Destination marketing: City of London

The City

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OF LONDON

Suggestions of marketing initiatives and marketing strategy for The City

By Tatiana Velez Barrientos 06033926 International Hospitality Management and International Tourism Management BA

Executive Summary The City of London’s Local Tourism Association (LTA) has commissioned Velez’s Consultancy to undertake this study to assess the tourism potential and to suggest a number of destination marketing initiatives for the locality.

On the First part of the report, a market research in the form of a SWOT analysis has been conducted to assess the locality’s tourism potential. Specific strengths and weaknesses of The City of London (that to the purpose of this report will be addressed as The City) have been identified and analyzed to determine how they affect possible tourism development.

The Facts: The Facts:

Additionally, trends have been identified and addressed on the opportunities and threats section.

The second part of the report intends to set The City within it’s environment and evaluates it’s competition at the market, leading to the third section where the potential markets are explored and discussed in detail.

On the fourth part of the report, which also serves as conclusion, a marketing strategy is envisioned, linking to tactics and possible facilitation requirements and finally suggesting possible packages and products.

map to the report:

We hope you find this report useful.

Market research# Promotional recommendations# Key markets# Market strategy and conclusion#

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1. The City has a unique City status since AD 43 Commonly known as “The Square Mile”, The City has held a unique city status since AD 43; itʼs boundaries have remained almost unchanged since the Middle Ages being just over one square mile (1.12 sq mi/ 2.90 km2)

1. Market research: the objective of this section is to outline the City’s tourism potential

2. It’s population grows by 33 times during the day It has a population of 10,000 people which makes it the second smallest town by population in the UK after St Davids in Wales, but has an additional population of around 330,000 who work there mainly in the financial services sector.

This makes it a busy destination during the week and an ʻempty townʼ on weekends.

3. It is a unique authority in Britain and has some unusual responsibilities such as:

SWOT Analysis: Strengths The City of London has been at the heart of London for 2000 years. Although it is now part of the metropolis London, which is composed of 32 boroughs, it still holds a city status and is full of historical buildings which are blended with rich and innovative modern architecture ( Please refer to table 1) The City is well connected and has a wide choice of transport and accessibility, with twelve Tube stations, two DLR Stations, three National Rail Stations, one London Pier and aprox. twenty-eight Cycle hire docking stations. Furthermore it is reasonably small (1.12 sq mi) which makes it possible to walk within.

The City of London counts with a wide range of accommodation facilities; amongst others with four five-star and twenty four-star hotels.

Of all UK visitors, 47% stay in London as part of their visit, making it the most visited City in the UK. As The City is part of the London as a Metropolis, a portion of this visitors would by default visit it.

Weaknesses Although The City of London owns a city status, it is regarded as part of the metropolis of London and this aspect could undermine the perception of it as a destination on its own.

The City has a reputation of a business only district, and this stigma ‘repels’ leisure only travelers as it is usually very crowded with its working population and is perceived as an expensive destination.

By being in-between of other ‘more attractive’ London attractions, the City is almost a transit only area. Furthermore, with the occupancy of hotels and other accommodation facilities being on it’s majority taken by business travelers, leisure travelers are somehow obliged to stay elsewhere during their visit.

Having itʼs own police force and owning and running markets (Old Spitafields Market and Billingsgate Fish Market), parks and forests (Hampstead Heath and Epping Forest) and bridges outside itʼs boundaries. It also has one Hospital several Schools and Universities.

4. It is the Third largest UK funding-patron of the arts

By overseeing the Barbican Centre it also subsidies several important performing arts companies, museums and heritage sites. (http:// www.cityoflondon.gov.uk/ Corporation/LGNL_Services/ Leisure_and_culture/) 5. In 2008 accounted for 4% of UK’s GPD

London is the world's greatest foreign exchange market, with much of the trade conducted in the City of London. Of the $3.98 trillion daily global turnover, as measured in 2007, trading in London accounted for around $1.36 trillion, or 34.1% of the total.

Architecture in the City

The City’s architecture table 1

historical sites

skyscrapers

parks, markets

Survivors of fire and bombing

13 Skyscrapers

13 Gardens

The Guildhall The Royal Exchange Dr. Johnsonʼs House Mansion house

and tall buildings including the Heron Tower = 202 Mt. 30 St Mary Axe (The Gherkin) = 180 Mt. Londonʼs first ecofriendly Skyscraper

within its boundaries, also runs numerous locations beyond itʼs boundaries including Epping Forest, Hampstead Heath

55 Churches

6 over 100 Mts

4 Markets

within itʼs boundaries including: All Hallows-by-the-Tower 675 Saint Paulʼs Cathedral 1677 The Monument built in the 12th century

buildings approved or under construction; one being The Heron Plaza hotel = 135 Mt. and one The Heron which is going to be residential = 112 Mt.

Smithfield Market (largest Meat market in the UK) Ledenhall Market Old Spitafields Market Bilingsgate Fish Market

a few

One of London's principle

7 Universities

small sections of the Roman wall which was built in late 2nd Century

examples of concrete Brutalist

The Cass Business School and the Giuldhall School of Music and Drama amongst them

Opportunities As previously mentioned, 47% of the UK visitors stay in London as part of their visit; this is possibly the City’s biggest opportunity. There is room to attract a significant amount of visitors to the City by targeting and concentrating on creating awareness of what it has to offer to the relevant tourist segments.

The latest figures from the International Passenger Survey (IPS) reveal that the number of people visiting London in 2010 grew for the first time since 2006, with 14.6 million journeys made - up almost 3 per cent on the previous year.

2010 proved to be particularly successful for the capital as it bucked the trend for the rest of the UK, which suffered an overall decrease in visitors of 4%.

The figures show that the capital was a strong magnet for tourism and business with visitors spending a record £8.6 billion; an increase from the previous year of 5%. (IPS 2010) The City is a business driven destination and the potential of MICE Tourism is enormous. If considered that the MICE market accounts for 27% of all overseas visitors and 28% of all inbound tourism earnings in the UK. As part of it it’s cultural heritage, the City owns and runs several markets and festivals, this could be

architecture, the 1960s Barbican Estate

considered an asset when targeting leisure visitors; furthermore as part of this, the weekends and bank holidays are when the ‘crowd’ of business travelers is less imminent. Therefore the weekend would be the equivalent of a ‘mini’ low season and leisure tourism could be encouraged.

There is a potential to incorporate within the cultural-heritage visitors agenda the new architecture the attractions that the city has to offer.

Threats There has been a reduction of domestic overnight stays in London and the UK due to the economic recession which will inevitably affect the City as a destination (The City only accounts for 4% of London’s room supply); furthermore the Government cuts on funding on the past months could influence negatively the subsidy of leisure and culture.

According to The European Tour Operators Association “there will be a fall by 50% for 2012 due to the effect of the Olympic Games.” (MIntel 14.03.11) The association said that London hotels were putting up rates for summer 2012 which was stopping key long-haul markets such as the US from getting “viable rates” High taxes and the difficulty in obtaining visas to visit the UK have also been stated as reasons for the decline in inbound bookings.

Overseas visits Q3 2010 (Source: London and Partners, The official promotional Agency for London)

2. Promotional Recommendations: The objective of this section is to identify the key target markets and to envision a marketing strategy for The City ‘ By 2016, London will be recognized as the leading global city for tourism and as a constantly evolving destination.

London will deliver a high quality visitor experience, continually surprising and exciting our visitors with a vibrant, contemporary, diverse offer in a historically and culturally rich environment. Tourism in London will contribute to the economic success of the City and the quality of life for Londoners.’ (LDA 2010-16 Documentation) Historically, the number of international visitor nights to London has shown signs of recovery since the terrorist attacks in the US in September 2001. By 2006, international tourist nights by both business visitors and leisure visitors were back above levels in 2000. (LDA 2010-16) “Over the seven year period between 2000 and 2007, the average growth rate of leisure tourist spending increased by 2.4%. This compares with an average annual growth rate of 1.5% for business tourists over the same period”

Strategic Management and marketing objectives Enhance the long-term prosperity of local people Delight visitors by maximizing their satisfaction Maximize profitability of local enterprise and maximize multiplier effects Optimize tourism impacts by ensuring a sustainable balance between economic benefits and socio-cultural and environmental costs (D.Buhalis)

London is a well positioned destination and is perceived globally as a mix, multicultural and exiting place to visit with strengths in commerce, education (with 43 universities making it the highest concentration of Higher education in Europe), entertainment, fashion, finance, professional services, transport and tourism amongst many. Furthermore alongside New York, The City is the world’s largest financial centre and has the largest City GDP in Europe. It also has the most international visitors of any City in the World.

London is the largest metropolitan area in the United Kingdom.

It’s administration is coordinated by the Greater London Authority (GLA), while local administration is carried out by 33 smaller authorities. The City of London is at the core of this metropolis, being the only borough that holds a city status. London is, due to it’s history and heritage and world wide recognition, almost unique and not substitutable.

Existing Hotel supply (Central, Periphery and The City) Source: Cushman & Wakefield Research 2009

Heathrow airport (London’s biggest of it’s 5 Airports) is the world’s busiest airport by number of International passengers. The top five markets of inbound tourists are the USA, France, Germany, Spain and Italy, accounting for just under 50% of all international visits.

Icons which The City competes include: • Westminster and The BigBen • Camden and The Camden Lock • Southwark and The Tate Modern

Current Situation Of The City

• Tower Hamlets and The Tower Bridge • Canary Wharf as London’s second financial district

Map 1. City of London’s adjacent Boroughs

Monthly The City as part of London the metropolis The City’s competition at the market, to the purpose of this report, will be narrowed down to it’s adjacent boroughs. Because these are the ‘destinations’ that share the widest proportion of tourism of London as a whole; accounting for the biggest proportion of tourism attractions, accommodation and transport links in the capital. (Please see map 1) Most of these boroughs are well-known and established and enjoy a strong reputation for various tourism products and iconic landmarks. Some of the most important boroughs and

The list of all the attractions London has to offer is endless and listing them individually does not help to stress enough the fact that the competition for the leisure tourist in London is very tough.

Although The City has a big potential and a strong portfolio of historic heritage attractions, it needs to undertake several activities to remain competitive and expand it’s share of the market. This will be further discussed in later chapters of this report.

Each of the above mentioned boroughs have a wider offer for leisure tourism than The City and a stronger reputation as a destination, given the fact that The City is perceived as a financial district only. Another important factor which could ‘repel’ the leisure tourist off The City is, that

occupancy Trends in the City

Daily REVPAR v Weekly Average

Table 3 and 4 from top to bottom

Target Markets Customer profile

Existing and possible target customer profiles: 1. Business A businessperson is an entrepeneur or someone who is involved in the management (at any level) of a company. The term businessperson usually refers to someone with a "white collar” occupation.

2. Hipsters Hipster is a slang term that first appeared in the 1940s, and was revived in the 2000s and 2010s to describe types of young, recently settled urban middle class adults and older teenagers with interests in indie rock, independent film, magazines such as Vice and Clash, and websites like Pitchfork Media.

3. Young professionals and/or independent young Europeans

4. Baby Boomers In Europe and North America boomers are widely associated with privilege, as many grew up in a time of affluence.

As a group, they were the healthiest, and wealthiest generation to that time, and amongst the first to grow up genuinely expecting the world to improve with time.

5. Residents, Return visitors and/or do not consider themselves as tourists This group is less likely to want to visit must see attractions and/or have the non-tourist approach, being a relevant target to approach when promoting night live and local markets 6. Heritage/ Culture tourist People with postmodern lifestyles, generally in the higher ʻsocioeconomicʼ groups and ages 35-64 (Riuz 2004). It is a growing high spend market with a projected annual growth of 15% (WTO 2000) who are typically from the above mentioned groups (business, residents and VFR, etc).

it’s accommodation is mainly booked at comparative high prices by business tourists during the week and running at low occupancy during the weekends. This could be potentially off putting to some leisure tourists who are after the London vibrant atmosphere.

Some other amenities such as shopping and ‘restaurant/night life’ and entertainment are also well-established in the areas mentioned above and have a stronger reputation than in The City with perhaps the exception of the Bishopsgate area (towards Shoreditch) were the ‘night-time’ economy does feature.

3. Target markets for The City: a bottom up approach The visitor markets for the different areas in London are varied especially according to the different places and attractions, composed of people of all ages and all backgrounds, with European visitors as “the main source of gains in the quarter, increasing 8.8%.

While the majority of these were holiday visitors, there was an eyecatching 26% boost from European business arrivals. The Holiday visitors (+5.4%) were the main source of growth in the quarter, while the business sector (+18%) continued its recovery trend.” (Overseas visits Q3 2010) While maximizing it’s potential of weekend leisure tourism including the residents of the metropolis as day visitors, The City’s main opportunity is to exploit the demand on the business sector by encouraging the night life and events during the week targeting the business people and residents. (See table 3 and 4) Fostering the potential for attracting the segments that are more likely to enjoy The City such as: the ‘Hipsters’, Repeat visitors, Existing visitors, Independent young Europeans, Baby-boomers and Heritage and culture tourist could generate a lively atmosphere when the business sector is on halt; i.e weekends and low business seasons. (For a summary of the profiles please refer to Customer Profile on the side of this page)

“Overseas visitors are looking for quirky ‘English’ places, which do not resemble their own High Streets.

Londoners and Home visitors are looking for interesting and exiting new places, and more interesting products than they can find in their standard day to day lives. They also enjoy the idea that they are to ‘new’ areas that are becoming increasingly fashionable, rather than going to established tourist spots” (Briggs 1999)

Bottom up approach and developing products As the City of London has an already wide variety of existing products, the most cost effective and viable approach seems to be the bottom up approach. This focuses on picking the ideal tourist and approaching them through the relevant channels enhancing the qualities of the existing products by customizing the appeal of the already existing factors of the ‘attractions’.

By targeting the chosen audiences, the product (different aspects of the destination) will be tailored to different wants and needs becoming a dynamic destination by getting closer to the ‘ideal’ customer.

As identified by VisitBritain.org; Getting ‘closer’ can take different forms: 1. When the customer uses our channels (Online,CRM,Mobile) we will aim to personalize our content for the customer wherever possible, recognizing that one size does not always fit all 2. If the customer opts not to use our channels (or is unaware of them) we will bring our content to them. A key part of our strategy is to syndicate our content to the touch-points where travel decisions are made 3. We will do our best to understand customers better by ensuring we gather quality contact details and repay the customer by providing only the information that is relevant to them

4. Envisioning a marketing strategy for The City The City needs to recognize and tailor it’s marketing strategies to fit the twenty-first century, adapting to more mature technology and digital savvy customers, were traditional forms of “pushing information to a large volume of potential customers to get a proportion to ‘purchase’ the brand may not be sufficient in itself” (VisitBritain 2010) Therefore the below strategies might prove effective when targeting the potential and existing customers, most of these strategies will outline the relevant cooperation and facilitation for the relevant tactics and link towards the market trends of the strategy when appropriate:

The City online...

Web presence The current web presence for The City as a touristic destination on itʼs own when searched as The City of London, visitthecity.co.uk comes down on a google search on the top five possible options, however when browsed from other sites such as visitbritain.com, londonandpartners.com, tripadvisor.com amongst many, the browse is misleading, in many cases directed to the government site cityoflondon.gov.uk. and in some cases non existent.

Web site (visitthecity.co.uk) As a web site for tourism purposes, the web site is functional, however it presents a high amount of text and few pictures.

The different sections are limited and ʻdryʼ and not ʻeasy to buyʼ, however compared to the rest of the London metropolis competitors it is well presented, please note this is not meant to be a positive remark (refer to snap shot 1 for comparison)

Packaging The City of Londonʼs web site seems to lack on clearness of products which are not easy to buy, the links and accessibility to packaging and encouragement seems weak and most of the images lack on character or are not relevant.

1. E-marketing: Includes web site, online

presence, social media, online interaction and e-packaging

The City needs to position itself in the e-world as an actual destination with a consistent and strong visibility on it’s own, (please refer to “The City online” box for comments regarding visibility, web-site layout and packaging) The City needs: A new, more interactive web site with fresh layout, more images, and fresh ideas to target different segments Twitter account Facebook page Mobile applications Top visibility on google and other engines Search engine optimization and positioning Social media and web design are proven to be effective marketing tactics (please see Table 5), when managed on an effective manner, they have proven to empower customer advocacy and ‘word-of-mouse’ and to encourage dialogue with ‘user-generated’ content.

Some specific e-marketing ideas as shown on the snapshots 1. ★ New Zealand’s tourism web site > targets different visitors with tailored links for geographical segmentation: it is innovative and attractive and could be used by The City focusing towards “the purpose of your visit” (i.e., age groups and/or interests) to direct them to the different activities and possible ‘attractions’ linking to offerings for specific target groups. ★ Australia’s web campaign > it is mainly based in image and symbol search; this makes it a catching, simple and approachable website. It is full of interactive maps, packaging resources, accessible tools which range from emotional connections to more practical tools (i.e. MICE advice and support) The above might prove ‘relevant examples’ that The City could incorporate into it’s web site. By having a more approachable web-site, encouraging a higher and more interactive site with the specific audiences segmenting it appropriately.

Furthermore, the interactions could be linked to specific tactics such as social media groups and other forms of e-marketing (i.e. Facebook groups and events, twitter, e-journals, professional magazines, city guides, blogs, etc) Within these and the below tactics the Local government will play an important role facilitating the initial web platform while cooperating with the different players including all the local stakeholders to ensure appropriate packaging can be achieved; this cooperation and built relationship will play a vital role within most (if not all) the suggested strategies.

2. Affinity marketing: Strategic partnerships, Audience sharing, Branding association

Visit London: http://www.visitlondon.com/ attractions/culture/only-in-london, can be seen as a good example, were “famous Londoners” share their insights and favorite things to do in London.

The City could use a similar tactic were famous people (that work or live in The City, professionals or foodies) talking about the hidden gems of The City. This tactic could be further developed by generating ‘easy-to-buy’ packages that are specific.

Creating partnerships with local stakeholders to promote and support the packages for the identified audiences on the relevant times of the day and week; and with external stakeholders to encourage promotion.

3. Stealth/Ambience Marketing: the

message is part of the environment and Lifestyle targeted – e.g. young socializers, businesses, highspending shoppers, up-market audience...

This links to the web targeted audiences and the other mentioned strategies. The idea is to create cutting-edge offers, to refresh the image of The City to show that there are specific assets that are ‘common’ that would be appreciated by certain profiles ... i.e. ‘just another LOCAL market’ Table 5.

Snapshots 1.

Web approaches targeting ideas and “easy to buy� approaches

Targeting Specific Markets

Some examples for images that say more than words with emotional connections

this could help dissolving the reputation of a business only district, attracting more leisure only travelers and enhancing business travelers experiences; showing a city that is part of the day to day life. Looking at the audiences individually and which products could enhance their experience and creating activities to balance seasonability.

4.Aspirational marketing: Status/Image/ Benefits, Reputation (image) by association

The City status and reputation building can be started by learning from New York’s 2003 to advantage further market opportunities: “to offer the city as its contents of inimitable mystique as a brand available to corporate purchase”. This was achieved by having city agencies endorse products, corporate names associated or exposed in landmarks, franchising names of ‘neighbourhoods’ to all sorts of products, sponsoring credit cards that allow holders to redeem points to be used in the cities attractions.

Some of these tactics could prove useful when combined with perhaps choosing some industries, personalities, landmarks and historical events that could provide a basis for strong branding and story telling...How about adopting an Olympic figure to build on reputation?

Suggested packages and products: Delegate pass to encourage business visitors and MICE to stay longer. This pass could be ‘packed with benefits for a Companion when working in the City’ i.e. companion eats for free, free entry to museums, reduced rates on weekends Museum nights to encourage business visitors, locals and create a boost on the nightlife and build a bridge to promote other ‘nightlife’ activities Restaurant/Pubs tours combined with walks, they could be tailored to different interests; this could be designed on the web site by specific target with What is the point of having a castle and not having anything happening in it? > Create events in and around new architecture We’re open for business...even on the weekends! > Create a buzz around the weekend markets to generate a flow of people into The City; then partner with museums, restaurants, bars and shops to have weekends where everything is reduced. This could be done on the high seasons where London is full of tourists to promote flow into The City and hopefully generate volume of visits that could generate ‘word of mouse’ and manifest in high social media exposure.

This could affect return visitors and recommended new tourism positively.

London and partners would be the first partnership that London as a city could benefit from.

By using the platforms already created by the ‘official promotional agency for London’ and incorporating them to The City’s strategies. This partnership could help to develop further other strategies such as Film tourism.

Making sure that all the products offered by The City as a destination are consistent and linked with the City’s image, could prove to be an effective platform to explore new emotional connections, ‘out-of-thebox’ ideas and web presence to position The City as an attractive destination.

5. Street/Guerrilla marketing Unexpected and

unconventional, usually cost-effectiveMemorable, generates buzz and positive

A very successful campaign to put the city of London in the map was the t-mobile flashmob in Liverpool Street. In this case the destination aiming to be promoted, however this sort of publicity stunts as they are usually quite effective and The City could aim at making sure it’s name is on them, especially if they are in it. Facilitating and even commission similar flash mobs could be a potential cost effective strategy for putting The City in the map.

Bibliography

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