Tourism is Back: UK Holidays are Back From Break

The state of tourism in the UK

COVID-19 restrictions brought the tourism industry to its knees, but the sun is shining once more on travelling abroad.

According to the Office for National Statistics, overseas residents made 31.2 million visits to the UK in 2022, up a staggering 387.5% from 2021.

The relaxing of COVID-19 travel restrictions had people packing their suitcases and dashing for the nearest airports. However, lingering COVID-19 concerns in early 2022 and soaring inflation meant overseas visits were still 23.7% lower than 2019 pre-COVID-19 levels in 2022.

VisitBritain anticipates 37.5 million trips to the UK in 2023 and a total recovery isn’t expected until 2024.

More US visitors have rushed across the pond than before the pandemic, with the pound’s weakness against the dollar giving them more bang for their buck. The scorching heat of Europe also hasn’t garnered many fans. Chinese tourists have made fewer trips, as China’s been slow to lift travel restrictions. Subdued European tour group sales have limited visitor numbers.

Businesses need tourists to loosen their purse strings  

Overseas residents spent £26.5 billion on their UK visits in 2022, down £28.4 billion on 2019.

US tourists’ deeper pockets have raised spending, helped by vouchers given instead of refunds for COVID-19-affected trips. For many US tourists, the UK is a playground for shopping, with everything much cheaper because of the favourable US dollar rate to the pound for most of 2022.

The slow recovery in tourism from China and Hong Kong is preventing spending from reaching 2019 levels, given that Chinese tourists were the second most valuable income source (6% of inbound UK expenditure pre-pandemic, according to the DCMS). Soaring inflation has also punched a sizeable hole in inbound and outbound spending.

VisitBritain expects inbound visitors to fork out £30.9 billion in 2023, 90% of the 2019 level in real terms, as inflation curtails spending.

Many UK businesses want VAT-free spending reintroduced for tourists to attract wealthier spenders.

The Brits are back abroad

Brits’ appetites for trips have grown after being locked in for so long, with people choosing to save money usually earmarked for socialising for a future holiday. This has made holiday bookings somewhat resilient to shrinking disposable incomes.

Travel has become a top priority for many UK residents, with 71 million visits abroad in 2022, smashing 19.1 million trips in 2021, but 24% lower than the 93.1 million visits in COVID-19-less 2019.

Holidays aren’t just a nice to have purchase anymore

The cost-of-living crisis has hit families hard, making package holidays, flights and hotels more expensive than ever. Some holidaymakers are opting for all-inclusive deals to keep costs under control.

Since COVID-19 was a saving period for some, people are more willing to indulge in a holiday and pay higher prices than falling disposable income levels should suggest.

Airfares on more than 600 of the world’s most popular routes soared by 27.4% over the year through February 2023 because of higher costs and a global aircraft shortage, according to the Financial Times’ analysis of Cirium data.

As to how long consumers will continue to indulge in the beaches and sunshine of abroad – it’s unclear. For now, airlines and hotels are benefitting from the prioritisation of travel after two years of people being trapped at home.

Embracing destinations that are only a train ride away

While holidaying abroad remains the most popular choice for Brits, staycation bookings remain high. Travel costs, high energy prices and the cost of living are sustaining demand.

An RSM UK survey found 64% of respondents were planning to take a UK break in 2023.

Airport and train strikes have raised travellers’ stress levels. Major UK airports have faced several workforce strikes in 2023, making domestic staycations more appealing.

Climate change will reshape airport destination boards

Extreme weather is wreaking havoc on holiday plans and it's here to stay. The summer of 2023 has seen wildfires barrel across Rhodes and Corfu, forcing hundreds of tourists to evacuate. Unbearable temperatures across Southern Europe have closed tourist attractions and holiday destinations.

With 12 European countries breaking monthly temperature records in 2022 and 2023 set to be another scorching year, the European summer is under threat.

InsuranceandGo’s poll of 2,000 revealed 67% of UK holidaymakers had changed their travel plans because of the extreme heat in 2023; only one-third were still planning to travel during the peak summer season.

Severe summer heatwaves will redefine future destinations and holiday seasons. Traditional tourist hotspots may no longer retain their status in the coming years. However, in the short term, last-chance tourism will thrive; people will continue to travel to places that’ll be severely affected by climate change while they still can.

A sunny forecast for British tourism

VisitBritain forecasts a return to pre-COVID UK tourism by the end of 2024 as global cost-of-living pressures ease. Deloitte expects the UK tourism market to be worth £257.4 billion annually by 2025. City breaks in places like London, Manchester and Edinburgh and visits to the Lake District’s rolling hills continue to draw tourists’ eyes. Inbound tourism is expected to hit £51 billion in 2025, according to VisitBritain.

The UK’s international tourism balance of payments will be in surplus in 2023 for the first time in 40 years.

Britain is flourishing as a popular holiday destination for both domestic and international visitors. Brits are still ditching European beaches for a coastal break and less-frequented areas like Manchester and Liverpool are welcoming more tourists. Repeat visitors are also making up a large share of inbound visitors, staying longer than first-time travellers and spending more – an exciting prospect for businesses.