The UK’s inbound tourism recovery has taken an interesting turn in recent times. While the number of visitors rebounded significantly after the pandemic, the recovery plateaued in 2023. The first half of the year saw a strong recovery, with visitor numbers nearing 2019 levels. However, the momentum slowed during the second half, with the final quarter seeing visitor numbers even lower than the same period in 2022. This suggests a potential slowing down of the recovery.
A Deeper Look at Visitor Spending
The story of visitor spending is even more complex. While nominal spending (the raw amount spent) was up in the first half of 2023, it slowed down considerably in the second half, even dipping below 2019 levels. This suggests that while people are traveling, they might be spending less, potentially due to economic pressures.
Looking Ahead: A Cautious Optimism
While official statistics for 2024 are not yet available, early flight booking data suggests a similar trend to the second half of 2023. However, the data for later in the year is looking more promising, with bookings indicating a potential rebound in inbound tourism. This optimistic outlook is also fueled by improved global economic conditions and projected interest rate reductions. The overall forecast suggests a return to 2019 visitor numbers by the end of 2024 or early 2025.
Market-Specific Trends
The recovery has not been uniform across all markets. While European inbound tourism recovered significantly in 2023, reaching 91% of 2019 levels, long-haul markets have bounced back even faster, reaching 97% of 2019 levels. Interestingly, within the long-haul market, there are significant variations. North American visitors have outpaced other regions, while East Asian visitors are still trailing behind, although trending upwards.
A Look at Travel Purposes
Different types of trips have also shown varying recovery rates. Holiday visits have seen a decline compared to 2019, while visits to friends or relatives (VFR) have surpassed pre-pandemic levels. Business travel continues to lag behind, although MICE (Meetings, Incentives, Conferences, and Exhibitions) is showing signs of a faster recovery.
Analyzing Visitor Spending Patterns
The average spend per visit has been rising, mirroring inflation, meaning that real-terms spending has been closely tracking the volume of visits. This implies that visitors may be staying longer or choosing more expensive options despite the economic pressures. It also suggests that the recovery may be driven more by spending power than by a surge in travel frequency.
Economic Influences on Tourism
The global economic climate remains a significant factor impacting tourism. Consumer spending slowed down in 2023, particularly in Europe, due to cost of living pressures. This is likely a major reason why the full recovery to 2019 levels has been delayed. However, with potential interest rate reductions on the horizon, the consumer financial landscape might improve, encouraging greater international travel.
Key Assumptions and Forecast Revisions
The forecast assumes that COVID-19 will not significantly impact travel in the future and that there won’t be any major global or UK disruptions. It projects a gradual return to 2019 visitor numbers by early 2025, assuming no unforeseen events. A revised forecast for 2024 and a forecast for 2025 will be published in December or January.
