Weak pound could attract more tourists to Wales

Mar 26 2008 by Rhodri Clark, Western Mail

THE euro’s strength against the pound could throw Welsh tourism a lifeline this year, compensating for falling long-haul business.

Yesterday would-be British holidaymakers could get just 1.22 euros for £1.

Having grown accustomed to getting about 1.40 euros to the pound, many could reconsider their plans for overseas holidays or mini-breaks this year.

That could result in more visitors to Wales from other UK countries, and more Welsh holidaymakers opting to try a different corner of their own nation.

At the same time, holidays in Britain will be more affordable for people in euro-zone countries than they have been for many years.

Tourism experts believe increases in these two categories could compensate for fewer visitors from the US, Australia and New Zealand – deterred from visiting here because of the weak dollar and financial uncertainty at home.

But while visitor numbers might hold up, this year’s tourists are unlikely to match the big spending of long-haul visitors.

“For inbound tourism, the euro is the one bright light compared to everything else,” said Julian Burrell, chairman of Wales Tourism Alliance. “The numbers of long-haul travellers – not just the American ones – are falling.

“Volumes may hold up. We may get more European visitors to make up for the long-haul visitors, but the spend probably won’t hold up. Long-haul visitors tend to spend the most here.

“The predictions are that this year there will be no significant increase. I don’t think anyone is expecting disaster.”

He also warned that British visitors would tighten their belts. The credit crunch, rising fuel and food costs and general gloom in the financial world were undermining people’s confidence.

“Some people will say, ‘We’re reining in a bit. Money is tight. The euro is expensive. We’ll stay in Britain’.

“The Bank of England talks about discretionary spending. Generally speaking, holidays hold up. We lose one end of the market but we get people coming in who were going to go abroad.

“We find that the accommodation side does OK, but once they’re here they don’t spend. It’s the restaurants and attractions that suffer more.

“If they go to a restaurant, perhaps they have a cheaper bottle of wine. They might go to the must-do attractions. It’s the B and C-list attractions that tend to suffer.”

Andrew Barker, manager of the Corn Mill restaurant in Llangollen, said it was too early to tell how the 2008 season would shape up.

“Everyone is worried about the credit crunch, but other than that it’s a matter of waiting and seeing rather than trying to predict.”

Menus might need adjustment to reduce slightly the prices of meals and wines, but that would not be easy.

“Our own costs have risen, for food and drink. The Budget didn’t help with that,” said Mr Barker, referring to this month’s increases in duty on alcoholic drinks.

Prof Max Munday, director of the Welsh Economy Research Unit at Cardiff Business School, said gradual changes in exchange rates tended not to influence tourists when choosing destinations. “In holiday decisions generally, what’s going to become more important through time is the cost of things like fuel. The exchange rate is one of a number of things,” he said.

A spokeswoman for Visit Wales, the Government’s tourism promotion arm, said more than 93% of visitors to Wales were from the UK.

Overseas visitors also made a significant contribution, spending about £358m in Wales in 2006. Although they were 7% of visitors, they accounted for 18% of visitor spending.

“It is possible some people will put off their plans to travel to Europe due to the exchange rate, and that the market conditions could work in favour of stimulating more demand for Wales from that marketplace.

“In the short-term, visitor numbers to Britain from the US will certainly feel the exchange-rate effect. Visit Wales already allocates proportionally more resources to the closer European market of Germany, the Netherlands and France, to get as much immediate business as possible.

“In the longer term, the US is still an important international market for Wales.”