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.
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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.
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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.
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By GlobalData*GlobalData Consumer Survey Q4 2021 – 22,074 respondents
