2018 inbound tourism forecast

The VisitBritain forecast for the volume and value of inbound tourism is issued in December each year and revised the following summer. The latest forecast was released in August 2018.

2017 set a record for inbound tourism to the UK in terms of both visits and spend. There were 39.2 million visits to the UK in 2017, up 4.3% on 2016, with these visitors spending £24.5 billion, an 8.7% increase on 2016. The growth in visits was in line with the trend seen over the past five years. The growth in spending was the highest since 2013 and the second highest since 2006; spend per visit rose by 4.3%.

Our revised forecast for visits for the calendar year 2018 is for continued growth. We are forecasting 40.9 million visits in 2018, an increase of 4.4% on 2017. Our forecast for spending by visitors in 2018 is £26.3 billion, an increase of 7.1% on 2017.

If achieved, this would be a similar rate of growth in visits to that seen over the past five years. Spending growth, while a little lower than in 2017, would still be above the long-term average. Spend per visit is forecast to grow by 2.7%, slightly above the expected rate of inflation.

We will review this forecast in December 2018, when we will also issue a forecast for 2019.

 

Although there is no official data yet available for inbound tourism in 2018 at time of writing, we have identified a number of risks and assumptions when making our forecast and have briefly detailed these below.

The year-on-year growth rate for inbound tourism is likely to be uneven during 2018. The first half of 2017 saw growth of 10% on 2016 whereas the final quarter saw a decline of 5%. The first half of 2018 will therefore be comparing against a very strong period.   

The impact of Brexit remains a key source of uncertainty. By the end of 2018 the departure date will be less than three months away and there is uncertainty about the transition period and post-Brexit settlement and their impacts on travel. While this forecast concentrates on inbound demand, Brexit creates many uncertainties for the supply and regulatory side too.

VisitBritain has continued to track consumer sentiment towards Britain since the referendum, with the latest wave conducted in March 2018. This reveals that for most potential European visitors, Brexit does not affect their decision to travel to Britain for leisure. Furthermore, most Europeans still see Britain as a welcoming destination – and agree that the exchange rate means that now is a good time to visit. However, likelihood to visit is not quite as high as in the first wave of this tracking research in August 2016. As we approach the date of Brexit, sentiment about Britain and concern about post-Brexit travel practicalities are downside risks for the forecast.

Brexit related uncertainty is also a downside risk for business travel. Business visits to the UK from the EU fell 8% in 2017.

It is assumed that there will be no unforeseen major events in 2018 that disrupt overall international tourism or travel to Britain in particular, e.g. whether related to terrorism, health scares or natural disasters. Given the events of 2017, this assumption represents a downside risk. Perceptions of Britain as a safe and secure destination fell between the spring 2017 and autumn 2017 waves of our consumer sentiment research, but recovered some ground in the spring 2018 wave.

The ongoing value of the pound is a key uncertainty. For visitors from most countries, the pound has remained lower than its pre-referendum level and is forecast to continue to be weak throughout the medium term, indicating that Britain will remain a good value for money destination, although the exact path of the exchange rate throughout the remainder of 2018 is a source of uncertainty in the forecast.

The economic performance of the UK’s main source markets is always an important driver of visitor numbers. The outlook for 2018 is generally benign. Short term forecasts for the Eurozone were upgraded several times during 2017 and the outlook is moderate and stable. The US economy is growing, employment is rising and consumer spending is healthy; although there is a divergence between spending growth and weaker income growth as well as a lot of uncertainty over tax, trade and investment policies, these are mainly risks for 2019 and beyond. Some emerging markets, including China and India, continue to grow at a rapid pace and others (Russia, Brazil) have emerged from a recession.

There are both upside and downside risks for 2018. Whereas in 2017 risks were judged to be weighted to the upside, in 2018 risks to both the visits forecast and the spending forecast are judged to be weighted to the downside, reflected in the forecast range. The forecast range is wider for spending than for visits.

 

  2017 actual 2017 actual growth 2018 forecast 2018 forecast growth 2018 forecast range
Visits (m) 39.2m 4.3% 40.9m 4.4% 2.0% to 6.0%
Visitor spend (£bn) £24.5bn 8.7% £26.3bn 7.1% 3.5% to 8.5%