, increasing importance of the Soft Power and Emerging Powers agendas and commercial partner appetite to engage with VisitBritain outside its core markets make this an opportune moment for VisitBritain to explore how it can broaden its global footprint.
Three principles underpin the project:
1. Working with commercial and public diplomacy partners; 2. Utilising existing VisitBritain’s assets and resources without diluting focus on priority markets; 3. Maintaining a light footprint.
Eight markets have been identified to test this new approach over the next financial year: Mexico, Indonesia, Turkey and South Korea (all GREAT markets) and South Africa, Singapore, Malaysia and New Zealand.
The Nurture Project can deliver significant long term returns for the UK tourism industry and UK plc. Specifically:
Deliver growth in tourism to Britain, helping achieve the 2020 ambition;
Help break into new markets, laying foundations for UK travel trade to invest;
Contribute to a lasting legacy from the 2012 Olympic and Paralympic Games;
Increase the UK’s exports and help attract inward investment;
Support the UK prosperity, security and soft power agendas by strengthening perceptions of Britain in Asia, Latin America and Africa.
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Paper Scope
This paper is pan-market in scope and sets the broad framework for activity in the medium term (2014-2016). It sits alongside an opportunities calendar and two market specific documents, namely competitive assessments and market plans. Together they will inform the nurture market activity in each market.
Project Overview Paper Overarching all nurture markets. Set out rationale for activity, broad approaches to test and desired outcomes.
Competitive Assessments Opportunity Calendar 1 for each nurture market. Detailed analyses setting Maps opportunities over the next FY – allowing VB to out market conditions and competitive position. select, prioritise and manage activity.
Market Plans 1 for each nurture market. Strategic plans set out how we can transform our competitive performance.
Activity in Market
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Rationale
In April 2013 VisitBritain published a Tourism Strategy ‘Delivering a Golden Legacy: A Growth Strategy for Inbound Tourism 2012-2020’. This set an ambition for Britain to attract 40 million visitors and earn £31.5 billion from inbound tourism by 2020. Attracting 40 million visitors in 2020 would represent a significant increase in tourism to Britain compared with 2012 levels, namely 9 million additional visits a year and £8.7 billion additional visitor spend. Growth in tourism to Britain would also benefit the UK’s image and in turn enhance soft power, supporting wider government objectives.
79% of the growth in visits is forecast to come from VisitBritain’s 22 core markets. The remaining 21% of the projected growth is required from markets where VisitBritain is not currently active.1 The ‘rest of the world’ therefore has a key role to and VisitBritian has recognised that it needs to consider how it can do more to support growth from these markets.
Given its limited resources, VisitBritain will not be able to open overseas promotional offices in new markets in the foreseeable future, or to mirror the intensity of activity it undertakes in its core markets. The purpose of the nurture project is to developing and test a fundamentally different approach to ‘nurture’ inbound tourism from the most promising markets in the ‘rest of the world’.
Fig 1: VisitBritain Global Footprint
VisitBritain Established Presence Approach
Need to develop and test a new,
No fundamentally different approach. VisitBritain
Physical Presence ‘Always On’ activity (Retail, English Language trade and consumer Digital Platforms).
1 VisitBritain did have a presence in some of the most promising of these markets until 2010 when it adjusted its global footprint to accommodate a significant reduction in core budget. 3 EM/VB/March 2014 UNCLASSIFIED UNCLASSIFIED
Objectives & Benefits
Objectives
The overarching aim of the Nurture Project in the financial year 2014/15 is to provide a robust evidence-based model that VisitBritain can use to respond to opportunities in non-core markets. Through the trial process, VisitBritain will also begin to build relationships with key stakeholders in the selected markets and improve Britain’s competitive position.
Activity will focus on growing the leisure segment, while recognising that business, study and VFR can act as powerful drivers of leisure.
Benefits
The Nurture Project can deliver significant long term returns for the UK tourism industry and UK plc.
Deliver growth in tourism to Britain, helping achieve the 2020 ambition;
Help break into new markets, laying foundations for UK travel trade to invest;2
Contribute to a lasting legacy from the 2012 Olympic and Paralympic Games;
Increase the UK’s exports and help attract inward investment;
Support the UK prosperity, security and soft power agendas by strengthening perceptions of Britain in Asia, Latin America and Africa.
2 This is particularly important given that the UK travel trade landscape is highly fragmented and the industry dominated by SMEs. 4 EM/VB/March 2014 UNCLASSIFIED UNCLASSIFIED
Why Now?
This is the right time for VisitBritain to develop and test this approach:
Global Economic and Demographic Trends
The centre of global economic power and influence is increasingly shifting towards emerging economies in Asia and Latin America (Fig 2)3. VisitBritain has already responded to these global shifts, stepping up its activity in the BRIC markets while recognising the continuing Fig 2: World Economic Centre of Gravity importance of big volume established source markets. , Attention is now turning to the second generation of emerging market pace setters. Countries such as Mexico, Indonesia, South Korea and Turkey (Jim O’Neill’s ‘MIST’ countries) have strong economic records, rapidly expanding middle classes, are home to increasing numbers of High Net worth Individuals and are urbanising fast.4 They are geographically well placed – with Mexico bridging North and South America, Turkey similarly bridging Europe and Asia and Source: McKinsey Global Institute Analysis South Korea and Indonesia on China’s doorstep. Mega-metropolises in these markets are centres of wealth and connectivity, and their growing populations increasingly have both the means and aspiration to travel.
The GREAT Britain Campaign
In bringing together the Foreign & Commonwealth Office, British Council and UK Trade & Investment, the GREAT Britain campaign has unified VisitBritain’s public diplomacy partners across government under a single brand and ambition (to show Britain is a great place to visit, and in which to work, invest and study) and created a strong platform for joint activity. GREAT campaign vehicles such as priority market plans (where these overlap with VisitBritain’s nurture priorities) and the GREAT Challenge Fund offer good opportunities for VisitBritain to work with its public diplomacy partners to grow tourism.
Commercial Partner Appetite
A number of VisitBritain’s existing commercial partners are increasingly looking beyond the BRICs and turning their attention to emerging markets in Asia and Latin America.
Competitor Landscape
In some emerging markets the current paucity of realistic competitors presents a narrow window of opportunity to establish a substantial share of voice for Britain with modest resources. Malaysia for example has been the source of some of the fastest growth in visits and spend of any of Britain’s inbound markets in 2013 and inbound visits are forecast to grow 60% by 2020. Some of VisitBritain’s strongest competitors, such as Atout France,
3 Fig 2 plots the aggregate centre of the world economy by weighting national GDP by each nation’s geographic centre of gravity, and shows that we are observing one of the most significant economic transformations the world has seen. Until the mid-20th century, there was a shift in the earth’s balance toward Europe, and, latterly to the United States. The rise of Japan in the 1980s helped change direction. It has been in the last decade, 2000 – 2010, however that we have witnessed the fastest rate of change. During this period the world’s economic centre of gravity has shifted by 140 km per annum, pulled by the furious pace of development in the emerging economies. 4 Jim O’Neill ushered in a decade long investment boom in 2001 when he coined the phrase BRICs. The Goldman Sachs Asset Management Chairman identified Mexico, Indonesia, South Korea and Turkey as the next generation of emerging economies, and are the four biggest markets in the Goldman Sachs N-11 Equity Fund. 5 EM/VB/March 2014 UNCLASSIFIED UNCLASSIFIED
ENIT (Italy), Brand USA and the German National Tourist Board (GNTB), are however conspicuous in their absence.
Where our realistic competitors are active (with the exception of Tourism Australia and the New Zealand Tourist Board in Asia-Pacific), engagement is often either in its early stages or to a lesser degree than in established markets. This is not because these markets don’t offer strong growth prospects: as table 1 demonstrates, they clearly do, but because their importance is only beginning to be appreciated.
We can seize this advantage to get ahead of our realistic competitors now - if we fail to engage with these markets we will be forced onto the back foot. Britain’s late entry into the Chinese market serves as a good illustration of the disadvantages of entering a market once competitors are well established. Significant investment is now required to gain market share.5
Table 1: Competitive Landscape and Market Potential
Realistic competitors with significant activity* Forecast % Growth 2012- 2020 Market Brand Atout GNTB ENIT Turespaña Canadian Switzerland Outbound Britain USA France Tourism Tourism Trips Inbound Commission (000s) (000s) Indonesia Yes Yes 75% 163% Malaysia Yes 60% 130% Mexico Yes Yes Yes Yes 48% 132% New Zealand Yes 51% 63% Singapore Yes Yes Yes 95% 48% South Africa Yes 34% 60% South Korea Yes Yes Yes Yes Yes 75% 118% Turkey Yes Yes 42% -2% *Not including Tourism New Zealand or Tourism Australia.
Capitalising on the Olympic Boost
Perceptions of Britain are positive in many of the nurture markets but are often outdated. A pre-Games FCO survey on Korean perceptions of the UK image for example found that 80% of the South Korean public think of Britain as a nation of gentlemen with bowler hats in foggy weather. We need to refresh Britain’s image and ensure that our tourism offer is well understood.
The Olympic and Paralympic Games were a strong step in this direction, putting Britain top of mind and materially improving perceptions. While many of the nurture markets are posting strong growth in 2013, this advantage will quickly fade unless we capitalise and build on the Games positioning now.
Upcoming events such as the Commonwealth Games and Rugby World Cup (which will resonate strongly in markets such as Malaysia, New Zealand and South Africa) represent a good opportunity to build on the Games Legacy.
5 Chinese tourists can only travel to countries which have been granted ‘Approved Destination Status’ (ADS). ADS was first introduced in the early 1990s for destinations in South East Asia such as Singapore, Thailand and Malaysia. Australia and New Zealand were the first of Britain’s realistic competitors to be granted ADS in 1999. Germany and France enjoyed ADS courtesy of being part of the Schengen bloc from late summer 2004. The UK/China Approved Destination Status Memorandum of Understanding was signed on 21 January 2005.
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Principles
Three principles will underpin all nurture activity to ensure consistency and value for money:
1) Working with Partners
VisitBritain already works closely with a range of partners and this partnership approach will be crucial to its work in nurture markets.
Partners who are active on territory will have a good network and market insights which can help inform and facilitate VisitBritain’s nurture activity.
VisitBritain’s commercial and public diplomacy partners, the Visits and, to a lesser extent, the UK travel trade, already organise a wide range events and campaigns targeting consumers and/or the travel trade in nurture markets. Examples range from Challenge Fund activity, to GREAT Festivals to the Thompsons Holidays / ASA road show in South Africa. VisitBritain may be able to help public diplomacy partners weave a tourism message into their existing events or add value to other partners events.
Partners may also have their own communication channels through which VisitBritain tourism messages can be disseminated.
2) Utilising Existing Assets and Platforms
VisitBritain does not have sufficient resources to invest in creating a plethora of bespoke assets and platforms for the nurture markets. It does however have a wealth of existing assets, resources, and tourism expertise. In many cases, these can be extended to nurture markets with minimal investment. In others, creative thinking and minor adaptions would enable it to ‘sweat’ its existing resources.
3) Light Footprint
The Nurture Project objectives must be achieved against the background of ongoing reductions to VisitBritain’s budgets and operating costs. A flexible approach and light footprint are therefore essential. Delivery of activity through commercial partners, use of HMG platforms and digital and social media are key. A light footprint will enable VisitBritain to adopt an opportunity driven approach to non-core markets.
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Approach
Table 3 outlines five broad approaches to be trialled. It represents a menu of possible activity: different approaches will be required in different markets. Activity needs to be highly focused and opportunity driven. The market plans will identify which one or two of these work streams should be trialled in each market. It is anticipated that in most markets activity will be trade rather than consumer facing.
Table 3: Proposed Approaches
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Case Study - Jakarta Garuda Travel Fair
VisitBritain and the FCO team in Jakarta worked together at the Garuda GATF consumer travel fair in September 2013. It proved an excellent opportunity for VisitBritain to work with FCO, interact with both consumer and trade in market, gather market intelligence and recruit for BritAgent, Hosted Buyers Marketplace and Destination Britain 2014.
VisitBritain provided the following support:
Access to VisitBritain GREAT Toolkit GREAT images for PILLARS ‘Sport is GREAT’ (Steven Gerard image) and ‘Food is GREAT’ (afternoon tea image) Digital media element –Lovewall Print media - BritAgent, Retail, UKVI, GREAT week flyer, t-shirts, maps Manpower on stand
Stand
Concept ‘This is GREAT Britain’ stand Interactive with 6m image backdrops for people to take photographs in front of depicting ‘Sport is GREAT’ and ‘Culture is GREAT’: pillars that resonate with Indonesian travellers Classic telephone box with ‘Keep Calm and VisitBritain’ wording. Social media was all of a flutter as every passing visitor just had to have their photo taken with the classic red telephone box.
Technology
A technological stand with a number of PC’s showcasing Lovewall and iPads running an interactive app of London. A large 60 inch TV was also displayed with a large map of the UK Open ‘welcoming’ stand as accessible from all sides
Results
Enduring relationship between VisitBritain and Embassy forged, creating the foundations for future collaboration Engaged with more than 1,500 people over the 3 days. Connected with over 50 key travel trade and influencers in market. Extended GREAT brand reach VisitBritain recruited new buyers for its travel trade events Hosted Buyers’ Market Place and Destination Britain. VisitBritain sourced market insights and competitor analysis
Measuring Impact
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Evaluation – Measuring Outcomes
Evaluation is a critical component of the nurture market project. Given the constrained nature of the budget it is essential to understand the impact of any activity undertaken. Only robust evaluation can allow us to track progress and the effectiveness of the five approaches being trialled. Good evaluation will allow us to understand the impact and value of investment, directly informing how we execute future activity in non-core markets.
As far as possible, existing VisitBritain methodologies will be used to measure activity. Nurture market sample sizes for VisitBritain’s incremental value surveys may however prove to be too small to allow individual market analysis at present, so additional data will also be collated to give a more comprehensive picture.
Some activities may be difficult to measure using existing VisitBritain methodologies or difficult to ascribe a financial value to. Examples of this could be strategic work with airlines and airports to support new routes to Britain or a VIP travel trade FAM trip to Britain.
This does not necessarily mean that such activity has no value and should not preclude activity from taking place. In such cases:
SMART objectives needs to be established. Where there is a partner element, objectives should also be agreed with the external partner/s; The activity should absorb little or no VisitBritain financial resource; Following the activity, active follow up should seek to identify concrete outcomes, assessed against the SMART objectives.
E.g. an activity to engage with VIP travel trade – has there been an increase in the number of Brit-Agent graduates from their organisation? Has this resulted in more Britain packages being promoted and sold in their brochures?
Measuring Market Performance
While the aim of the nurture market project in the next financial year is to test the broad approaches, measuring market performance is also important. The following metrics will be collated:
Table 4: Market Performance Metrics
Metric Source Visits, Nights and Spend Office for National Statistics, International Passenger Survey Market Share within the competitor set International Passenger Survey & Tourism Economics. Perceptions Nations Brand Index, ad hoc surveys e.g. Arkenford.
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Markets
Eight markets have been selected to test the nurture market approach on the basis that they meet at least two of the below criteria (see table 5):
1. Strong record and growth prospects; 2. Non-tourism GREAT market; 3. Commercial partner is active and demonstrated appetite to work with VisitBritain; 4. Ease of access and of doing business.
This approach, particularly criteria 1 and 2, ties in with broader Government priorities.
The eight markets selected are Indonesia, Malaysia, Mexico, New Zealand, Singapore, South Africa, South Korea and Turkey. The Nurture Market Project forms part of a broader VisitBritain effort to adopt a more nuanced approach to market activity. This selection does not completely preclude activity in other markets should exceptional opportunities arise.
Fig 3: Nurture Market Map
There are marked differences between these markets, and this will influence our approach and the projects tested.
The markets can be clustered into two groups according to broad characteristics.
Group 1 – Mexico, Indonesia, South Korea, Turkey Identified by Jim O’Neill as the next generation BRICs, these emerging markets are prioritized by Government through GREAT and the Emerging Powers Initiative. Broadly speaking, engaging in these markets is arguably more risky and more challenging for VisitBritain (they are non-English speaking, have lower scores on the World Bank’s ease of doing business index and while their economies are growing fast they are considered by most economists as more fragile). Their strategic locations and burgeoning middle class populations however mean that they offer considerable rewards in the long-term.
Group 2 – Malaysia, Singapore, New Zealand, and South Africa These markets are all English speaking, relatively mature tourism markets with good connectivity and growth prospects. They may prove a more suitable audience for London and beyond messages.
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Table 5: Nurture Market Selection Table 5: Nurture Market Selection
Growth Record & Prospects Non Ease of access & doing business Commercial Five Year Growth Forecast Visits Tourism Visit Visa Connectivity Key Language(s) Ease of Doing Market Partner is Britain (2007-2012 IPS) to Britain 2012- GREAT Required (Direct seat Business 2020 (IPS, TDM) Active capacity, capstats) (World Bank Rank) Key Market + 40% visits 0 Malay +113% spend Garuda Indonesia 164% Yes Yes Yes (Bahasa 128 direct Indonesia) flights May 2014. -4% visits -36% spend Mexico 118% Yes Yes No 397,450 Spanish 48
Group 1 Group + 39% visits 272,596 South Korea + 26% Spend 86% Yes Yes No All Korean 8 Heathrow - 4% visits Turkey - 34% spend -14% Yes Yes Yes 2,856,342 Turkish 71
+ 37% visits 360,620 English + 86% spend Malaysia 60% No Yes No All Malay 12
Heathrow (Bahasa Malaysia)
-21% visits 202,506 New -7% spend 69% No Yes No All English 3 Zealand Heathrow +55% visits 944,788 Group 2 Group Singapore +118% spend 37% No Yes No Heathrow, English 1 Manchester -40% visits 772,755 South Africa -23% spend 55% No Yes Yes All English 39 Heathrow
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Delivery
VisitBritain will play a leadership role in developing tourism from the nurture markets. It will provide strategic direction through developing competitive assessments and market plans for each nurture market to inform activity. Activity may be delivered by VisitBritain directly, or by proxy through partners. VisitBritain will co- ordinate, monitor and measure the outcomes of tourism activity in the nurture markets. Partner appetite to work with VisitBritain will be key in facilitating delivery.
Fig 4: Activity Flow Diagram
Time Frame
By April 2015 (phase I) VisitBritain will have developed and begun to test the five approaches identified above. While it will not have a full set of evaluation results, by Q4 FY 2014/15 it will be better placed to judge the effectiveness of the nurture market project, review and refine it and begin to plan activity for the next FY
•Develop core principles and project Review and based approach; •Begin Refine •Establish robust implementation, activites Q4 FY evidence base Q1-3 FY testing projects in Q4 FY appropriate Review 2013/14 activity; 2014/15 markets markets; 2014/15 •Plan actvity for FY Plan activity 2014/15; •Robust evaluation. for FY •Begin build 2015/16 stakeholder support.
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Annex 1: Nurture Market Opportunities and Potential
Indonesia
Indonesia is the world’s 4th most populous country and 16th largest economy but ranks just 32nd for outbound travel expenditure. Relative to its size, it has a longer way to go to fulfil its potential as a tourism source market compared with the other nurture markets but this arguably makes it a particularly exciting opportunity. There is a growing middle and upper class for whom travel is an affordable aspiration and, with a direct flight from Jakarta to London to launch in 2014, the time could be right to broaden VisitBritain’s engagement with the market.
Indonesia currently delivers the smallest number of visits and among the lowest total spend for Britain of any of the nurture markets, but high spend per visit indicates that those who do come are valuable. There is interest in Britain, particularly in certain football clubs, but numerous competitors are already in market and perceptions data suggests that more needs to be done to distinguish Britain’s tourism offer. The most visited European destination is Holland, thanks to its historical ties and direct air connectivity, though the Dutch tourism board is not engaged in the market. One of the biggest challenges for Britain will likely be the exchange rate — this is volatile and the last six months of 2013 saw a very sharp decline in the value of the Indonesian Rupiah against sterling (as well as other major currencies), which will impact notably on the cost of visiting.
Malaysia
Malaysia has been posting among the fastest growth in visits and spend of any of Britain’s inbound markets in 2013 and looks set to push back into record territory following years of undulation. The Malaysian outbound market in general has grown rapidly over the past decade and is forecast to double in volume over the next one. Britain is well placed to benefit as one of Malaysia’s top long-haul destinations, and the most visited country in Europe. Britain could also profit from the (current) lack of activity from our major European competitors, albeit several competitors in the Asia-Pacific region are increasingly investing their resources in Malaysia. The available evidence suggests the market offers strong prospects, but further engagement with the trade will be important in refreshing our knowledge of current perceptions of Britain in Malaysia, barriers to visitation and travel trends.
Mexico
While very much still a developing market, there is nevertheless a growing portion of Mexican society that has the desire and means to undertake international travel. While the majority of this is forecast to continue heading to the USA, a number of European destinations including Britain are among the top-ten most visited destinations by Mexicans. While Britain’s market share is forecast to remain steady at 0.5% over the next decade, other destinations are expected to start to surpass the number of Mexican visitors it attracts. Britain struggles to be seen as better than its realistic competitors for any tourism attributes, and is also deemed expensive and poor value for money.
Nevertheless, Britain does have some strengths and opportunities at its disposal, with no visa requirement in place for short-term Mexican visitors, a strong heritage and football offering that Mexicans connect with well, and the afterglow of the Olympic Games, which have generated greater enthusiasm for visiting Britain in Mexico. Digital platforms are also rapidly gaining traction in Mexico, which could arguably provide particularly cost- effective channels to reach outbound travellers, and engaging with the Mexican trade may also prove fruitful due to their important role in bookings.
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New Zealand
New Zealand is the smallest of VisitBritain’s nurture markets in terms of population and outbound travel but arguably enjoys the strongest bonds with Britain of all, its society having been built on the British model and a large majority of the population being of predominantly British European descent. Ancestral links, family ties and cultural overlaps all help to ensure that Britain is one of the most visited countries in the world by New Zealanders. Visitors from New Zealand spend more and stay much longer than the average visitor to Britain, and demonstrate some of the best regional spread among the nurture markets. Work is however required to keep New Zealand energised about visiting Britain and counter a potential sense of over-familiarity. Visits and spend have both fallen from their pre-financial-crisis peak and are currently flatlining, while outbound travel and spend have been demonstrating growth. Forecasts indicate that visits will soon start picking up and roughly double in volume by 2023, helping Britain to marginally increase its market share, but 2013 appears to have yielded no growth from the market, and Britain’s market share remains some way off the 9% registered in the year 2000. VFR has maintained a notable lead over holiday visits in the share by journey purpose for more than a decade, something else that we may wish to challenge.
New Zealanders may be a little more traditional in some aspects than other developed western nations, traditional media continuing to play an important role despite growing use of new platforms, and travel trade dependency is also remarkably high. Despite Sterling having consistently depreciated against the New Zealand Dollar since 2006, and Britain performing well against key competitors for value perceptions, good value is still an important consideration for the market due to high costs incurred by ultra-long-haul journeys and long stays — that special offers and deals are the second-most cited influencer on destination choice after friends and family further underlines this.
Singapore
Singapore may be a small city state, but with high living standards, prosperity and international connectivity, it punches well above its weight among the nurture markets when it comes to outbound travel volumes both at present and in future forecasts. This is however linked to its small size and close proximity to other countries, two-thirds of all outbound trips going to neighbouring Malaysia. Britain has been enjoying record levels of visits and spend from Singapore in recent years, and Singaporeans generate a high spend per visit too, making this a particularly lucrative market.
While the country is wealthy, growth in low-cost carriers has been attributed with providing a big boost to outbound travel, and research shows Singaporeans to be much more receptive to special offers when selecting a destination than average — combined with perceptions of Britain being expensive, it would be just as important to highlight the better exchange rate and opportunities for value in Britain as its luxury offering. Some caution also needs to be taken when drawing conclusions on this market due to a high proportion of non-Singaporean nationals in the visitor mix to Britain — indeed, only 52% were Singaporean in 2012, the lowest proportion of local nationals of any nurture market.
South Africa
South Africa is currently Britain’s top yielding nurture market for both volume of visits and spend, and Britain is South Africa’s top non-African destination, positioning it strongly in the competitive context. Nevertheless, the introduction of a visa regime in 2009 coupled with British air passenger duty, South African price sensitivity and a weak South African Rand, have seen visits and spend fall to their lowest levels in decades within the past few years, a situation that has only recently begun to reverse.
The market offers a number of opportunities, both within the traditional white affluent VFR segment that forms the core of visits to Britain as well as some newer target audiences. Economic and societal changes have seen the rapid growth of an affluent black middle class that is becoming an attractive segment to destination marketers, and South Africans’ affinity for many sports also played in Britain could also provide a strong niche to
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South Korea
South Korea is currently posting strong growth in both visits to and total spend in Britain and, with outbound travel volumes forecast to double in the next ten years, could prove very attractive for targeting. Overall perceptions of Britain are positive, and Britain has an edge in terms of its educational offer too, arguably only surpassed by the US. It is however not without its challenges, Britain being perceived as expensive, numerous competitors already engaging with the market, and a clear sensitivity to economic shocks. South Korean visits tend to be very London focused and are reasonably low spend (per head) compared with most nurture markets, but still above the average market. South Korean visits to Britain are holiday heavy, and trade dependency is high, so good relations and cooperation with relevant trade players will be key to success. South Korea is one of the world’s most tech-friendly societies, so digital channels may also prove important in messaging.
Turkey
Turkey is a country with strong prospects but presents arguably the biggest challenge of any nurture market in terms of encouraging tourism to Britain. Perceptions research shows Britain to both suffer from very weak perceptions in Turkey and struggle to stand out against realistic competitors on any particular tourism elements. Holidaymakers account for a below-average proportion of the Turkish market, which is more heavily weighted towards business and study visits than the other nurture markets, and the trade does not appear to be knowledgeable enough or have the demand to sell product beyond London. There is the further barrier of visas being required to visit Britain, and the Turkish Lira has recently depreciated significantly against the Pound, and forecasts suggest that inbound tourism to Britain from Turkey is set to decline, despite a growing general outbound market.
The market is not without its positive sides, visitors being high spenders, excellent air capacity existing between the two countries (even when stripping out the seaside destinations favoured by British outbound travellers) and increasingly widespread web connectivity that could allow for cost-effective messaging.
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Annex 2: Nurture Market Key Statistics
Market Size, Growth Record and Potential
Inbound to Britain 2020 Five-year growth to Outbound Trips Inbound to Britain 2012 (000s, Tourism Decision Britain (000s, Tourism Decision Metrics) (IPS) Metrics, IPS) (2007-2012 IPS) Market Spend 2020 2012-2020 Visits Spend Spend per 2012-2020 2012 2020 Visits Spend per Predicted Growth (%) (000s) (£m) visit (£) Growth (%) visit (£)
Indonesia* 7,578 13,285 75% 27 68 2,519 71 163% 40% 131% 136% Mexico 16,814 24,880 48% 84 43 512 183 118% -4% -36% -29%
South Korea 15,100 26,474 75% 158 103 652 294 86% 39% 26% 14% Group 1 Group Turkey 5,737 8,131 42% 145 150 1,034 124 -14% -4% 34% -6%
Malaysia 9,301 14,856 60% 116 139 1,198 186 60% 37% 86% 48% New Zealand 2,978 4,772 60% 175 165 943 296 69% -21% 7% 15%
Singapore 19,847 38,709 95% 154 193 1,253 211 37% 55% 118% 30% Group 2 Group South Africa 5,575 7,470 34% 211 200 948 327 55% -40% -23% 21%
Notes: Due to low sample, Indonesian figures are volatile. Five-year average for spend per visit is £1,730, whereas for the other markets there is a lot less variance. Growth in spend and spend per visit may therefore be exaggerated. Conditional shading applies to individual columns, not rows.
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Visit Characteristics
Regional spread Inbound to Britain 2012 by purpose Nationality of visitors to Britain 2012 (% staying visits, 3-year average IPS 2010- (IPS, all-market averages in %) (IPS) 2012). NB totals per market greater than 100% Market
Holiday Business VFR Study Misc Rest of London Scotland Wales Local British Other (38%) (24%) (29%) (2%) (7%) England
Sample Sample Sample Sample Sample Sample Sample size too
Indonesia* 46% 17% 24% 4% 9% size too size too size too size too size too size too small small small small small small small
Mexico 77% 5% 9% 4% 5% 80% 25% 6% 2% 87% 2% 11% Group 1 Group South Korea 64% 20% 11% 3% 3% 79% 23% 4% 2% 94% 3% 3% Turkey 31% 38% 22% 7% 2% 58% 46% 3% 1% 80% 13% 7%
Malaysia 42% 11% 34% 5% 8% 65% 41% 10% 2% 85% 9% 6% New Zealand 39% 7% 47% 0% 7% 57% 58% 11% 6% 71% 25% 4%
Singapore 34% 26% 34% 1% 6% 70% 38% 7% 2% 52% 29% 19% Group 2 Group South Africa 23% 22% 47% 0% 8% 58% 51% 7% 3% 72% 17% 11%
Note: Indonesian data is based on three-year averages (2010-2012) for greater accuracy. Conditional shading applies to individual columns, not rows.
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Access & Route to Market
Travel trade Direct flight seat (IPS 2012, all-market averages in %) Visa for short-term visit? capacity to Britain Market (cost = £83) (includes stopping flights Trip bookings Accommodation on one flight code) via travel agent bookings via travel (23%) agent (31%) Sample size too Indonesia* Yes. Two VACs 0 Sample size too small small
p 1 p Mexico No 397,450 57% 55%
South Korea No 272,596 48% 55% Grou Yes. Five VACs and two Turkey 2,856,342 30% 38% mobile biometric clinics
Malaysia No 360,620 34% 42% New Zealand No 202,506 52% 53%
Singapore No 944,788 28% 29% Group 2 Group South Africa Yes. Five VACs 772,755 43% 42%
Note: In nearly all cases, trade dependency for nurture market visitors is higher than is the case in the average market. NB this data relates to visits for all journey purposes. Conditional shading applies to individual columns, not rows.
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