Description of sector
The UK’s ’s tourism industry consists of public and private sector organisations including small and medium-sized enterprises (SMEs), international private businesses (e.g. airlines, large hotel chains) and Destination Management Organisations (DMOs, city or sub-regional bodies responsible for tourism product and promotion at a local and regional level). They are funded by a mix of public and private sources.
Tourism is defined as the goods and services purchased by someone “travelling outside their usual environment”1 and can arguably be better understood as elements of several industries, for example accommodation, restaurants, attractions,hospitality, transport and travel services.
“Direct tourism” is the part of UK tourism industry that is driven directly by tourism spend. This is the preferred measure of tourism as it is a more defined and accurate definition. Please note that there are occasions in this document where statistics refer to the wider “tourism industries”, these include the totality of the tourism-related sectors. These statistics have only been used where more specific figures on direct tourism are not available.
The current EU regulatory regime
EU Frameworks and Directives
The tourism industry is bound by EU rules and regulations but most of these are not sector-specific for tourism. The main sector-specific regulations for the tourism industry are:
– The Package Travel Directive: The current Package Travel Directive (Directive 90/314/EEC) ensures the protection of holidaymakers who purchase package holidays, in particular protecting consumers against the insolvency of package organisers. The new 2015 Package Travel Directive, which is currently being implemented into UK law, will update and extend the scope of existing protections to ensure that people who book package holidays online enjoy the same rights as those who book with a traditionaltravel agent; and
– The Tour Operators Margin Scheme (TOMS): The TOMS is a VAT scheme aimed at simplifying the rules for suppliers of designated travel services. It is a scheme for businesses that buy-in and re-sell travel, accommodation, and certain other services as a principal or undisclosed agent. In many cases it enables VAT to be accounted for on travel supplies without businesses having to register and account for tax in each Member State where theservices and goods are enjoyed. The scheme not only applies to tour operators, but often applies to travel agents, events organisers and other businesses selling travel.
Other EU Law
The tourism sector is also affected by other cross sectoral EU law, including:
– Access: Laws and regulations surrounding access to the UK for visitors (the UK’s visa regime and the Common Travel Area with Ireland and the Channel Islands);
– Road Transport: Carriage of passengers by coach and bus is covered by EC regulation EC 1073/2009, which enables road passenger carriers who are currently allowed to drive all over Europe;
– Air Transport: Key considerations for the aviation sector are market access,safety and air traffic management. These are set out in more detail in the aviation sector report;
– Passenger rights: These are covered by a number of regulations, e.g EC 261/2004, which sets out entitlements for air passengers when a flight is delayed or cancelled. There are similar but separate agreements for coach and road tour operators;
– Mutual recognition of qualifications directive: A number of industries benefit from cross-border mutual recognition, including guiding services, diving qualification and hotel management qualifications;
– Health and safety: A number of areas are covered here, including employment rights and the blue flag regime for clean beaches;
– Health Cover: The European Health Insurance Card guarantees access to local health facilities during a temporary stay;
– Data: The Passenger Name Records (PNR) Directive provides the legal framework for Member States to process PNR to prevent and combat counter-terrorism and serious organised crime.
– Cross-border employment and labour rights: The Posted Workers Directive sets rules for workers to move around the EU without the need for separate contracts. This is important for the UK outbound sector, particularly package holidays involving holiday representatives and the ski/chalet sector;
– Duty free shopping: Duty-free sales at airports and ports;
– Roaming: Mobile phone roaming fees are capped across the EU (Reg 531/2012), which is attractive for tourists as consumers; and
– State Aid regulations: EU State Aid rules set out clear requirements regarding investing public money in tourism, both in terms of the construction and operation of infrastructure for tourists, such as information centres and accommodation facilities, as well as destination marketing.
Devolved Administrations
Tourism is a fully devolved matter, and policy is set independently by each Devolved Administration. However, the visa regime is UK wide, as are the air access agreements, and free movement of people and services rules.
VisitBritain, a Department for Digital, Culture, Media and Sport (DCMS) Arm’s Length Body has an annual target to increase international visitor growth and spend across Britain. It works with Visit England, Visit Scotland and Visit Wales to deliver this target.
Tourism Ireland Limited is responsible for marketing the whole of the island Ireland. It is funded jointly by the Irish Government and the Northern Ireland Executive, and operates within the auspices of the North South Ministerial Council as set up by Strand 2 of the Belfast (‘Good Friday’) Agreement.
A UK-Ireland cooperation on the Common Travel Area (CTA) supports the all Ireland approach on tourism. The UK Government, Irish Government, and European Union agree on maintaining the CTA.
Existing frameworks for how trade is facilitated between countries in this sector
The arrangements described in this section are examples of existing arrangements between countries. They should not be taken to represent the options being considered by the Government for the future economic relationship between the UK and the EU. The Government has been clear that it is seeking pragmatic and innovative solutions to issues related to the future deep and special partnership that we want with the EU.
The international baseline for trade in services, including among the tourism industry, is the WTO’s General Agreement on Trade in Services (GATS). All WTO Members are parties to GATS which sets out general rules, principles and obligations as a framework for trade in services; plus a schedule of commitments which set out how open and non-discriminatory parties commit to be across the service sectors covered.
GATS also sets out ‘how’ parties will allow services to be traded and this is split into four principal ‘modes’:
1) where a product rather than a service supplier/consumer crosses a border ;
2) where the consumer of the service crosses a border (eg. an inbound tourist);
3) where the company crosses a border (e.g. a retail chain opening a new establishment in another country); and
4) where the service provider moves
The UK is a member of the WTO in its own right, but its current commitments are listed in wider EU schedules. The Department for International Trade is leading a process to create UK-only schedules – reflecting our current level of openness.
Commitments taken by parties vary and parties can unilaterally choose to improve their GATS offers at any point (subject to a certification procedure) or lower the level of their commitments, but in order to do so they will be expected to offer compensatory concessions. Tourism commitments in GATS schedules are taken under the Sector of Tourism and Travel Related Services51 across all four modes of supply.
All of the EU’s existing third country trade deals, and those currently under development, look to build on the GATS baseline by expanding the commitments of EU Member States to open up their services markets to each other. The most ambitious of these is the EU-Canada Comprehensive Economic and Trade Agreement (CETA). Other plurilateral agreements also look to further liberalise the GATS baseline for trade in services. Although negotiations are currently on hold, the most comprehensive attempt so far is the proposed Trade in Services Agreement(TiSA) between 23 different parties.
The key piece of horizontal EU legislation in services is the Services Directive, which covers approximately half of the services sector, including tourism. The Services Directive provides that Member States cannot impose discriminatory, unnecessary or disproportionate requirements on services providers from other Member States However, there is a great deal of variation in national regulation across the EU and many barriers to the free movement of services still exist.
