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Tourist spending gap widens in London despite rise in visitor numbers

Sophie Smith
14 August 2023

Tourist spend was down in the second quarter of 2023 despite a rise in visitors to the UK, according to data from New West End Company.

Whilst tourist numbers are continuing to recover in 2023, the spending gap has widened compared to pre-pandemic levels.

Flight bookings to London from the US increased 17% in the three months to June 2023 against the same period in 2019, but the total spent by American visitors in the West End was down by 1%.

Similarly, travel from the GCC (Gulf Corporation Council) countries to London was up 7% in Q2 2023, compared to four years ago, but spending decreased by 17%.

Whilst the gap between footfall and spend widens in the UK, Continental Europe continues to reap the rewards.

US spend in France and Spain grew 183% and 174%, respectively. In addition, spend from GCC visitors increased 118% in France and 112% in Italy.

Tax-free shopping was previously available to visitors from non-EU countries, but was withdrawn on 31 December 2020, effectively adding a 20% premium onto goods bought by international visitors.

A separate survey by the New West End Company revealed that consumer sentiment on tax-free shopping is also crystallising.

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, up by 5 percentage points compared to the same question in January 2023.

Meanwhile, 72% would be more likely to return to the UK if the VAT free shopping was reintroduced.

Dee Corsi, CEO 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.

"We’re hopeful that the Treasury will make the right decision after hearing the evidence from businesses directly impacted by this ‘tourist tax’ and will announce during the Parliamentary hearing to review the impact and cost of losing tax-free shopping as a first step towards possible reinstatement of the scheme."

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