Destination Intelligence – January 2011 & 2010 Year Review

1. Destination Intelligence – January 2011 & 2010 Year Review Joseph Phelan, Research Assistant j.phelan@visitchesterandcheshire.co.uk

2. Bigger Picture – Tourism News The Year in News: 2010 • Eyjafjallajokull volcanic eruption Around 1 million Britons were stranded abroad during the volcanic ash cloud crisis in 2010. Thousands of flights were cancelled, causing huge travel congestion all around the world. The ash cloud disruption is reported to have cost BAA £28m • Conservative and Liberal Democrat coalitionThe introduction of a new government brought with it a new budget. As part of the budget, From April 2011 families with a household income of more than £40,000 will see their eligibility for child tax credits reduced, housing benefit is to be cut by £1.8bn and higher-rate taxpayers will see the rate of capital gains tax rise to 28pc from 18pc, while the annual exemption of £10,100 will remain in place • December snowfallIt is reported that the December snow disruptions cost BAA £24m. The worst affected airport was Heathrow which took a hit of £19m. Due to these problems, passenger numbers at Heathrow dropped 9.5% year on year. The department store Debenhams is said to have lost £30m of sales during the snow disruption • VAT increaseOne of the most important changes laid out by the 2010 Budget was the increase of VAT from 17.5% to 20%, which was implemented on 4th January 2011. The government saw it necessary to increase the VAT in order to boost tax revenues in order to cut the their deficit Source: Visit Britain – Trends, 2011

3. Bigger Picture – Economic News 2010 review – Domestic Economic UK economic review 2010 and 2011 expectations • The UK appears to be getting quickly back onto its feet. However, a look at what has driven this strength creates some cause for concern. The recent surge in construction output looks unlikely to last. And the positive contribution from government spending will of course fade • Departmental spending is set to fall by over 4% in real terms in 2011/12 – and the Government seems to have no plans, for now at least, to scale back the cuts. Public sector employment is already falling. And VAT and national insurance contributions will soon rise • The euro-zone’s peripheral economies – the destination of about 15% of UK exports – will continue to struggle • The overall economic recovery might manage to keep up its momentum for a little while longer – especially if consumers take time to adjust their spending in response to the tax rises. However, it is expected that growth will slow to pretty sluggish rates. It is expected that there will be a GDP growth of just 1.5% in both 2011 and 2012 • Although a difficult couple of years lie ahead, growth should eventually accelerate. It will also be more soundly-based than the growth seen over the past decade or so Source: Visit Britain – Trends, 2011

4. Bigger Picture – Economic 2010 review - International Spanish economy shrank 0.1 per cent in 2010 • Spain's shrank 0.1 per cent in 2010, less than had been expected, the Bank of Spain said Friday. • The had forecast that the economy would contract by 0.3 per cent in 2010. • Gross domestic product (GDP) grew 0.2 per cent in the last quarter, after remaining stagnant in the previous quarter, the central bank said. • It forecast a slow recovery, the speed of which would depend on exports and economic reforms. • Prime Minister Jose Luis Rodriguez Zapatero's government has adopted reforms including an overhaul of savings banks, raising the retirement age and making the labour market more flexible. • It has also cut public spending in an attempt to trim the budget deficit from 9.3 per cent to about 6 per cent this year. • There had been concern that Spain could follow Greece and Ireland in needing an international bailout. European overview • In the wake of the global economic crisis, the European Commission projected that the EU's economy would shrink by 4% in 2009 and 0.1% in 2010. The EU has recovered from the crisis faster than expected, however, and the Commission estimates 2010 growth at 1.8% • In June 2010, prompted by the Greek financial crisis, the EU and the IMF set up a $1 trillion bailout fund to rescue any EMU member in danger of default, but it has not calmed market jitters that have diminished the value of the euro • Internally, the EU has abolished trade barriers, adopted a common currency, and is striving toward convergence of living standards. Internationally, the EU aims to bolster Europe's trade position and its political and economic power Source: Visit Britain – Trends, 2011

5. Bigger Picture – Tourism Tourism – Developing countries lead the tourism recovery • UNWTO has recently announced that world tourism is recovering from its financial crisis hangover and that the future is looking much rosier. However, the 7% growth in 2010 was far from evenly spread across the planet. Indeed, developing nations such as China, India, Malaysia led the way, with developed nation of South Korea joining them. The figures relate to inbound and outbound tourism, meaning that the countries are becoming serious forces to be reckoned with on the world tourism market. • According to estimates, China could become the 3rd most important country for tourism this year. The spending patterns of the emerging nations are very important, as Chinese people spent 17% more in 2010 on their travels than in 2009. Russians splashed out 26% more, whereas Brazilians spent an astonishing 52% more. • One of the main reasons for such growth in 2010 was the amount of major events taking place around the world. The World Cup in South Africa, the Shanghai exposition, the Winter Olympics of Vancouver and the Indian Commonwealth games all contributed to the fact that more people traveled. Warnings have been made, however, that such level of growth is unlikely to be reached in 2011 and the progress should slow down. For example, the Asia-Pacific area cannot sustain a growth level of 12.6% like in 2010. Similarly, the Middle East will not probably be capable of growing by 14% yet again. Source: Visit Britain – Trends, 2011

6. Bigger Picture – Tourism Looking forward - National • The British tourism industry has responded very positively to the Government’s challenge to create a marketing fund of more than £100 million to boost tourism around the forthcoming Royal Weddings, The Queen’s Diamond Jubilee and the 2012 Olympic and Paralympic Games. • The four-year marketing campaign, full details of which will be unveiled in the spring, aims to deliver: 1 million extra overseas visitors a year £2 billion more visitor spending the UK 50,000 new jobs across the country • Companies including British Airways, DFDS, lastminute.com, P&O and Radisson Edwardian have pledged cash and payment in kind to help match the £50 million of public money already committed by national tourism agency, VisitBritain.  A must-see destination • At a Reception in Downing Street to thank those already involved, Prime Minister David Cameron said: “Last year we challenged British businesses to help us put together the best tourism marketing campaign ever for Britain – something that will make us the must-see destination for visitors from new growth markets in Asia and Latin America, as well as core ones like Europe and the USA. The response has been magnificent, with pledges of cash and kind from companies that mean we are well on the way to our target.” • Jeremy Hunt added: “This is Britain’s moment. A wonderful and unprecedented opportunity to tell the world that we are well and truly back in business, and that there is no better place to take a holiday, not just in order to be part of the big-ticket events of the next two years, but to enjoy everything else we have to offer. • “British companies have dug deep to back us in promoting this idea. And I hope that others will pitch in too – to become part of the global launch to market Britain as quite literally the greatest show on earth.” Source: Visit Britain – Trends, 2011

7. Bigger Picture – Tourism Looking forward - International • The cruise industry is hoping for 16 million passengers to embark on its ships in 2011, thus expecting an increase of 6.6 % on the last year. The optimism is shared amongst the leading representatives of other industries too, with the difference being the cruise industry placing its hopes on a fleet of new ships and masses of new customers. Europe, the Caribbean and Alaska are the biggest markets at the moment, with emerging nations such as China and Russia providing not only passengers but also venues and exciting places to visit for current cruise ship fans. • In 2010, after the financial crisis tourists were still careful with their money. However, the promising beginning of 2011 has encouraged them to spend more. According to forecasts, the amount of money spent on traveling abroad could reach the record sum of 61.3 billion euro in Germany. The figures from incoming tourism could reach even the numbers from the year 2008. The Commerz Bank expects an income of 27 billion euro, which would be approximately the same amount as in 2008 • International Air Transport Association (IATA) expects global recovery of airline industry in 2011 and anticipates a net profit of 9.1 billion dollars this year. It is less than the 15 billion dollars reached in 2010 nevertheless it is still more compared to the forecast made in September 2010. IATA also expects a 5% increase in the number of passengers. However, taxes and oil prices in 2011 are supposed to rise, which will unfortunately slow down the predicted growth in the field, especially in Europe Source: Visit Britain – Trends, 2011

8. Chester and Cheshire’s News –2010 £530m investment into northern railways (February) • Network rail have unveiled plans to transform rail travel in the north of England, with emphasis on Cheshire • The plans include a 40% increase in trains per day across the region and capacity for another 3.5m passengers per year • There is also set to be a direct link from Chester to Manchester Airport Sale of council property could help pay for a new theatre (May) • A massive sale of council property worth £200m could help pay for a new theatre for Chester, says council leader Mike Jokes • Of the £200m, £100m would be used for road repairs and £100m to improve sports and leisure facilities across the borough - with many more millions anticipated from private investors • Cllr Jones said the council is committed to providing Chester with a theatre and the money raised is likely to help finally achieve that dream Source: TravelDailyNews– Prepared by Joe Phelan

9. Chester and Cheshire’s News –2010 Chestival extravaganza declared a tremendous success(July) • Millions of pounds have poured into Chester thanks to a summer of events which have brought thousands of people flocking to the city. • Tills in city shops and restaurants are ringing to the tune of £16 million more through five weeks of Chestival alone as visitor numbers soar • Chester Festivals director Tracy Lynn said: “This has been one of the best years to be in Chester and we at Chester Festivals have really enjoyed delivering these great programmes to so many people over the summer, it really is a great building block for 2011 and sets the standard for our city going forward.” • The inaugural Chestival, which ran from June 12-July 14, included Roman Weekend – attended by 8,500 – and Midsummer Watch and BiG Giant Parade which saw 152,000 people come through the city when normally 110,000 would be expected Chester Rows on Government list for World Heritage status (July) • The Government has decided to submit a 38-strong list, also including Brunel’s Great Western Railway, the Forth Rail Bridge in Edinburgh and the Eighth century Offa’s Dyke • Chester’s famous shopping galleries date back to the Thirteenth century and were originally shops or warehouses at street level with a long gallery above, reached by steps from the street Source: TravelDailyNews– Prepared by Joe Phelan

10. Chester and Cheshire’s News –2010 £100m boost for 2012 (September) • Figures released for the first time show that Northwest businesses have won £100 million worth of contracts as a result of London hosting the 2012 Olympic Games and Paralympic Games • As of September 2010, 216 firms in the region had won 348 Games-related contracts, either directly with the Olympic Delivery Authority or the London 2012 Organising Committee or in their supply chains • Latest business success for the region includes Ticketmaster, the official ticketing services provider for the London 2012 Olympic Games and Paralympic Games whose Manchester contact centre is handling calls and emails from the public following the launch of the London 2012 ticketing sign-up in March 2010 Wirral Waters gets government green light (November) • The £4.5bn Wirral Waters scheme, the biggest planning application in the UK, has been given the green light by the government. Wirral Council gave the go ahead for the Peel Holdings scheme in August, but the plans had to be scrutinised by ministers in Whitehall • The proposed development at Wallasey and Birkenhead Docks is so large that it could have been called in for a public inquiry, but the secretary of state for communities and local government Eric Pickles confirmed that it will not undergo further review • Wirral Council leader Cllr Jeff Green said: "It's not everyday that a leader of a council is given the go-ahead to see 26,000 jobs created. I am delighted the government has demonstrated its trust in allowing local people to make the decision and will not call in the Wirral Waters plan for national review Source: TravelDailyNews– Prepared by Joe Phelan

11. Chester Hotel Performance: 2010 • When comparing the results from the whole year, it is possible to see that 2010 is faring better than 2009, and only slightly down on 2008. From January-December 2010 the average room occupancy was 69.7% compared to 67.6% in 2009 and 70.3% in 2008

12. Cheshire Hotel Performance: 2010 • Covering January to December for Cheshire’s hotel performance, 2010 (68%) has unsuprisingly out performed 2009 (67%), by 1% point. However, this is still 2% points less than 2008 • Similarly, the ARR in 2010, has been held 1% point higher than 2009. Primarily, because the height of the recession forced providers to reduce prices and drive up demand. Again, comparing 2010 to 2008 (£68.87) shows that, the latter outperformed 2010 (£66.94), by 3% points.

13. The Year in Highlights February 2010 • There was very strong performance in terms of occupancy level (72%) in February 2010 within Chester • When comparing the same period as last year there was a (relative) 24.14% increase in occupancy levels. This was 4% points below February 2009 • These massive year-on-year increases in ARR and RevPAR were mainly down to strong performance over the school half-term break which was on average, 84%. In addition, Valentines weekend saw occupancy levels reach 97% with the ARR being held at £78.92, due to this demand the revenue per available room was high (£76.50) in comparison to normal weekends April 2010 • There was fairly strong performance in terms of occupancy level (70%) in April 2010 within Chester • There were a number of key events over the month that affected occupancy, these varied from school holidays to the volcanic ash ‘disruption’. The Easter holidays spilled over into April, contributing to the positive performance • Most significantly, over the volcanic ash ‘disruption’ period hotel occupancy was 75%, 5% points above the monthly average. Indicating that visitors were forced to extend their stay as they we essentially, stranded

14. The Year in Highlights July 2010 • The average monthly room occupancy (74%) from 2010 in July has increased since the same period in 2009 (up by 2%). Year-to-date, Chester occupancy is 68%. This is 2% points down compared to the same period in 2008 • Weekend wise, each Saturday had a room occupancy of at least 95%, with a peaking of 98%. Only two of these weekends were on race meets, indicating normal summer leisure performed strongly. • Traditionally this has been a positive month across the city, with key race meets and the leisure market increasing at the start of the summer holidays. However, this month was affected by the World Cup, with many people choosing to stay at home rather than spontaneously go on a short-break or day trip. September 2010 • The average monthly room occupancy (78%) from 2010 in September has increased since the same period in 2009 (up by 5%) • This is significantly higher than 2009, the average occupancy for Saturday through the month 95%. This is due to a number of reasons; the final race meeting of the year, which always proves popular; and the university welcoming students and having an open day over the 24th Sept • There was extremely high mid-week occupancy levels with a normal Wednesday and Tuesday reaching 96%. September is generally a strong business tourism month, and this year is no different

15. The Year in Highlights October 2010 • The average room occupancy in October has fared well with regards to the previous two years. At 76% occupancy, this is 1% down on 2009 but 1% up on 2008. This high room occupancy level also means that October is the third most occupied month in 2010, behind August and September • When looking at the hotel performance in Cheshire for October, it is possible to see that the room occupancy percentages have increased by 1% when compared to October 2008, but fallen by 2% when compared to the same period in 2009 • With regards to room rate in October, 2010 is lower than 2009 and 2008. 2010 is only lower than 2009 by £0.29, but is down a considerable £3.33 when compared to 2008 December 2010 • The average room occupancy in December has not fared well with regards to 2008 and 2009. At 61% occupancy, this is 6% down on 2009 but 4% up on 2008. This room occupancy, although rated quite well in comparison to 2009, is the second lowest month of the year in terms of occupancy, only behind January • When looking at the hotel performance in Cheshire for December, it is possible to see that the room occupancy percentages have decrease by 4% when compared to October 2008, and fallen a much more significant 13% when compared to the same period in 2009 • The RevPAR for Chester in December is up on the same month in 2008 but not in 2009. The 2010 figure is -10% (£4.54) down on the same period in 2009, but 5% (£1.85) up on the same period in 2008

16. Destination Intelligence – January 2011 Joseph Phelan, Research Assistant j.phelan@visitchesterandcheshire.co.uk

17. Cheshire Hotel Performance – Jan 2011 • The average room occupancy for January 2011 is higher than the corresponding months in both 2010 and 2009. There is a 2% increase over the same period in 2010, and a 1% increase from 2009 • Despite the average occupancy being higher than both 2010 and 2009, the monthly room rate is lower than when compared to January 2010 and 2009. The 2011 room rate is down 2% when compared to 2010, and down 4% again the 2009 figures

18. Chester Hotel Performance – Jan 2011 • The trend for monthly room rate and room occupancy is similar in both the Chester and Cheshire results. With regards to monthly room occupancy, the 2011 January occupancy is 2% up on the same time in 2010, and is exactly the same as the room occupancy in 2009 • When comparing the average monthly room, there is a similar trend to that of the Cheshire room rate, in that the 2011 room rate is lower than both 2010 and 2009. The room rate is down by 2% when compared to January 2010 and down by 7% when compared to January 2009

19. RevPAR Performance – 2010 • With regards to the RevPAR for Chester, the figure is 4% higher in January than for the same month in in 2010, but is 6% less than for the same month in 2009 • When looking at the RevPAR for Cheshire, the figure is 1% higher than during the same month in 2010, but is 2% down on January in 2009 • Both of these figures can be seen as positive, because the figures through 2010 were higher than 2009, despite a fairly slow January. If the 2011 figures continue the same trend, then it could be a more profitable year than 2010

20. Business Tourism: Midweek occupancy

21. Business Tourism: Midweek occupancy

22. LJ Forecaster: Forward Bookings • Over the next twelve months, there are only 3 months which have higher forward bookings than their corresponding months in 2009 and 2010. On a more positive note, there are 9 months in 2011 which have more forward bookings than 2009 • The only month which looks to be significantly down when compared to 2010 and 2009 in Janaury 2012, however as this is so far away there is a lot of time for the figures to pick up