Analysis of the Contribution of Tourism Industry in the UK

This report provides a detailed analysis of the UK tourism industry's contribution to the national economy. It examines the direct and indirect impacts of tourism, including spending by tourists, government spending, and related industries. The report highlights the industry's significant contribution to the UK's GDP and employment, discussing the creation of jobs and the multiplier effects across various sectors. It also explores the wider contributions of the tourism economy, such as enterprise formulation, economic and social inclusion, and sustainable development impacts. Furthermore, the report delves into the future outlook and challenges, including forecast growth, key drivers, and emerging trends like the digital world and emerging markets. It also discusses the cost of travel, opportunities for infrastructure investment, and the importance of continued marketing efforts. The report concludes by referencing relevant books and journals that support the analysis.

Study Skills

Table of Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
The wider contribution of the tourism economy ........................................................................5
Future outlook and challenges for the tourism economy ...........................................................6
Key trends over the next decade ................................................................................................6
.........................................................................................................................................................7
REFERNCES ..................................................................................................................................8

INTRODUCTION
Tourism has become a vast industry in all over the world. Having consideration of the
tourism industry in UK provides effective contribution to the economy of UK. This report
includes the contribution of tourism industry in UK with having direct impact and indirect
impact (Roberts, Hall and Morag, 2017). Direct impact shows the sectors which are completely
related to tourism industry and the indirect impact shows the sectors which are relying on the
tourism industry.
MAIN BODY
Tourism industry is playing a crucial role in the contribution of the economic
development within UK. The report will discuss the contribution of tourism industry on the basis
of three measures which are as follows:
Direct Industry- It includes the spending of tourists within UK, government spending
related to tourism industry and the industries which are directly related to the tourism industry
such as hotel etc. This industry has a significant delivery of economic development within UK.
This industry has delivered about €58.0 billion GVA i.e. it has contributed to around 4.1% of the
total UK GDP in 2013. In terms of employment, this industry has contributed to almost 1.75
million jobs within UK. The industry is growing rapidly and shows that it is increasing very year
with a huge contribution to the economic development within UK.
Tourism Economy- It includes the direct industry and the investments done by
government and private industries in the travel and tourism sector (Moutinho, and Vargas-
Sanchez eds., 2018). Apart from that it also includes the supply chain which provides inputs to
the direct industry. Since the tourism industry also incudes the different sector which are relaying
on it, therefore the contribution of such sectors cannot be underestimated. The direct and indirect
contribution of the tourism industry is about €127 billion and 9% of the total GDP within 2013.
Apart from that, this sector involves a contribution of around 3.12 million of jobs within this
sector in UK.
Total Contribution- It includes both both direct industry and tourism economy within
tourism sector. The total contribution of tourism sector in UK GDP is 11.4 percent. There are
important indirect impact of guests and visitors on economy as they interact with other
businesses in supply chain management. Total contribution in terms of direct, indirect and

induced impacts of tourism economy is equal to €161 billion or 11.4 percent of national GDP at
UK in 2013. It also includes induced effects of staff spending in tourism sector. This helps in
providing 3.79 million jobs all over world.
Tourism has created various opportunities for people and company to earn maximum
revenue for their business. As it assist in creation of large number of job opportunities to
individual, multiplier effects across nations and leverage of foreign visitors for tax revenues
(Mbaiwa, 2017). The main contribution made by UK is in terms of direct industry, tourism
economy and total contribution. Through this measure, nation and company can earn maximum
revenue that helps in growth, sustainability of country. Thus, in this way, tourism sector plays an
effective role in achieving goals and objectives of nations and business.
The wider contribution of the tourism economy
The tourism activities create huge benefits for a number of sector in UK. The tourism
economy has contributed to wider policy agenda such as enterprise formulation, economic and
social inclusion regeneration and sustainable development impacts. The tourism industry has
contributed in the context of multiplier effects across the nations, job creation and the tourism
economy's broader contribution by tax receipts.
Job creation
The marginal revenue needed by UK tourism for creating job is around fifty four
thousand dollars. The regression analysis suggests that elasticity of employment with
expenditure in Hotel industry is approximately 0.79. There is a one percent increase expenditure
of UK tourism, it is evaluated that employment will increase by 0.89 percent. It is estimated that
the amount which is required to support a job in tourism is around 47,500 dollars. This indicates
that additional spending is required for generating extra job in tourism.
Multiplier effects
The tourism encourages growth in the primary and secondary sector of industry as well as
it creates job in tertiary sector. This is defined as the multiplier effect. This is the amount of
money spent by a tourist to the economy of country. The money spent on Hotels creates job in in
hotels directly (Chaperon, 2017). In context of UK, if a hotel is established in the country then
job creation will take place. There is impact of consumer spending and supply chain that affects
increment in UK economy.

Leverage of foreign visitors for tax revenues
The export earnings for UK from tourism are around 22 billion dollars. According to the
simplified analysis of tax-take, 6.7 billion dollars are generated every year for exchequer from
the spending through APD, VAT and resultant corporation tax, employee/employer national
insurance contributions and income tax.
Future outlook and challenges for the tourism economy
Forecast growth
The key drivers of the forecast for the UK tourism economy includes consumer spending,
Bilateral exchange rates, investments, destination attractiveness and overall macroeconomic
performance. The tourism contribution to the economy depends on these drivers. According to
an estimation, it is measured that the direct contribution in value added terms increased to 119
billion dollars. This analysis estimates that 2.1 million jobs are given to tourism industry.
Tourism played an important role in the development of UK economy over a longer period. This
contributed 12.4 percent increase in GDP. This determines that around 3.8 million jobs increase
from 2019 i.e. a potential net increase of 630000 jobs. The demand from the international visitors
is expected to grow at a strong rate of 6.1 percent annual growth. The domestic tourism increased
by 3 percent (Butnaru and Haller, 2017). The price of travelling from UK is increasing with
higher fuel costs and exchange rate trends.
Key trends over the next decade
There are a number of factors that affects the tourism economy and it gives a mix of
opportunities and threats for economy of UK. Some of the key trends are given below-
The digital world – The tourism organisation must invest in the technology to remain
successful in the market. The travel and tourism industry will need to attract more number of
customers by using effective technologies and right products and prices. The advancement in
digital capabilities will help in performing activities at a global scale.
Opportunities from emerging markets in the longer term- The contribution of
emerging markets in creating value will need to be more rigorous. The government of UK
identifies long term growth of the industry in emerging markets in upcoming years. This creates
possibilities of strategic challenges for tourism promotion of the country. Britain will face many

challenges like balancing resources to ensure revenue generation and building a long term
position in market.
The cost of a trip - When the currency of UK i.e. pounds decreased, the international
visitors are more attracted towards visiting Britain. The travel and tourism industries engaged in
encouraging holidays in UK and making offers and discounts to increase the number of tourists.
Shaping future trends and opportunities- There are various opportunities that helps in
running business successfully in this sector (Claveria and Poluzzi, 2017). The areas where
government of UK generated the highest rewards are described below-
Investment in infrastructure- The increase in tourism economy of UK is enhanced by
maintaining and improving the international and domestic transport of UK. The government
takes care of roads, railways, aviation structure so that tourists will be impressed by transport
facilities of UK.
Continued support for business in the sector- This includes leverage opportunities like
using digital technologies, understanding and exploiting target markets and responding to
changes in legislation.
Continued targeted marketing effort- This involves addressing the weakness and
strength of the company. The UK government should respond to increasing desire for more
authentic and individual travel experiences while working with partner in business. UK targets
the clients or customers through online channels and social media. It is important for the
government of UK to maintain and build awareness of strong tourism offer in UK.

REFERENCES
Books and Journals
Butnaru, G. and Haller, A., 2017. Perspective of sustainable rural tourism in the United Kingdom
of Great Britain and Northern Ireland (UK): Comparative study of β and σ convergence
in the economic development regions. Sustainability. 9(4), p.525.
Chaperon, S., 2017. Tourism industry responses to public-private partnership arrangements for
destination management organisations in small island economies: A case study of
Jersey, Channel Islands. International Journal of Tourism Policy. 7(1). pp.23-41.
Mbaiwa, J. E., 2017. Poverty or riches: who benefits from the booming tourism industry in
Botswana?. Journal of Contemporary African Studies. 35(1). pp.93-112.
Moutinho, L. and Vargas-Sanchez, A. eds., 2018. Strategic Management in Tourism, CABI
Tourism Texts. Cabi.
Roberts, L., Hall, D. and Morag, M., 2017. New directions in rural tourism. Routledge.
Claveria, O. and Poluzzi, A., 2017 Positioning and clustering of the world’s top tourist
destinations by means of dimensionality reduction techniques for categorical data. Journal of
Destination Marketing & Management. 6(1). pp.22-32.
REFERNCES
Books and Journals