Scenario Planning

Using the principles of computable general equilibrium (CGE) modelling, we are able to measure changes such as rising oil prices, taxation policies, productivity or falling demand from certain markets. This allows VisitScotland to ask ‘what if’ questions and come up with meaningful answers. VisitScotland has used such an approach for the following scenarios.

Terrorism and the London Bombings

Dear Gordon...VAT and Tourism

An Influenza Pandemic - What it Could mean for Scottish Tourism

The Future of Oil

2006 Dollar Exchange Rate and its impact on Scottish Tourism

How house prices influence Scotland’s domestic tourism markets?

Terrorism and the London Bombings
After the London Bombings, VisitScotland wanted to know how this would impact upon our markets and what if there were further attacks. Therefore, three scenarios were constructed comparing the London bombing to Madrid, transport and marketing disruption.

The first scenario, the benign scenario, makes a direct comparison between London and Madrid, with minimal disruption on tourism, whereas two further scenarios look at how fear and security could change consumer behaviour. These two scenarios are based upon weaker economic conditions in which the period of recovery is longer, before normality returns. In all the scenarios, the impact is measured on a short term economic cycle of up to 2 years. A range of assumptions are made for each scenario that changes the percentage of demand.

VisitScotland's London Bombing Scenarios (PDF 256Kb)

Dear Gordon...VAT and Tourism
VAT rates on tourism products and services vary across Europe, whether this is 5% in Cyprus to 25% in Denmark. Such variety impacts on tourism demand, as price is a key determinant in purchasing. Tourists, by the nature of taking holiday and traveling, are often viewed as affluent and able to pay additional taxes by political leaders.

The current debate about sustainable tourism, highlights whether tourists should pay 17.5% VAT on air transport as a carbon tax, as at the moment they don't. Three scenarios have being constructed that considers different VAT rates on tourism products and services - and subsequently, what the economic impact would be on Scottish Tourism. The scenarios are called growth, carbon and luxury. It's now up to Gordon Brown, the Chancellor of the Exchequer to take heed.

Dear Gordon (PDF 364 Kb)

An Influenza Pandemic - What it Could Mean for Scottish Tourism
With increasing concern by global disease surveillance centres over the possibility of Avian Flu mutating to a human pandemic influenza, the associated impact on business continuity should also be considered.  Along with the possibility of high mortality rates, the economic impact could be considerable and widespread.

One way to seek understanding of the impact of pandemic flu on Scottish Tourism, is to consider the ramifications of an outbreak on both the destination and its tourism economy.  Through economic modelling and scenario planning, insight into how the pandemic may unfold and the implications on tourism may be revealed.  Published in the Fraser of Allander Economic Quarterly, Vol30/4 this briefing paper suggests several scenarios for Avian Flu and its social and economic impact.

An Influenza Pandemic (PDF 211 Kb)

The Future of Oil
It is Scotlands ambition to increase value of tourism by 50% over the next ten years.  With persistent increases in the price of oil and its enduring links with transport, this paper considers oil and the global economy and its relationship to Scottish tourism.

Two scenarios have been constructed called Energy Inflation and Paying for Climate Change.  The first scenario looks at non-interventionism resulting in sudden reductions in oil supply.  The second scenario suggests that rising energy costs require conservation measures such as introducing carbon taxation.  The scenarios examines a number of policy issues for the future and the impacts they may have on Scottish Tourism.

The Future of Oil (PDF 170 Kb)

2006 Dollar Exchange Rate and its impact on Scottish Tourism
Late in 2006 the exchange rate between Sterling and the US doller moved close to $2 = £1.  What impacts on Scottish tourism would this move in exchange rates have both domestically and on international markets?

US Dollar Exchange Rate (PDF 54 Kb)

How house prices influence Scotland’s domestic tourism markets?
Over the last decade wealth accumulated through property primarily driven by low interest rates has meant property prices are booming along with home ownership thus creating a new breed of property millionaires. If property is a key driver of wealth there is clearly a correlation with holidays, as the wealther a society becomes the greater proportion of income is spent on travel, which today is perceived as the number one luxury experience.  As the UK is Scotland’s core market representing 86% of all trips and 61% of all revenue, the following research examines the impact of rising and falling house prices on Scotland’s tourism markets.

The Housing Market and Tourism (PDF 88 Kb)