Weak dollar and global slowdown prompts 5% fall in visitors to Britain

A reflection of the slowdown in the global economy and the strength of sterling before its recent sharp decline, the number of visitors to the UK fell by 5 per cent over the three months to June.

The International Passenger Survey published by the Office for National Statistics, revealed Americans, who traditionally account for a large slice of the tourist market, were particularly prone to skipping their British break: a weak dollar saw the number of visits by US citizens fall by 8 per cent, while trips by Europeans fell by 2 per cent over the quarter. Total visitor numbers slipped to 8.1 million, but spending remained steady compared with the previous quarter at £4.1bn.

However, visits from one group of countries continued to show strong growth, mirroring wider trends in immigration: the new accession countries of the European Union such as Poland and Lithuania contributed a 15 per cent rise in visitor numbers to the UK over the three months to June, and were 6 per cent up on the year.

The credit crunch may have started to affect the number of overseas holidays taken by Britons. UK residents' visits abroad declined by 1 per cent in the 12 months to June, with the total standing at 17.7 million.

And just as the strong pound/weak dollar deterred Americans from coming here, so it encouraged British holidaymakers to head for New York, Florida, San Francisco and other popular destinations, with a 6 per cent rise in the number of Britons going to North America. That increase was only exceeded by the 7 per cent rise in visits by UK residents to eastern Europe, again reflecting the number of migrant workers and their families travelling to and from Poland.

Spending by British residents abroad declined by slightly more than the number of visits – down 2 per cent to £9.1bn. Thus the UK's balance of trade on tourism deteriorated from a deficit of £18.8bn in 2006-07 to £20.3bn last year.

However, this is likely to improve soon with the precipitous fall in the value of the pound and the widely reported trend towards Britons taking holidays at home. Lastminute.com recently said domestic holiday bookings are up 16 per cent since on this time last summer with holidays in Devon, Cornwall, Dorset, Somerset, the Isle of Wight and Wales proving to be favourites.

VisitBritain, the quango in charge of UK tourism, continues to expect 2008 to see modest growth in the number of visitors coming to this country, but with a small decline in their spending. VisitBritain forecasts a 2 per cent rise in numbers over 2008.

The tourism minister Margaret Hodge is on holiday in Greece, but a Department for Culture, Media and Sport spokesman predicted that the strength of the euro should benefit UK tourism this year, with more Britons holidaying here. Tourism accounts for 6 per cent of the UK economy, approximately the same as the construction industry, and, at a time when many observers are predicting a recession, any positive contribution to economic growth will be especially welcome.

Britons still going on a summer holiday

Recession or not, the British public still wants its summer holiday abroad – TUI, the travel group, yesterday published third-quarter results showing underlying operating profits up 39 per cent to £65m.

"Customers are not prepared to forgo their main summer holiday," Peter Long, chief executive of TUI, said. "I don't believe they are prepared to forgo their second winter holiday either, albeit they may wish to cut back on expenditure."

The company posted an overall loss of £216m, due to the cost of last year's merger of TUI's Thomson Holidays with First Choice. But selling prices are on the rise – up 8 per cent for this winter and 12 per cent for summer 2009 – thanks to flourishing demand. "Customers are booking earlier and the remainder of the summer has 18 per cent fewer holidays remaining than last year," Mr Long said. "Whilst looking at price rises for next year, we are still significantly cheaper than holidaying in the UK."

TUI is cutting capacity by 25 per cent over this year and next, largely to remove unprofitable routes and spare aircraft capacity following the merger, says Mr Long. "We are a holiday company, we are not in the business of just selling flights."