Spending by tourists in central London is set to plummet by £10.9 billion this year as a result of the Covid-19 pandemic – far more than the amount lost from fewer commuters traveling into the city – according to new analysis published today by the Mayor of London, Sadiq Khan.
The Mayor welcomed the Chancellor’s announcement yesterday of changes to improve the flawed and narrow Job Support Scheme. However, today’s figures demonstrate that the new measures and grants are only a sticking-plaster solution, with the collapse of tourism into London leaving many hospitality, retail and leisure businesses without any prospect of returning to normal levels of business for many months to come.
City Hall analysis of forecasts by VisitBritain show overseas tourists will spend £7.4 billion less on goods and services in London’s economic and cultural centre throughout 2020, while domestic tourists will spend £3.5 billion less.
This far outstrips the financial impact of the fall in commuters: City Hall estimates the loss in their spending will reach £1.9 billion – £1.4 billion from commuters living in London and £0.5 billion from those outside.
VisitBritain estimates the number of international visitors to the UK throughout 2020 will be 74% fewer than in 2019, at 10.6 million. It also estimates that London as a whole will suffer from a reduction in international and domestic tourism spending, including transport revenue, of £20.7 billion in 2020 compared with 2019 levels.
The tourism industry is a vital part of London’s social and economic life: it accounts for as many as one in seven jobs in the capital and contributes almost 12% of London’s GDP.
The new analysis comes as the Mayor commissions major new research into the impact of the pandemic on the ‘central activities zone’ (CAZ) – London’s economic and cultural heart – to identify the emerging trends across key sectors over the next few years and in the longer-term.
Along with the drop in tourism and commuters, the CAZ has also been affected by changes in how Londoners spend their free time. The situation is extremely dynamic as a result of the changing restrictions to tackle Covid-19, and so this research will seek to provide important clarity and a detailed evidence base which will then inform future recovery work and policies.
Sadiq has also urged the Government to scrap the 10pm curfew, which he argues became redundant when London and other parts of the country moved into Tier 2 and higher restrictions, which prohibit households mixing.
Sadiq is supporting hundreds of small companies through his Pay It Forward London scheme, through which Londoners can buy goods and services in advance from their favourite local and independent businesses struggling with the challenges of Covid-19. He is match-funding money raised through the scheme via his £1 million Back To Business Fund.
He is also calling on the Government to reverse its proposals to end duty-free shopping for tourists, in what would be a further blow to the central London businesses which benefit from the millions spent by visitors taking advantage of the scheme.
The Mayor of London, Sadiq Khan said, “This analysis shows the eye-watering drop in the money spent by visitors in the economic and cultural heart of the capital – which is far greater than even the impact of fewer commuters travelling into the centre of the city each day.
“Clearly, this will mean many businesses are in danger of closing and many thousands of jobs will be at risk.
“I’m determined to do all I can to support London’s economic recovery now, and in the years to come. But these sectors won’t be able to sustain pre-pandemic levels of employment until tourists return in significant numbers – so Government must act swiftly to prevent widespread job losses and the financial hardship this will bring for Londoners, many of whom are already struggling to make ends meet.
“The Government needs to get its act together and provide a functioning test and trace system so the economy can reopen safely.
“We also urgently need an extension of the business rates holiday to next year along with more support for jobs beyond what the Chancellor announced this week and which truly reflects the scale of the problem.”
Chief Executive at New West End Company, Jace Tyrrell said, “Here in the West End, international visitors usually account for almost 50 per cent of footfall and more in spend, and this year, the whole tourism ecosystem of retail, hospitality, leisure and culture has suffered from the lack of international travellers.
“As we enter the key Christmas season – usually peak trading months – our businesses need immediate support to survive and longer-term measures to aid what is sure to be a long and slow recovery for many.
“The decision to abolish tax-free shopping for international visitors was a further blow to the industry, with the UK set to be the only country in Europe not to offer tax-free shopping to our international visitors. On top to dismal sales and footfall, the tourism industry is set to lose a further £6 billion a year in spend resulting in up to 138,000 job losses on the back of this decision. With the industry still reeling from the impact of Covid-19, we urge the Government to reconsider its decision and further support such a valuable industry.”
Chair of the Association of Leading Visitor Attractions, Baroness Patience Wheatcroft, said: “Tourism is one of London’s largest and most important industries and we know that four in five overseas tourists to London are motivated to come here for our culture – our theatres, museums, galleries and attractions. These are not just leisure visitors but businesspeople, inward investors, students and event attendees.
“Everyone in London knows someone who works in tourism and they know how decimated the industry is. We need specific help from the Government for our hospitality and tourism sectors to keep businesses afloat, keep people in their jobs and to market London to the UK domestic market, and to the world, so we can welcome back our inbound tourists when they are ready to return.”