According to the Office for National Statistics, visitors to Britain fell by 6 per cent from last year's record 6.4 million in the year to May. Since then, the pound has soared even higher against the French franc, the Italian lire, the Spanish peseta and the German mark. While it means millions of British holidaymakers are heading off for cheap breaks in the sun, the tourist trade back home, which relies on western Europe for almost two-thirds of its visitors, is suffering.
Western European visitors now get around pounds 20 less for their currency on a pounds 100 exchange than a year ago, according to Thomas Cook, the travel agents. This means that a German visiting Madame Tussauds would have to pay DM29.4 instead of DM23.1 at last year's exchange rate for his pounds 9.50 ticket.
A French tourist would pay Fr88 for his Tower of London entrance fee. Last year Fr70 would have bought the pounds 8.50 ticket.
"If their money is not going so far, then they may well take holidays in their own countries," said Isobel Coy of the British Tourist Authority.
Miles Quest, of the British Hospitality Association, said the fall in western European visitors was a cause of concern to hoteliers. "When the pound rises in value against European currencies, it's more expensive to come here, the hotels are more expensive to stay in, travelling is more expensive to get here," he said.
The combination of the strength of the pound and the demand for hotel accommodation from business travellers has seen room rates in the top hotels soar to pounds 350 a night for a single room. Although hotels such as The Savoy have not been badly affected, cheaper accommodation has seen a fall-off in European visitors.
Liz Lloyd, of the Youth Hostel Association, which has 1,100 beds in London, said fewer of their visitors were coming from Europe: "People talking in the bars and restaurants at the hostels are saying, 'Gosh, isn't London expensive?'"
American visitors, traditionally the biggest spenders, are up on last year by 16 per cent to a record 1.5 million for the first five months of the year. Overall spending by all tourists in the UK is up 2 per cent at pounds 4.28bn.