London’s tourism and hospitality sectors will benefit from the planned multi-million-pound campaign to drive domestic and international visitation. However, the industry remains in a precarious position.

Accounting for Covid-19 risk necessary to attract tourists to England’s capital

The Mayor of London announced proposals on 16 February 2022 to invest an additional £10 million ($13.6 million) to attract more domestic and international tourists to London. The Mayor reportedly plans to invest an additional £3 million ($4.1 million) to attract domestic tourists to London as an extension of the £6 million ($8.2 million) ‘Let’s Do London’ campaign, which was credited with helping draw UK visitors to the capital. The additional investment involves highlighting London as a domestic destination, and promoting cultural and sporting activities happening in the capital this year.

London’s hospitality sector has been crippled by the government’s guidance to work from home. While popular staycation areas in the UK have been able to capitalise on a glimmer of opportunity, tourism businesses in London have suffered from the absence of business and leisure tourists. Furthermore, a GlobalData Survey* reveals that 68% of UK respondents are concerned about eating out at restaurants because of the Covid-19 risk. A further 69% are concerned about visiting shops and stores because of Covid-19. While the proposed campaign will be a welcomed driver of domestic tourism, a cornerstone of promotional activity will need to showcase London as a safe destination to attract visitors.  

London faces competition to attract tourists

As travel restrictions eased globally, there are plans to encourage international tourists to return to London. This includes a £7 million international marketing campaign. Prior to Covid-19, the UK was one of the most visited destinations globally, with 39.1 million international arrivals in 2019, driven by world-leading cultural and visitor attractions. According to VisitBritain, London has consistently attracted more than 50% of all UK visitors since 2010.

Nevertheless, Covid-19 related travel restrictions saw international arrivals decline by 80.2% year-on-year (YoY) to 7.8 million in 2020. Concurrently, inbound tourism spending declined by 84.2% YoY, from $43.2 billion in 2019, to $6.8 billion in 2020, which will have decimated many of central London’s tourism and hospitality businesses dependent on international tourists. Going forward, GlobalData forecasts expect international arrivals to return to pre-pandemic levels by 2024, with a projected 39.8 million arrivals (CAGR 2022-24: 8.6%). The proposed international marketing campaign will help drive recovery. However, competitor cities are already out-promoting and out-spending London. For example, New York has been running a £30 million ($40.1 million) tourism campaign since April 2021, almost a year earlier than London. With England’s capital on the back foot, the city will face additional challenges attracting visitors.

Barrage of challenges facing the hospitality sector

London’s hospitality, retail, and cultural sectors have faced an existential threat from Covid-19. While the London Mayor’s proposed campaign will be welcomed by an industry in a fragile state, hospitality businesses still face a barrage of challenges. This includes the UK Government’s plans to increase VAT in April 2022, and staff shortages exacerbated by Brexit and Covid-19, as well as rising costs of living. Undoubtedly, attracting domestic and international visitors will be key to driving economic recovery. A promotional campaign that showcases London as a safe and exciting destination is necessary to ensure a smooth recovery, and minimise further disruption to London’s hospitality businesses.

*GlobalData Consumer Survey Q4 2021 – 22,074 respondents