The Government has been slammed for "lamentable understanding of tourism and a lack joined-up thinking" after it today announced an 18% cut in funding for VisitBritain over three years.
The cut in funding means that, in real terms, the Government will have reduced the tourist board's funding by around 50% between 1997 and 2011.
Ros Prichard, chairman of the Tourism Alliance, said: "To do this to a successful organisation that has generated around £10b for the UK economy and £2b for the Exchequer over the past 10 years and supports over 23,000 jobs across the country makes no sense whatsoever.
"To do it in the lead-up to the Olympics when the Government's own research shows that there is the potential to generate an additional £2.1b in tourism expenditure for the UK economy borders on sheer madness."
The problems will be compounded by a reduced level of tourism spending at the local and regional levels over the next three years, the Alliance predicted.
The Local Government Association has already concluded that the outcome of this month's Comprehensive Spending Review (CSR) will almost certainly mean in cuts in local authority services.
For local authorities, the provision of tourism services and marketing is not a statutory requirement meaning these activities will be directly in line for providing savings.
Similarly, the CSR reduced the Regional Development Agencies' single programme budget from £2.3b to £2.1b and implemented a value-for-money programme that will realise further savings of £349m per annum by 2011.
Again, this means that there will almost certainly be reductions in the level of funding for regional tourism development, the Alliance said.
"This lack of understanding and joined-up thinking makes a mockery of the Government's new Olympic Tourism Strategy that was launched just last month," Prichard said.
"To achieve tourism's potential up to and beyond the Olympics, we need to invest in tourism development and marketing to challenge competitor destinations for overseas visitors and motivate more UK residents to holiday in the country. This is a simple business principle that the Government just doesn't seem able to grasp."
VisitBritain chairman Christopher Rodrigues said the cuts were disappointing.
"We will need to become even more efficient in the marketing partnerships we have with the travel industry and the regions and nations to plug the gap this settlement has created," he said.
Stephen Dowd, chief executive of trade body UKinbound, said he was "shocked and horrified" by the cuts, suggesting that the DCMS "has completely lost the plot".
"The London 2012 Olympics could provide a once in a generation opportunity to promote the UK as a tourism destination to a global audience and for the Secretary of State responsible for the UK tourism industry to forego this opportunity is utter madness," he said.
"James Purnell has emasculated VisitBritain and our competitors will be rubbing their hands with glee."
By Daniel Thomas