Tourist spending gap widens in London despite rise in overseas visitor numbers
New figures from New West End Company have shown that the tourist spending gap has widened in London from pre-pandemic levels despite a rise in overseas visitor numbers.
The organisation said the figures are evidence of the stark impact that the absence of tax-free shopping is having on international visitor spend which is worsening quarter-on-quarter.
According to New West End Company, flight bookings to London from the US were up 17% in the three months to June 2023 on the same period in 2019, but the total spent by American visitors in the West End was down 1%. Furthermore, travel from the GCC countries to London was up 7% compared to four years ago, but spending decreased by 17%.
Dee Corsi, chief executive of New West End Company, said: “It’s plain to see that more tourists are becoming aware of the tax-free shopping issue and choosing to spend their money in European cities other than London. While it’s reassuring that our capital city hasn’t lost its appeal when it comes to attracting overseas visitors, the widening gap between footfall and spend in Q2 should set alarm bells ringing in Westminster.
“For West End businesses, this is a particularly acute issue as international visitors make up a significant proportion of all retail and leisure sales. The most recent data indicates a worsening trend of lower spending from international visitors, as word gets out that Britain no longer has tax-free shopping.”
In contrast, US spend in France was up 183% in the second quarter of 2023 compared to 2019 levels, and up 174% in Spain. Similarly, spend from GCC visitors rose by 118% in France and by 112% in Italy.
Corsi added: “For West End businesses, this is a particularly acute issue as international visitors make up a significant proportion of all retail and leisure sales. The most recent data indicates a worsening trend of lower spending from international visitors, as word gets out that Britain no longer has tax-free shopping.”
A separate survey by the New West End Company found that 77% of international visitors to the West End said they would spend more if they were able to claim back the VAT on their shopping. This was up 5% on the same question posed in in January 2023. Meanwhile, 72% said they would be more likely to return to the UK if VAT free shopping was reintroduced.
Corsi added: “The Government continues to insist that scrapping the tourist tax will cost the UK money but that’s simply not the case. All the evidence indicates that, far from a cost to the Exchequer, reintroducing tax-free shopping would have a net positive receipt to the Treasury of at least £350 million.
“As well as the increased sales for retailers, there would also be more business for hotels, restaurants and cultural attractions across the whole of the UK. The Government should grasp this opportunity to scrap the tourist tax and provide a boost to the Exchequer and UK economy with both hands.”
