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UNCLASSIFIED 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. 1 EM/VB/March 2014 UNCLASSIFIED UNCLASSIFIED 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 2 EM/VB/March 2014 UNCLASSIFIED UNCLASSIFIED 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.