The UK is falling behind its closest competitors as a tourist destination more than four years on from the onset of the pandemic, analysis of official data shows.
Unlike other industries, tourism is still exhibiting a pre-pandemic shortfall in activity, according to new research by the Centre for Economics and Business Research think tank.
Inbound visitor numbers rose over two consecutive years to reach 38 million in 2023 but was still 7.1% short of the 40.9 million recorded in pre-Covid 2019.
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The latest projections of tourist numbers from VisitBritain suggest only “moderate improvement” this year, with visitor numbers expected to reach 38.7 million – a shortfall of more than 5%.
Meanwhile, spending is also down in real terms, according to the CEBR.
“In real terms, VisitBritain’s spending forecast for 2024 is 8.0% lower than the equivalent figure for 2019, equivalent to a £2.8 billion hole in tourist spending,” the report suggests.
“Though this is only a fraction of total expenditure, it still represents a cost to the economy and one with disproportionate impacts on certain sectors, notably those of a consumer-facing nature, such as hospitality, travel and retail.”
Factors identified for driving the continued shortfall in activity include a “general cautiousness surrounding international travel” caused by unfavourable economic conditions, weak consumer confidence and the lingering effects of the pandemic.
“This point is supported by the fact that the number of UK outbound tourist visits is also down relative to 2019, while tourist volumes globally are expected to remain down by 3% this year according to the UN Tourism Barometer,” the CEBR adds.
“However, this global shortfall is of smaller magnitude than the UK equivalent.
“Meanwhile, expected tourist volumes for Europe as a whole, covering the UK’s most direct competitors for international visitors, show a different view. Across the continent, visitor numbers are projected to return to growth relative to pre-pandemic this year.
“This suggests that that the UK is falling behind its closest competitors as a tourist destination and that there must be some country-specific factors at play.”
Competitiveness is cited with overall prices 23.5% higher than in 2019.
“This increase is larger than that experienced in competitor markets, such as the Eurozone and US,” the CEBR said.
“Meanwhile, price rises in categories typically consumed by tourists are even higher. Relative to 2019, prices for accommodation services have been 35.8% higher in 2024, while the equivalent figures for restaurants and cafes and airfares are 28.7% and 47.6%, respectively.
“These heightened costs are exacerbated by exchange rate changes.”
Tougher barriers to entry for visitors are also seen as a factor.
“Meanwhile, more recently, domestic unrest led to several countries issuing advice to their citizens regarding the safety of travelling to the UK, which presents downside risk to the summer tourism season.”
The termination of the UK’s tax-free shopping scheme post-Brexit is seen as another contributing factor.
“By making the cost of travel more expensive, abandoning this policy is seen to disincentivise trips to the UK, with travellers on the margin instead opting for competitor economies that still operate such schemes.
“This has a disproportionately damaging effect, given that users of these schemes tend to be higher spenders than the average tourist.”
The report concludes that the UK tourism industry “continues to face difficult trading circumstances”.
The CEBR adds: “Under the Tourism Recovery Plan set by the Johnson administration in 2021, inbound tourism was to have recovered by the end of 2024.
“The anticipated shortfall in tourist numbers and real expenditure based on the latest data suggest that this target will not be achieved.
“With a new government now in place, helping the UK return to being a flourishing tourist destination will likely be a topic for continued discussion.”