Chinese tourists return to London - but international ‘spending gap’ continues to grow

  • New West End Company reveals a widening gap between the number of visitors coming to London and overall spend in the West End;
  • Chinese tourists are returning to London, but higher visitor numbers aren’t being accompanied by a comparable increase in spend;
  • Pressure on HM Treasury builds, as business calls to reinstate tax-free shopping grow louder.

Figures released today by New West End Company reveal a growing gap between the number of international tourists visiting the capital and their propensity to spend, a major cause for concern for businesses grappling with high inflation and the cost-of-living crisis. Overall, the gap between international visitor travel and spend compared to 2019 has grown from 1 percentage point in Q1 2023, to 31 points in Q3 2023.

After the Chinese government’s restrictions on group travel were lifted on 10 August, visitors from the country have begun to return to London, but are spending significantly less. In September alone, the first full month without restrictions, arrivals from China were just 2% shy of 2019 figures, but the spend was down by 58%, indicating a severe cutback in shopping outlay per traveller.

International visitors are critical for British brands - many of whom have dedicated manufacturing hubs across the regions – and have accounted for nearly half of all retail and leisure sales in the West End this year.[1] However, there has been a notable shift in spending patterns; compared to 2019, today's tourists, though present in force, are spending far less.

Previous research from New West End Company shows that tourists are increasingly aware that the U.K. no longer offers tax-free shopping and are diverting their spending elsewhere in Europe. Three quarters (77%) of international visitors to the West End said they would spend more if they were able to claim back the VAT on their shopping.[2]

The ‘spending gap’ is reflected in the data for visitors from other countries too: flight bookings from the US to London have outstripped 2019's Q3 figures by 18%, yet US tourists have spent 18% less in the same period. Visitors from the Gulf countries, including Saudi Arabia, have shown a similar pattern to the US, with travel from this region up by 1%, but spend down 5%. This is higher for some individual countries; Saudi Arabian tourists' expenditure has fallen by 14%, despite visitor numbers being 12% higher than 2019, for example.

Dee Corsi, Chief Executive of the New West End Company, comments:

"The West End's allure for international tourists remains resilient, with its world-leading retail and leisure offering continuing to attract visitors. However, despite delivering exceptional experiences and products, the absence of tax-free shopping is hindering growth and impacting consumer spending. Whilst tourists cut back in the U.K., Continental Europe reaps the benefits, with spending in France and Spain more than doubling in recent months.

“The evidence is clear and the message from businesses consistent — the return of tax-free shopping would deliver a much-needed boost to the Treasury at a time when the country is dealing with a cost-of-living crisis and high inflation. We continue to call upon the Treasury to conduct an independent review of the policy’s effects. A reversal of the ‘tourist tax’ is a simple measure that would have a significant impact and help to restore London's competitive edge."

Tax-free shopping was previously available to non-EU visitors until its abolition on December 31, 2020. The subsequent rise in shopping costs for international tourists has led to an outflow of potential spend to destinations that still offer tax incentives for shopping. Not only would the return of tax-free shopping enable the UK to benefit from non-EU shoppers, but it would also tap into a new potential tourism market of 450 million EU residents, for whom the UK is the largest major European tax-free shopping destination.


[1] New West End Company data, November 2023.

[2] New West End Company Visitor Experience Radar, June 2023.


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