London’s Burning: International Reaction to the August Riot and its Potential Impact to Tourism

Whilst the dust finally settles on areas affected by the recent riots, the country still takes stock on what was one of the greatest civil disturbances in many years. The political fallout may be taking centre stage at the moment; however, it is the likely that the economic effects will have a far more tangible effect on people’s lives, not just in the short term, but in the long term too. The long term ramifications of the riots on Britain’s international image will undoubtedly have a great impact on Britain’s tourist industry, especially those centred in London which is of particular importance due to the 2012 Olympics. In times of economic hardship it is most likely that the recent riots will make the situation worse for many businesses that are directly and indirectly reliant on foreign tourists and investors. As pointed out in a previous blog post on Chinese tourism, foreign tourists from a wide variety of destinations are increasingly important to the British tourist industry, therefore what the riots did to London’s intentional reputation is a vital matter to understand.

Understanding, how the riots were digested abroad will allow us to gain a glimpse of what tourists now think about Britain’s capital city. One of the most striking things about the riots was the great wealth of images that it produced, from those of burning cars and shops to masked looters, and police inactivity in the face of wanton violence. In our modern media age we cannot underestimate the power of these images had on the global tourist community. London’s image as a safe, modern capital has been tarnished by the images of gangs looting and mugging at will, especially the terrible scenes of Asyraf Haziq being robbed by people supposedly offering him help. These scenes will have undoubtedly created a negative image of London worldwide, but especially in South-East Asia, which is an increasingly important economic region and therefore a future tourist generator.

Furthermore, if the images of the riots didn’t do enough harm the reaction to them in the world press and by many governments have cast further doubt over London’s security. The Russian tabloid Komsomolskaya Pravda painted a picture of London as boiling cauldron of seething ethnic tension, whilst the Brazilian television network Globo and the Chinese newspaper Renmin Ribao questioned London’s ability to deal with security during the Olympics. The USA, Austria, France, Germany, Malaysia and others all urged their citizens to be cautious in London and other affected areas, adding to Der Speigel’s comment that London looked more like Mogadishu than the modern financial centre people are so accustomed to.

Like the healing process, a true assessment of the economic impact of the UK riots on London’s hospitality and retail sectors will take a long time. Savills, the international real-estate advisor has said that the riots will not have an effect at all on property prices, which as so reliant on foreign money. However, any judgement is premature at the present stage, currently with the riots over are tourists and investors willing to risk missing out on some of the opportunities London has to offer. Nevertheless, London has deep wounds to heal and it almost certainly could not take another bout of bad publicity. With a host of European and world cities vying for the same money from the international elite, it has yet to be seen whether London will feel further effects from the riots.

El Fin de El Bulli

The past weekend marked the closing of EL Bulli, Ferran Adria’s trendsetting dining experience and the World’s Best Restaurant for a record holding five times. However, this is not a moment to be sad, but a moment to celebrate Adria’s achievements of over two decades and the great culinary legacy that El Bulli has left the world.

In gastronomic terms, the popularity and status of El Bulli has firmly put molecular cuisine into a wider public consciousness. How many times have you been watching Masterchef or gone into a restaurant where a flavoured foam was a part of a dish? Adria’s exploding olives or pina colada flavoured cotton candy and other dishes like them have revolutionised the way we think about eating. Nevertheless, the legacy of El Bulli isn’t simply in the food it has brought us, but also the cultural changes it has played a part in. Adria’s work has ushered in a culture of experimentation that has liberated chefs from the shackles of convention. Who would have thought in 1987, when Andria first started to work at El Bulli, that science would be an accepted and even necessary element to cooking? Furthermore, Adria has helped to bring about a more open culture into gastronomy. His recipes are all online and he has also written a book chronicling a day at El Bulli, giving the reader a unique insight into its daily operation, with recipes attached. Moreover, El Bulli’s impact to Spain shouldn’t be understated either as it has helped to contribute to an image of a modern, dynamic democracy, far away from Franco’s dictatorship.

So before we start feeling sad for not sampling the ‘Rabbit with Hot Apple Jelly’ or the ‘Hot and Cold Trout Roe Tempura’ at El Bulli, let us raise a toast to a truly revolutionary restaurant and one of the world’s best chefs.

The Emergence of the Chinese Luxury Tourist

The explosive economic growth of China has inexorably changed the world we inhabit. In the last decade China experienced GDP development figures of around 10.5 percent per annum, which has facilitated its rise to become the world’s second largest economy. China, whose growth is being powered by its huge manufacturing sector, will also produce 100 million outbound tourists by 2020. Nevertheless, although Chinese products are usually cheaper than those made in other countries, its tourists are keener to spend as much as possible with $48 billion being spent in overseas destinations. These new tourists’, emanating from China’s burgeoning upper and middle classes are now forming crucial, modern elements in the luxury holiday and retail markets.
The effect of wealthy Chinese tourists on the global luxury and holiday markets is naturally great to the vast volumes of people coming. 2.4 million Chinese tourists visited Europe alone in 2010, with many more preferring to travel closer to home in Asia. Along with the increase in numbers there is also an increase in the overall consumption by Chinese tourists in Europe, with spending up by around 99 percent in 2010 when compared to the same period in 2009. Of course not every Chinese tourist is buying luxury items and staying in 5* hotels, but the impact of those who are, is certainly being felt. Retailers now see Chinese tourist as big spenders who are want to take their favourite brands back home. As a consequence luxury manufacturers and retailers are seeing a surge in demand largely driven by orders from the Chinese at home and abroad. Bain & Company has predicted that global luxury good sales will increase by 8 percent driven by renewed demand from department stores, in part due to the prevalence of the tourist market to those stores. Moreover, it is not just their favourite brands that Chinese consumers are eyeing up. The CBRE estimates that 10 percent of residential property sales in London this year will be conducted by buyers from mainland China.
However, it is not just luxury goods that are attracting the Chinese abroad. Exotic luxury destinations, once the haunts of mainly Western tourist are now seeing Chinese tourists as their main visitor demographic. The Maldives welcomed over 65,000 Chinese tourists out of a total of 392,000 visitors in the first 5 months of 2011, an increase of 56.7 percent from the same period in 2010. Sri Lanka too has also seen its number of Chinese visitors’ rise, with an increase of 83.8 percent in the first 6 months of 2011 compared to 2010.
Principally, the numbers and expenditure of Chinese tourists has a direct correlation with Chinese breakneck economic growth. As the country develops economically then more Chinese are becoming financially active, which is of great importance when considering China’s size. Furthermore, with Chinese growth still strong despite the financial crisis, many Chinese tourists are merely replacing those from other countries who have chosen to stay at home in order to tighten their belts. However, there are other factors outside the mere increase in income and demand that help to answer why increasing numbers of Chinese see the West as a place to travel and spend. Western destinations are far more reliable for luxury brands, both in terms of quality and price. Chinese import tariffs are considerably high on imported luxury goods, which has meant a flourishing counterfeit market, as demonstrated by the recent fake Apple store. Overall, the change in market will have a considerable impact in how hospitality and retail businesses are run if they want to attract this lucrative marketing stream.

Wills & Kate Fever!

We are all counting down the minutes to the Royal Wedding here at MSE! The anticipation of what the lovely Kate Middletons wedding dress is going to be like, and what sort of delightful affair they have planned is killing us! We've got our fingers crossed that the weather will be lovely and not horrendous as planned.

We hope that everyone celebrating the Royal Wedding has a great time tommorow, and if you're having a street party, have one for us!

For Anglophiles across the pond, who can't make it to the UK to celebrate the nuptials of Will & Kate, New York might just be the next best place to be!

The New York Palace hotel (www.newyorkpalace.com) in Midtown gets things started at 5:30, with a formal breakfast. Revelers can watch the ceremony on several televisions while tucking into scones with marmalade and scrambled eggs with Devonshire cream.

The Trump Hotel will be accepting guests at 5 a.m. for the Trump Royal Wedding Breakfast and the opportunity to watch the special wedding day unfold in the elegant confines of Jean Georges.

We think its great news that the entire world can tune in to this once in a lifetime event in the lap of luxury, even if they couldnt make it to England!

Congratulations to the happy couple!

Eggstraordinary

We're heading for the Warmest Easter Weekend on record! With temperatures set to hit 25c or higher this is exciting news for Britons and good news for retailers.

As temperatures have soared since last Easter, so too have sales in BBQ equipment. Homebase have reported gas sales high enough "to fuel 300,000 barbecues".

As for the Easter Eggs themselves, Sales arent rocketing nearly so much as they are for Hot Cross Buns, which Mike Prentice, group marketing executive at Spar, claims have shown a yearly increase in popularity for the last three years, helped by the fact that they are affordably treats when compared to the eggs.

For those of us who are attempting to refrain from calories over the usually gluttonour Easter Hols, a host of alternative seasonal treats are now available, ranging from the Playmobil Egg (not just for kids!) Chocolate Manicures and for those who prefer Easter with a bit of gore, The London Bridge Experience offers a zombie easter bunny, and an Easter Head Hunt!

Whatever you choose to spend your money on this bank holiday weekend, make sure to enjoy the heat!

Farewell to Knut

On Saturday afternoon, the much loved internationally famous Polar Bear Knut, who touched hearts across the world after being rejected by his mother and handraised by zoo keepers in 2007, was pronounced dead by bear keeper Heiner Kloes at Berlin zoo. Scientists announced yesterday that brain problems apparently caused the shockingly early death of Knut, Germany's four-year-old celebrity polar bear. However his final distressing moment, turning around erratically in circles, before falling into the water, has been caught on camera sadly for the world to see.

Polar Bears can live up to 30 years, and thus it is unusual for a polar bear in captivity to die so young. He was just four years, old, the polar bear equivalent of an 18 year old human.

Because of the rejection by his mother and subsequent close relationship with his keeper, baby Knut became a celebrity, with his every move being documented by TV crews, he was the centre of a mass media phenomenon, spawning toys, t-shirts, DVDs and being featured on the cover of several magazines as well as increasing the Berlin Zoo's profile and revenue by five million euros. Even MSE visited Knut when we were in Berlin in 2010, when he appeared to be a picture of health.

His being raised by hand did enchant everyone though, he drew significant controversy from human rights activists who claimed that he ought have been put down, rather than raised as a domestic pet. This however, only increased support & adoration for him from his legions of fans. Following on from his death though, the BBC have questioned whether or not it was his hand rearing led to inevitable behavioural problems.

In recognition of his superstar status Berlin Zoo have announced that they would like to stuff and mount Knuts body for display in the Berlin Natural History Museum. More than 15,000 Knut fans have so far paid tribute to him on Berlin zoo's website and many have expressed outrage at the decision to display him at the museum, demanding a worthy burial for the creature they hold so dear.

Women In The Board Room

A government-commissioned report on diversity has recommended that by 2015 a quarter of Great Britain’s top business roles should be held by women, this infers that diversity at the board table can help to make boards more effective, and less of a boys club. But is this recommendation a positive move encouraging and empowering women, or does it devalue women’s achievements by making a conspicuous show of their place in business like a false monument to equal opportunity?

In 1991 Kathleen O’ Donavan was made the first female finance director at the British Tyre and Rubber Company, this was so significant that Julia Finch at the Guardian describes this as a turning point, marking a generation of women who could have it all, families and a fabulous lifestyle, while still storming the business world. 20 years later though, women still only make up 12.5% of board members in the UK's 100 biggest firms, with only five of these having a female chief executive. Finch argues that quotas are the only way to force change, because without them “there is just too big a risk that the next 20 years will be just like the last 20”. However, we disagree with this assessment. An arbitrary number of women in top business roles will not improve the boards, the company, or the individual. We would argue however that organic growth within the company is key, and top business roles should be awarded to the most suitable candidate, regardless of gender.

While we concede that the underrepresentation of women in the upper echelons of business is an issue for wider debate. Perhaps the answer is more encouragement at lower stages in the career ladder. At an academic level women achieve higher qualifications than men, but once in the workplace, a disparity seems to occur which distances men and women in terms of achievement. The Institute for Leadership & Management explain that it is not a lack of ability or opportunity, but a lack of ambition which causes this, but perhaps the over representation of men at higher levels dissuades women from wishing to join these ranks. In a study by the LSE just last week, it was predicted that the amount of female entrepreneurs are set to double in the next 30 years. This is a dramatic prediction, and we hope that this can be achieved, but naturally and organically, with appropriate encouragement for those women, who would flourish in top positions regardless of gender, without resorting to imposing quotas.

Is introducing an arbitrary quota demeaning to women? Does it make economic sense? Contact us, and let us know what you think about this topic.

Libya: An end to the luxury hotel boom.

Following sanctions on Libya being lifted in 2003, Professor Macy Marvel at the Ecole hôtelière de Lausanne undertook in depth research on this burgeoning new market, and found that this former pariah state was looking forward to an unprecedented level of new hotel construction.

With the Corinthia Bab, previously the only 5 star luxury hotel in the country, being joined by the likes of Radisson Blu, Starwood, & Corinthia just to name a few, it seemed that investment in luxury hotels was on the rise, with Libya witnessing a mini luxury boom.

Whilst not at the forefront of most holiday goers minds when choosing a luxury destination, Libya, straddling the Middle East & Africa, and having lived under Italian colonial rule for 30 years, offers a rich experience, and the luxury market has the potential to thrive here, with the welcoming culture and such beautiful surroundings. Libya has for the most part been untapped by large numbers of commercial tourists, but with the sun, sand and sea surrounding it, this has made a utopian destination for many holiday goers in the know, hoping to relax in a beautiful location. However, without wishing to trivialise such a sensitive issue, the success of Libyas luxury hotel market is now in jeopardy.

Within the last few days, Libyan troops have been accused of opening fire on peaceful protesters, and many western nations that have criticised the violence being used by Libya's government forces. Additionally opposition groups are said to have taken control and major ports have been closed while tens of thousands of citizens and tourists attempt to flee the country.

Even if the political unrest were to be resolved instantly, it is impossible to predict the effect that this will have on the market. Though it seems unlikely to be a positive one with the tacit disapproval of many nations, and the horror stories that will no doubt flood out of the country once citizens and tourists are able to leave en masse. It is not easy to assume that Libya are going to enjoy a fast return to their luxury boom.

Please contact us with your comments on this topic.

The VAT rise

One year ago the VAT rate was dropped to just 15% as a quick fix measure to stimulate the economy. However, while the countrys leaders are at loggerheads over this, the issues on the high street certainly do not reflect those being represented in parliament.

Many high street chains, whilst more than ready to lower the shop signage to include the lower VAT rate with lightning speed last year, are failing to move so quickly on the VAT change this time around. Here at MSE, we are finding, over a week later, that customers are reaching the point of sale in well known food & beverage chains, only to find themselves being charged at a higher rate due to the snails pace that signage and labels are being changed at. In addition to this, many retailers are being accused of raising prices far beyond the 2.5% rate of VAT.

However, certainly not all businesses are causing such a stir, with many high street chains offering to absorb the VAT rise. While the effect that this will have on small businesses is yet to be seen, a members survey by the federation of small businesses found that more than 70 per cent of small businesses expect the VAT rise to have a negative impact on their business.

Outside the MSE offices in the bustle of Covent Garden however, a sea of tourists and day trippers, laden with bags bearing the emblems of high street & boutique brands alike betray the reality of a debt crisis and budget deficit. Nor does last week’s VAT increase appear to have dissuaded keen shoppers.