Our forecast for visits for the full year 2016 is 36.7m visits, an increase of 1.5% on 2015. Our forecast for spending by visitors in 2016 is £22.3bn, a 1.1% increase on 2015.
Our forecast for 2017 is for 38.1 million visits, an increase of 4.0% on 2016; and £24.1 billion in visitor spending, an increase of 8.1% on 2016.
We have identified a number of risks and assumptions when making our forecast and have briefly detailed these below. We will continue to monitor our forecasts during 2017.
Our forecast for 2017 is that visits will grow by 4.0% to 38.1m. This represents a faster rate of growth than our projection for 2016 but slower than the 5% growth seen in each of 2013-15 so is close to the medium term rate of growth in visitor numbers.
A major uncertainty in the forecast is the path of the exchange rate and the extent to which the favourable exchange rate, should it persist throughout 2017, attracts additional inbound visitors if Britain offers good value for money. VisitBritain research conducted in July 2016 found that the prevailing exchange rate could act as a net incentive for potential leisure visitors to come to Britain with the benefit concentrated amongst those who have visited Britain before and those with a good knowledge of the exchange rate.
Recent data at time of writing is inconclusive on the impact of the fall in the pound in late June. Visitor numbers grew moderately in July, August and September compared to 2015 although many travel decisions made for the third quarter of 2016 would have been made before the fall in the pound so available visits data at the time of the forecast largely reflects the pre-referendum conditions. Flight bookings data suggest that arrivals to the UK for November, December and early 2017 are likely to be up year-on-year.
Our forecast for 2017 is that spending will grow by 8.1% to £24.1bn. This is a faster rate of growth than we have seen in the last few years although inbound spending grew by 13% in 2013 and 7% in 2011 so it would not be exceptional. This growth rate implies an increase in spend per visit of just over 4%: higher than the long term average although faster growth in spend per visit has been seen in some years, for example 2013.
Inflation in 2016 was low and is likely to average well under 1.0%. In 2017 inflation is very likely to pick up due to the fall in the pound – our forecast assumes to 2.7%. Spending growth in real terms, i.e. taking away inflation, is forecast to be 5.3%. Spend per visit in real terms is forecast to grow by a moderate 1.2%.
As with visit numbers, the impact of the fall in the pound – which has improved inbound visitors’ spending power – on the value of visitor spending is so far inconclusive. The ongoing value of the pound itself is a key uncertainty and will depend on several factors. These include the status of EU and trade negotiations throughout the year as well as monetary policy actions taken by the Bank of England and other major central banks abroad.
The global macroeconomic outlook is forecast to be generally benign and stable in most of Britain’s key inbound markets in 2017. Most advanced economies have similar central forecasts for 2017 to those seen in 2016. The central forecast for the EU overall is for continued modest economic growth in much of Western Europe and Eastern EU generally seeing healthy growth. The short term US economic outlook looks healthy although there is considerable uncertainty about specific policies. Some emerging markets, including China and India, are still growing at a strong pace with others, such as Russia and Brazil, slowly emerging from recession.
It is assumed that there will be no unforeseen major events that significantly disrupt travel to Britain, e.g. related to security, health scares or natural disasters. While 2016 did not see a major international sporting event held in Britain (aside from those held annually), 2017 will see the ICC Cricket Champions Trophy and the World Athletics and Para-Athletics Championships held in the UK.
There are both upside and downside risks for 2017. Risks to the visits forecast are judged to be weighted slightly to the upside, reflected in the forecast range, insofar as the continued weak pound could encourage additional visitors in 2017. Ongoing business uncertainty during 2017 represents a downside risk. The forecast range is wider for spending than for visits, reflecting the greater uncertainty about the response of visitor spending to the currency (as well as uncertainty about the value of the pound), with risks here judged to be weighted to the downside. As a comparison, Tourism Economics are forecasting growth of 6.7% in visits to the UK and 5.8% growth in spending.
|2015 actual||2016 forecast||2016 forecast growth||2017 forecast||2017 forecast growth||2017 forecast range|
|Visits (m)||36.1m||36.7m||1.5%||38.1m||4.0%||2.0% to 6.5%|
|Visitor spend (£bn)||£22.1bn||£22.3bn||1.1%||£24.1bn||8.1%||5.0% to 10.0%|