For the first time, inbound visits to the UK surpassed pre-pandemic levels in the first quarter of 2024, says data published by VisitBritain. Joss Croft, CEO of UK Inbound, noted that the US and Canada have been standout performers, with a record 1.1 million North Americans visiting the UK during the period.
“Europe has recovered too, but China is very slow,” he added “It [China] was our second most important market in terms of spend pre-pandemic.”
In a survey of UK Inbound’s 400 members, which include tour operators and accommodation providers, 78 per cent said that business volume in June and July 2024 was above or the same as 2023, with 82 per cent saying that their profits were the same or above.
However, confidence has dipped slightly. In December 2023, 73 per cent said they felt positive about future trading; it is now 60 per cent, due to concerns about softening US and European demand.
Impact of Brexit
Brexit has introduced new challenges for European tourists. “You need a passport to travel to the UK now and a lot of Europeans who tend to holiday at home can travel throughout the Schengen area without a passport. It’s a big expense for a family of four to travel to the UK, so that has an impact,” Croft explained.
European groups, particularly youth and student groups, are not visiting the UK as frequently. “There is now an agreement that French registered school groups can travel to the UK on an ID card as long as their teacher/leader has a passport, but the agreement does not cover summer camps, music tours, or sporting tours,” Croft explained.
“If there is a Turkish national in a German school group, for example, he or she will need a visa. They will not want to disenfranchise that particular student, so they just won’t come to the UK. Ireland, Malta and the Netherlands are picking up that business that would previously have come to the UK.”
Withdrawal of Tax-Free Shopping
Additionally, the UK used to offer tax free shopping to non-EU tourists until January 2021 when, at the end of the Brexit transition period, the Government decided to withdraw the scheme.
The removal of tax-free shopping for international visitors has diverted their spending to European cities like Milan and Paris.
The Government’s arguments for scrapping the scheme were that the economic benefits were unclear and that it appeared to not benefit the whole of the UK equally.
Regional opportunities
In fact, Croft argues that a big opportunity for the UK tourism sector would be to introduce tax-free shopping for Europeans, as this would directly benefit the UK regions.
He acknowledged the marketing challenge involved in encouraging international tourists to visit the regions.
“We have wonderful countryside, but people see the UK very much through the lens of London and they think it’s quite urban,” he said. Half of all international visitors to the UK do not venture outside London.
Croft noted that in France and Germany, tourist visitation is more spread geographically across the countries.
In the latest Nation Brands Index the UK has maintained its high rankings for tourism and culture, but its scores for natural beauty and rest and relaxation come in lower.
The ranking for ‘warm welcome’ has dropped to 19th place, the UK’s lowest ranking in this category. This decline suggests that international perceptions of the UK’s hospitality and friendliness have diminished compared to previous years.
Hotel investment
The UK is the most heavily invested market in Europe for hotels with £3b transacted in the first half of 2024. Half of that investment was in London and 52 per cent was in the upscale, upper-upscale and luxury segments.
This high-end investment has an impact on prices generally, and there is a big difference between average hotel prices when comparing London with the rest of the UK. In the regions, average daily rate was £112 in Q2 2024 while ADR stood at £237 in London, says Hotstats and Knight Frank.
“Prices are high for hotel accommodation. Are they justifiable?” commented Croft. “I am getting questions from some members about our value-for-money proposition. This is challenging because there are parts of the UK where you get fantastic quality and fantastic value for money, for example, Newcastle, the North East of England, and the east coast of Scotland.”
He added: “People talk about overtourism, and there may be small pockets of that; but there are also parts of the UK that offer fantastic British experiences that are desperate for business.”
Key elements for future growth
Croft highlighted three major elements crucial for international tourism: means, money and motivation.
Means refers to factors like documentation required (how easy and affordable is it to obtain a visa?), and airline capacity. Croft noted that Virgin Atlantic has decided to suspend its route between London Heathrow and Shanghai Pudong International Airport, primarily due to the challenges and increased costs associated with having to avoid Russian airspace. The suspension is symptomatic of a general reduction in airline capacity between western countries, like the UK, and China.
Under the second element, money, Croft highlighted that the UK is a comparatively expensive destination, due to air passenger duty, VAT on accommodation, and the end of tax-free shopping.
Thirdly, how motivated are tourists to visit the UK? Croft said that the UK is “enduringly attractive, but our tourist boards are not funded as well as competitor tourist boards, so we are losing share of voice.”
Notwithstanding such challenges, the UK arguably continues to punch well above its weight in the tourism stakes, as the sixth most visited country in the world (38m visitors in 2023), benefitting from the fifth highest level of inbound tourism spend (£31.1bn).