What are the prospects and scenarios for Scottish Tourism?

In light of the developing economic situation in the summer of 2007, the research team at VisitScotland undertook a forecasting exercise for the forthcoming two years.  Based on information available at the time two scenarios were developed to look at a benign and malign unravelling of the credit crisis.  The results of the study are presented below.

Due to the ongoing volatility of current economic conditions revisions to the forecasts will be made periodically and published on this site.  VisitScotlands analysis of the current economic situation and response may be found within the media centre here.

Scenarios and Prospects Published 2007
The scenario planning team at VisitScotland has constructed two scenarios about the prospects for 2007 through to 2009 in order to make sense of such uncertainty. These scenarios are called ‘Steady as it Goes’ and ‘Middle Class Squeeze’ respectively and have been tested with leading decision makers and industry to find about the probability of occurrence.

Scenario 1: Steady as it Goes:

• The UK economy remains stable through the second half of the 2007 and 2008, although growth projections are scaled back in light of the Credit Crunch. 2009 is a year of growth
• Inflationary pressure and interest rate hikes in the UK, US and Europe continue to erode household budgets remain stable.
• Holidays still remain a priority for many households, therefore driving annual growth in visits and spending by 1.5% and 1.9% respectively. The value of tourism in this scenario in 2008 is £4.5bn
• North America in 2008 experiences slight decline due to poor exchange rates, but this is compensated by increases from Europe and the Rest of the World

The probability of this scenario occurring is 50-70% based on industry feedback 2007.

Scenario 2: Middle Class Squeeze:

• Economic slowdown through 2008, with growth in 2009
• The hallmark of consumer spending in 2008 is described as best as ‘thrifty’ and at worst ‘stretched’
• The US economy goes into recession in 2008
• Sharp decline in tourism spending across all markets in 2008, with trips and spending falling 3.71% and 3.74% respectively. The value of tourism in this scenario in 2008 is £3.9bn
• North America markets fall by 10% in 2008 but grow by 5% in 2009

The probability of this scenario occurring is 30-50% based on industry feedback 2007.

prospects for 2008 (PDF 65Kb)

For further information, please do not hesitate to contact

Chris Greenwood
Strategic Research Analyst
VisitScotland
Email: chris.greenwood@visitscotland.com
Tel: 0131 472 2389