THE next year will be a "defining moment" for tourism with one in five people expected to holiday at home instead of going abroad, industry leaders said yesterday.

VisitBritain believes the weakened pound could also lead to an increase in the number of overseas visitors to the UK.

Now, the agency is launching a £6.5 million campaign to run in the UK and abroad highlighting what the UK has to offer tourists.

However, Westcountry tourism chiefs have warned that holiday firms in the region must not simply slash prices and end investment because after the recession visitors will not come back.

VisitBritain executive chairman Christopher Rodrigues said: "This is a time to talk about the importance of our industry: an industry supporting 2.7 million jobs, 200,000 small and medium-sized businesses and worth £114 billion.

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"Despite current economic woes, tourism is one of the few industries that could show growth, with a real opportunity to grow to a £133 billion industry by 2018."

His comments came as a review of the industry demanded greater support from Government, without which rural and coastal economies could be especially hard hit.

Tourism is worth 12 per cent of the South West's economy. The review reveals the "high number of new business start-ups in tourism and how tourism plays a vital role both in regeneration and in the rural economy".

It warns that without Government support and greater co-ordination the industry will "continue to punch below its weight".

It could mean missing out on 114,000 jobs and £20 billion which could have boosted the UK economy.

"This means less employment for the young and part-timers. Less support for rural economies and coastal towns. Less skills development. Fewer new business start-ups."

Malcolm Bell, chief executive of South West Tourism, said there was a "lot of potential" for tourism to have a "good or OK" year but traders must not resort to drastic discounting which could damage the industry in the long-term.

"There are real challenges in terms of making sure we convert new or lapsed visitors into repeat visitors."

He warned the "fear of unemployment" could deter many from holidaying at all while businesses had to think: "How can we deliver value at the same or even lower price while competitive enough to have money left over to invest? The one worry I have is that in the last recession there was ridiculous discounting just to get turnover and it was only when we came out of it in the 1990s a lot of the stock was very tired."

The review, published yesterday, was commissioned by the Department for Culture, Media and Sport and will be used for VisitBritain's three-year strategy.

Mr Rodrigues said: "Our priority this year has to be working with the industry to encourage Britons to explore their own country and foreigners to visit us right now, when we offer great value.

"Success will mean increasing numbers of visitors, spending more in local economies and creating jobs – good news for Government and smaller businesses in a deepening downturn."