2018 inbound tourism forecast

The VisitBritain forecast for the volume and value of inbound tourism is issued in December each year.

Our revised forecast for visits for the full year 2017 is 39.9 million visits, an increase of 6.2% on 2016. Our forecast for spending by visitors in 2017 is £25.1 billion, an 11.6% increase on 2016.

With 2016 itself setting a record for both visits and spending, these forecasts for 2017, if realised, would represent new records set for both measures. 2017 is forecast to see the fastest rate of visits growth since 2006; spending is forecast to grow at its fastest rate since 2013 (and the second fastest since 2006).

Our forecast for 2018 is for 41.7 million visits, an increase of 4.4% on 2017; and £26.9 billion in visitor spending, an increase of 6.8% on 2017.

This would be a slower rate of visits growth than in 2017 but similar to that seen from 2013-16. With inflation forecast to be 2.2% in 2018, spend per visit is forecast to be stable in real terms.
 

 

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 2018 and will review our forecasts in summer 2018 to take on board the final data for 2017 and the latest provisional 2018 data.

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 September 2017. 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 has fallen since our 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 were 3% down on 2016 in the first half of 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.

The ongoing value of the pound is a key uncertainty. The pound remains much 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 central forecast is for Sterling to strengthen slightly in 2018 but will depend on several factors, such as: the possibility of further increases in the base rate in the UK and abroad; the strength of the UK, EU and US economies in particular; the status of EU and trade negotiations throughout the year and expectations of the post Brexit settlement and transition period.

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 and investment policies. Many emerging markets (China, India, much of South East Asia) continue to grow at a rapid pace and others (Russia, Brazil) have emerged from a recession. The Middle East is hampered by much lower oil prices than those seen a few years ago but growth forecasts for 2018 are generally more positive than in 2017.

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.

 

  2016 actual 2016 actual growth 2017 forecast 2017 forecast growth 2018 forecast 2018 forecast growth 2018 forecast range
Visits (m) 37.6 4.1% 39.9m 6.2% 41.7m 4.4% 2.0% to 6.0%
Visitor spend (£bn) £22.5bn 2.1% £25.1bn 11.6% £26.9bn 6.8% 3.5% to 8.5%