2022 inbound forecast for UK:
For the full calendar year, inbound visits are forecast to total 29.7 million and spending £25.9 billion. These are 73% and 91% respectively of the visits and spend levels seen in 2019.
This is an upgrade on our previous forecast, made in August, due to stronger than expected results from official statistics in figures released to date.
The Office for National Statistics, via the International Passenger Survey, has released data on inbound visits and spending up to August at time of writing. After a slow start to 2022 due to the impact of the Omicron variant, from April visits have averaged around one fifth below the level seen in the same months in 2019 and the value of visitor spending has been not far off 2019 levels in nominal terms (visits and spend are down 21% and 4% respectively on 2019 in the April-August period). For the year to date, the ONS has reported 18.9 million visits so far, 31% down on 2019, and £16.0 billion spending, down 13%. Indications from flight booking numbers is that this level of visits is likely to have been at least maintained in late 2022.
Average spend per visit is therefore much higher than pre-COVID, due mostly to a combination of longer average length of stay as well as an increase in spend per night broadly in line with inflation amongst some journey purposes.
You can find more detail on the latest 2022 figures here.
2023 inbound forecast for UK:
We are forecasting 35.1 million visits in 2023 (86% of the 2019 level and 18% higher than in 2022) and £29.5 billion spend (104% of the 2019 level and 14% higher than in 2022). If the latter figure is achieved it would be a record for the value of inbound spend in the UK in nominal terms, although adjusting for inflation it would be 87% of the 2019 level in real terms, in line with the trend in visitor volumes.
At time of writing, flight bookings are currently a little weaker for those arriving in January than in late 2022 but very strong for March/April (above 2019 so far) although the rate of bookings made in the last several weeks suggests that this elevated pace could ease downwards. The forecast therefore assumes in the short term that the pace of flight bookings will remain approximately around its current rate, and then pick up gradually consistent with a return to 2019 volume levels by around mid-2025. Although visit levels are forecast to be below 2019 levels in the aggregate when looking at the year overall, we are likely to see some months and markets where numbers do surpass 2019 levels.
When looking at the value of visitor spending, the forecast assumes that length of stay will gradually fall from its 2022 level as we move to a more normal pattern of visitation, therefore pushing down spend per trip, but that this will be mostly counterbalanced by inflationary factors as inflation is likely to remain higher than the historic norm in 2023 (although lower than in 2022).
Visits from European markets are forecast to recover quicker than long-haul overall, continuing the steady recovery seen this year, reaching 24.1 million in 2023, 88% of the 27.3 million visits in 2019. For long-haul markets, the forecast is for 11.0 million overseas visits to the UK in 2023, 81% of the 13.6 million in 2019, with significant variation across source markets as some regions (e.g. North America) recover relatively quickly while others (East Asia) lag behind.
There is a lot of uncertainty about prospects in 2023 due to the changeable external context. In particular, the global economic situation will be challenging during 2023, which will likely mitigate against a swift return to pre-pandemic levels of tourism volumes or (in real terms) value.
The forecast assumes that cost of living pressures will not intensify and that inflation will ease from its current level in line with forecasts, although will remain above normal level in 2023, putting pressure on travellers’ spending power. A major unknown is whether an easing of inflation will encourage spending and therefore travel, or whether there will be a delayed reaction to the intense inflation seen in late 2022 in travellers’ booking and spending patterns in 2023.
Meanwhile, it is assumed that the COVID situation will not present fresh challenges to international travel and that restrictions will not be re-imposed; and that markets where outbound travel is currently slow or impossible will gradually recover / restart.
The forecast is therefore predicated on a delicate and challenging balance: there will be a minority of travellers who will remain nervous about COVID and will be deterred but many who are keen to travel again; cost of living pressures will inhibit travel for some but most regular/occasional international travellers will still go abroad; spending power will be constrained but prices will push up nominal spending. The forecast is therefore a central scenario and only one possible outturn based on our assessment of current knowledge at time of writing; the balance of risks to the forecast are to the downside.
We will revise our inbound forecast in 2023.
For broader insights on inbound travellers please refer to our recent MIDAS research.