the economic impact of tourism 2018 - city of london · 2019-07-26 · city of london – tourism...

M

City of London The Economic Impact of Tourism 2018 July 2019 Commissioned by: City of London Corporation RJS Associates Ltd E: [email protected]

City of London – Tourism Impact 2018

1

1 Introduction 1.1 Background

The following report provides a range of data on the economic impact of tourism in the City of London. This data has been based on a bespoke economic impact model developed for the City of London by RJS Associates Ltd. 1.2 Approach

The model draws on a range of data sources and works in three stages.

• Stage one quantifies the volume of visits to the City • Stage two translates these into direct spend • Stage three generates estimates of impact in terms of Gross Value Added and

jobs supported by tourism spends. It takes account of leakage (tax) and displacement.

The volume (and spend) estimates are based on five primary market groups, which have different ‘drivers’ (i.e. data that is used to quantify their relative volume). These are summarised in the following table: MARKET GROUPS Market Group Definition Key Drivers of volume Staying visitors – commercial accommodation

Visitors staying overnight in commercial accommodation in the City of London (including hotels, serviced apartments and AirBnB).

Occupancy and supply

Staying with friends and relatives

Visitors staying with people living in the City of London

Population

Day visits (from a holiday base)

Visitors staying away from home in holiday accommodation (typically elsewhere in London) and visiting the City for part of a day

Visits to City attractions

Leisure day visits from home

Day visitors travelling from (and returning) home and visiting the City for a range of activities. A trip is defined as at 3hrs+ and something that the visitor does not do regularly. This group excludes residents of, and workers in, the City.

Visits to attractions Events

Conference and meetings (day)

Visitors coming for a business event (conference, meeting etc.) of 3hrs+ in a paid-for venue

Venue supply and performance


2

The model provides output data on these market groups. It also provides outputs on two other dimensions – main purpose of visit (divided between business and leisure) and visitor origin (divided between domestic and overseas). Appendix 1 provides more detail on the assumptions and data sources used in the modelling approach. 1.3 Definitions

In addition, to the market groups defined in section 1.2 above, other terms are used in this report. These include: • Visits – the number of visits made to the City of London • Visitor days - the total number of days spend by visitor times in the City. A day

visitor represents one visitor day, a staying visitor will represent one or more (depending on the number of days spent).

• Direct Expenditure - Expenditure on the purchases of goods, materials and services sourced in the City of London – this includes VAT.

• Gross Value Added (GVA) - Gross value added is a measure of the income generated by a sector or activity. It is calculated as the difference between the value of goods and services produced and the cost of inputs which are used up in production (hence wages and profits).

• FTEs – full time job equivalents.


3

2 Headlines It is estimated that there were 21.5m tourism visits to the City of London in 2018. They generated £2,006m of direct expenditure. This translated into £538m of GVA (Gross Value Added) impact, which supported an estimated 18,880 FTE jobs. Volume and Value of Tourism – City of London Key Indicators

Both volume and value indicators were up in 2018. There were a variety of factors behind this:

• Increased bedstock – approximately 1000 4/5* hotel rooms have been added in the City since the start of 2016 (an increase of 39%). These include Z City, the Ned, Dorsett City – Aldgate, the Four Seasons Hotel and Citizen M hotels. The new Premier Inn Farringdon has added a further 326 rooms which will come fully on stream in 2019.

• Occupancy and Average Daily Rate (ADR) have increased year-on-year since 2016. As a consequence, RevPar (Revenue per achieved room) was up 2.5% in 2017 (on 2016) and 2.9% in 2018 (on 2017).

• An increase in visits to the City’s attractions - up 4% in 2017 and 2% in 2018. • Major events notably the Wizarding World Wand Installation attracting an

estimated 500,000 visits in November 2018. • Conference and meeting visits were up on previous years.

2018 2017 2016

No. of visits (m) 21.5m 18.4m 18.8m

No. of visitor days (m)1 23.0m 19.7m 20.1m

Direct spend (£m) £2,006m £1,763m £1,714m

GVA (£m) £538m £488m £470m

Jobs (FTEs) 18,880 18,410 17,750

1: Visitor days are the total number of days that visitors spend in the City of London. A day visitor

represents one visitor day, a staying visitor will represent one or more (depending on the number of days

spent).


4

3 Seasonality Visits to the City did not have a marked seasonal pattern in 2018 (see below). However, visit levels were lower in the winter period (December to February) reflecting lower levels of leisure visitors, and during August (lower levels of conference and meeting visits). In 2018, there was a spike of visits in November caused by Wizarding World Wand Installation.

4 Impact by market group The City attracts several different market groups. This section summarises the impact of six market groups (see section 1.2 for definitions, with the ‘Staying in commercial accommodation’ group sub-divided into business and leisure visitors).

By Market Group Volume and Value of Tourism – City of London (2018)

No. of visits (m)

No. of visitor

days (m)

Direct spend (£m)

GVA (£m)

FTEs

Day 20.3 20.3 1,523.5 318.4 11,860 Day – for conference 7.3 7.3 755.9 108.4 3,150 Day – from holiday base 5.1 5.1 361.8 88.7 3,570 Day – from home 7.8 7.8 405.8 121.3 5,140 Staying 1.2 2.7 482.3 219.6 7,030 Staying with friends/relatives * 0.1 1.5 0.5 20 Commercial - Business 0.8 1.0 345.6 158.8 5,080 Staying Commercial - Leisure 0.5 0.7 135.3 60.3 1,930 Total 21.5 23.0 2,005.8 537.8 18,880


5

Figures rounded to nearest 100,000. FTEs rounded to the nearest 10. As such, sub-totals in the table may not

always add up exactly.

* = less than 50,000

Day visitors can be divided into three groups – day visitors from home (typically London, 36% of visits), day meetings and conference visitors (34% of visits) and holiday visitors staying elsewhere in London and visiting the City for the day (24% of visits). Overall, they account for about 94% of trips.

Staying visitors accounted for a small proportion of visits (6%) but were more significant in terms of spend (24%), GVA (41%), and the number of FTEs supported (37%).

5 Impact by visitor origin The following table summarises the relative impact of UK and overseas visitors – broken down by day and staying visits. Appendix 2 provides more detail of the impact of UK and overseas visitors by the different market groups.

By Origin Volume and Value of Tourism – City of London (2018) No. of

visits (m) No. of visitor

days (m)

Direct spend (£m)

GVA (£m)

FTEs

Domestic 16.1 16.7 1,383.4 317.6 11,300 Day 15.5 15.5 1,166.3 218.8 8,140 Staying 0.6 1.2 217.1 98.8 3,160 Overseas 5.4 6.3 622.4 220.3 7,580 Day 4.8 4.8 357.1 99.6 3,710


6




Most trips (75%) and direct spend (59%) were generated by UK visitors. Overseas visitors made a more significant contribution to GVA (41%) and FTEs supported (40%).

Staying 0.6 1.5 265.2 120.8 3,870 Total 21.5 23.0 2,005.8 538.0 18,880


7

6 Impact by purpose of visit The following table summarises impact by purpose of visit – divided into business and leisure – broken down by UK and overseas visitors.

By Purpose




Most trips (62%) were for leisure purposes. Leisure visitors accounted for 45% of direct spend and 50% of GVA.

Leisure visitors were more significant among overseas markets – accounting for 83% of overseas trips, 60% of direct spend and 50% of GVA.

Volume and Value of Tourism – City of London (2018)

No. of visits (m)

No. of visitor

days (m)

Direct spend (£m)

GVA (£m)

FTEs

Business 8.1 9.3 1,101.5 267.2 8,220 Overseas 0.9 1.6 248.9 115.1 3,600 UK 7.2 7.6 852.6 152.1 4,620 Leisure 13.4 13.7 904.4 270.8 10,660 Overseas 4.5 4.7 373.5 105.3 3,980 UK 8.9 9.1 530.9 165.5 6,680 Total 21.5 23.0 2,005.8 538.0 18,880


8

Appendix 1: Methodology Introduction

The data in this report is drawn from a bespoke economic impact model developed for the City of London. This uses data from a range of different sources and makes a series of assumptions. The model is built in three stages.

• Stage one quantifies the volume of visits to the City • Stage two translates these into direct spend • Stage three generates estimates of impact in terms of Gross Value Added and

jobs supported by tourism spends. It takes account of leakage (tax) and displacement.

Stage One: Volume Estimates.

The volume (and spend) estimates are based on five primary market groups, which have different ‘drivers’ (i.e. data that is used to quantify their relative volume). These are summarised in the following table: MARKET GROUPS Market Group Definition Key Drivers of volume Staying visitors – commercial accommodation

Visitors staying overnight in commercial accommodation in the City of London (including hotels, serviced apartments and AirBnB).

Occupancy and supply


Visitors staying with people living in the City of London

Population

Day visits (from a holiday base)

Visitors staying away from home in holiday accommodation (typically elsewhere in London) and visiting the City for part of a day

Visits to City attractions


Day visitors travelling from (and returning) home and visiting the City for a range of activities. A trip is defined as at 3hrs+ and something the visitor does not do regularly. This group excludes residents of, and workers in the City.

Visits to attractions Events


Visitors coming for a business event (conference, meeting etc.) of 3hrs+ in a paid-for venue

Venue supply and performance


9

Market Group Approach to volume estimates Staying visitors – commercial accommodation

Volume is based on accommodation supply (serviced accommodation, serviced apartments and AirBnB). This is multiplied by occupancy data (based on STR Global data) to provide an estimate of the volume of nights. Occupancy for serviced apartments is assumed to be the same as hotels but lower for AirBnB. Volume of nights is multiplied by average party size and divided by average length of stay (from ‘Business with Pleasure’ - TEAM - 2006), to provide estimates of the numbers of trips and nights. These volumes are then split into proportions of business/ leisure visits and UK/overseas visits (with ratios derived from ‘Business with Pleasure’ for weekdays and assumed for weekends).


Volume is based on the resident population of the City. A ratio of trips per head of population was calculated based on GBTS and IPS data for the whole of London. This was then applied to the City population to provide an estimate of trips. This was multiplied by an average length of stay figure (from GBTS and IPS) to provide an estimate of nights.

Day visits (from holiday base)

These are visitors staying outside the City but visiting for the day. The key driver for this group (and leisure day visits from home) is visits to City attractions (from the Visitors to Attractions Monitor). For visitors to attractions, account is taken of visitors potentially visiting more than one attraction in the same day (and been double counted as City visitors). This is based on data from the CIC survey. Visits are then split into three categories – visitors from home (see below), UK visitors staying outside the City, and overseas visitors staying outside the City. These splits are based on data from individual attractions. Visitors will come to the City for a range of reasons. Data is available on this in the GB Day Visits Survey – this highlights the relative importance of a range of different activities. For day visits from a holiday base, it assumed that visitors will also come for a ‘general day out’ (effectively sightseeing without visiting a specific attraction). A ratio (derived from GBDVS) is applied to the visits to attractions figures to give an overall estimate of visits.


Day visits from home is based on the same approach. The range of additional activities is greater and includes going for a meal, a night out, general day out, special shopping and public event. Based on these categories, a ratio to the visits to attractions is applied (as above). In addition, events data (for major events) is added to this figure to give an overall total for day visits from home. (Events data is


10

derived from individual events figures - a proportion of this is assumed to be visitors from home).


The conference and meetings market is a large market for the City. Business and conference visitors that are staying in the City are accounted for in the ‘staying in commercial accommodation’ market group. However, conferences will generate day visits (from home or staying elsewhere in London). The driver for this is the number of venues and their performance. Supply data is derived from VenueDirectory.com/RJS Associates Ltd. Performance data is based on data from the UK Conference and Meetings Survey (UKCAMS) which relates to London venues. This provides data on numbers of events, size, duration, proportion of residential to day delegates etc.

Stage Two: Spend estimates.

Stage one provides estimates of the volume of visits and visitors days. Stage two translates these into estimates of direct spend. The following table summarises the approach and data sources. Market Group Approach to spend estimates Staying visitors – commercial accommodation

Spend by business visitors is based on accommodation rates (from the STR occupancy survey). Spend in other areas (e.g. food, retail) is related to accommodation spend through a series of ratios (derived from data from ‘Business with pleasure’. Spend for leisure visitors at accommodation is based rates (from the STR occupancy survey). Spend in other areas (e.g. food, retail) is derived from GBTS data (based on spend by short break visitors staying in serviced accommodation). Overseas rates are assumed to be the same as UK Not all spend by staying visitors will be undertaken in the City. The model makes assumptions for the levels of spend retained in the City by different categories of spend. It assumes higher levels of spend retention for business visitors than leisure visitors (who are more likely to travel outside the City).


Spend per day is derived from GBTS data (based on the spend by VFR staying in a friend’s / relative’s house). Overseas spend per night is assumed to be the same.


11

Day visits (from holiday base)

Spend figures are based on data from the London Visitor Survey (2008) and inflated to current prices using the Consumer Price Index (CPI). For these visitors it is assumed that some spend is accrued outside the City of London.


Spend figures are derived from GBDVS.


These are based on two sources of data. Rates at a conference/meeting venue are based on UKCAMS (2019), and other areas of expenditure are from the Delegate Expenditure Survey 2017 (VisitBritain, 2017). Venue rates are based on and weighted by the relative number of delegate days by venue type e.g. hotels versus unusual venues). Other areas of expenditure are based on and weighted by event type (i.e. corporate vs associations).

Stage 3: Impact estimates

Stage 2, in addition to generating estimates of direct expenditure, breaks this spend down into different categories – spend at accommodation / meeting venue, eating and drinking, shopping, attractions and entertainment, travel and transport and other. Stage 3 translates initially direct expenditure into Gross Value Added (GVA). There are different elements to this:

• VAT is removed • A factor is applied for displaced spending. It is assumed there is generally no

displacement because of tiny internal market. The exception is the conference market. It is assumed that the majority (75%) is generated internally from the City (companies and their employees) and therefore counts as displacement. NB applied only to UK day markets - overseas delegates (and residential markets) are assumed to be additional.

• After this, direct spend (or turnover) is translated into GVA through a series of ratios. These are based on ratios derived from the Annual Business Survey for appropriate Standard Industrial Classification (SIC) codes.

From GV, estimates are generated of the number Full Time Job equivalents (FTEs) supported by visitor activity. This is based on the GVA required to support a FTE (derived from the Annual Business Survey).


12

Appendix 2: Volume and value data by market group and origin

Volume and Value of Tourism – City of London (2018) By Market Group and origin




No. of visits (m)

No. of visitor

days (m)

Direct spend (£m)

GVA (£m)

FTEs

UK Visitors Day 15.5 15.5 1,166.3 218.8 8,140 Day – for conference 6.8 6.8 702.0 82.9 2,410 Day – from holiday base 0.9 0.9 58.5 14.6 600 Day – from home 7.8 7.8 405.8 121.3 5,140 Staying 0.6 1.2 217.1 98.8 3,160 Staying with friends/relatives

* * 0.3 0.1 *

Commercial - Business 0.4 0.8 150.6 69.2 2,210 Commercial - Leisure 0.2 0.4 66.2 29.5 950 Total UK 16.1 16.7 1,383.4 317.6 11,300

Overseas visitors Day 4.8 4.8 357.1 99.6 3,710 Day – for conference 0.5 0.5 53.9 25.5 740 Day – from holiday base 4.2 4.2 303.2 74.1 2,970 Day – from home - - - - - Staying 0.6 1.5 265.2 120.8 3,870 Staying with friends/relatives

* * 1.2 0.4 20

Commercial - Business 0.4 1.1 195.0 89.6 2,860 Commercial - Leisure 0.2 0.4 69.1 30.8 990 Total Overseas 5.4 6.3 622.4 220.3 7,580

All visitors Day 20.3 20.3 1,523.5 318.4 11,860 Day – for conference 7.3 7.3 755.9 108.4 3,150 Day – from holiday base 5.1 5.1 361.8 88.7 3,570 Day – from home 7.8 7.8 405.8 121.3 5,140 Staying 7.1 16.3 2,869.4 1,306.4 3,200 Staying with friends/relatives

* 0.1 1.5 0.5 20

Commercial - Business 0.8 1.9 345.6 158.8 5,080 Commercial - Leisure 0.5 0.7 135.3 60.3 1,930 Total – all visitors 21.5 23.0 2,005.8 538.0 18,880

the economic impact of tourism 2018 - city of london · 2019-07-26 · city of london – tourism...

Documents