Tourism is pretty big business in the UK. In a normal year, it makes up around 9% of GDP, and had been set to grow a further 10% by 2025.
In terms of numbers, the UK is most popular with visitors from the US, France and Germany. Together, these three countries accounted for 27% of all inbound visits in 2019.
However, in that same year, Chinese visitors only made up 2% of inbound tourists. Looking at these numbers, it might be easy to overlook the significance of Chinese tourists in the UK. Nevertheless, this tiny number has a considerable impact on UK tourism.
Despite the low numbers, the Chinese market accounted for 6% of total visitor spending in 2019; making them the second biggest spenders after the US. It’s certainly not volume that makes Chinese visitors so valuable.
It could be that 2021 will see the importance of Chinese tourists soar.
The Cost of 2020
This rise will largely be down to global economic performance this year. 2020 hasn’t been a good year for GDP growth at all; in fact, almost every major economy in the world shrank in the wake of the pandemic.
This is a huge problem for the UK, as our biggest tourism markets all saw negative GDP growth. The US for instance, our biggest market by far, shrank by 4.3%.
On top of this, skyrocketing unemployment rates due to covid mean far less people from these countries will be in a position to travel next year.
Moreover, Brexit could throw up an additional barrier to visitor numbers going into 2021 as free movement ends and no deal looms. Losing visa free travel in the event of a no deal could see a sharp drop in visits from Europe as short-haulers opt to visit Schengen areas. EU countries provided 70% of our inbound tourism in 2019, so we would certainly feel this loss.
All of these factors could very well translate into a sharp decline in trips made from our traditional tourism markets in 2021.
There is one notable exception to this; the IMF actually projected China’s economy to grow this year by 1.9%, making it the only major economy to do so. This growth may be far slower than recent years, even small growth puts the average Chinese consumer in a better position to travel than those in other countries.
China to the Rescue?
All things considered, China has fared well in the pandemic. Since March, life has been slowly getting back to normal, and the country has even seen a surprising rebound of its domestic tourism market.
It’s clear from the huge number of domestic tourists travelling in early September that Chinese consumers are still keen to travel. Furthermore, an August study by McKinsey revealed a growing confidence in travelling overseas, showing that 31% of respondents expected to take their next trip abroad; an increase of 6% since March.
We’re very unlikely to see a full recovery until a vaccine is rolled out. But with fewer visitors from the US and Europe, Chinese travellers could provide a valuable lifeline to our flagging tourism industry.