According to the latest report from the New West End Company (NWEC), it has been observed that tourists are gradually making their way back to London after the pandemic-induced lull. However, their spending habits have taken a hit, mainly due to the absence of tax-free shopping for international visitors in the UK.
Despite a noticeable increase in the number of visitors in comparison to pre-pandemic levels, the amount spent by tourists has not shown a parallel growth trajectory. The disparity between visitor numbers and spending was glaring in the third and fourth quarters of 2023, with a significant gap of 31 percentage points and a 15% decline in spending, respectively.
The grim reality of the situation becomes more apparent when looking at the full-year figures, which reveal a 19% decrease in spending despite international visitor numbers in 2023 being only marginally lower than those in 2019. Particularly noteworthy was the sharp decline in spending by tourists from affluent Gulf nations like Saudi Arabia, the UAE, Qatar, and Kuwait, despite a notable increase in their numbers.
Even visitors from major tourism markets like the US showed a similar trend, with more Americans visiting London in 2023 but spending 14% less than in 2019. The absence of tax-free shopping in the UK has driven tourists to spend their money in countries like Italy, France, and Spain, which offer lucrative tax-free shopping opportunities.
Dee Corsi, Chief Executive of the NWEC, voiced concerns over the lingering spending gap and urged the government to reconsider its stance on tax-free shopping. Corsi emphasized that reinstating tax-free shopping could stimulate economic growth and entice more visitors to patronize shops, hotels, and restaurants in London.
Despite the overall annual sales in London’s West End exceeding expectations and reaching £9 billion in 2023, international sales fell short of 2019 levels, casting a shadow over the area’s growth prospects. The negative impact of the absence of tax-free shopping was echoed by a survey of businesses in the West End, with a staggering 92% reporting adverse effects.
In response to these challenges, businesses in the district are adopting proactive measures such as revisiting investment strategies and staffing requirements to navigate the tough economic landscape. The NWEC remains optimistic that the government will recognize the importance of reinstating tax-free shopping to revitalize the economy and provide much-needed support to businesses in London’s West End.
To read more about the impact of tax-free shopping on tourism and retail spending in the UK, check out these informative links: BBC – Tax-free shopping impact on UK retail and The Telegraph – UK tax-free shopping changes.
