Owing to its rich cultural heritage, prestigious educational institutions and wide range of attractions across fashion, media and sports, London is a key destination for international visitors.

In addition, its strong influence as a financial centre and a hub for technology and innovation defines it as a leading market in terms of hospitality and hotel investment.

Despite its size, London’s accessibility through various international airports as well as the Eurostar high-speed rail service facilitates travel, ensuring a steady influx of both leisure and business travellers.

These factors are expected to drive London’s continued success as a leading global tourism destination, even in the face of economic challenges and geopolitical uncertainties.

Source: HVS Research

Economic Indicators – UK

Source: IMF

Tourism Demand

Years of practically uninterrupted growth delivered close to 34 million visitors to London in 2019, mainly driven by international demand which increased its share from less than 60% in 2011 to around 64% by 2019. In 2020, global tourism was halted by COVID-19, causing London’s international visitation to plummet by more than 80% to 3.7 million.

Both 2020 and 2021 witnessed significant challenges owing to COVID-19 containment measures; however, in 2022, international visits notably increased to 16.1 million, 75% of 2019 levels.

In 2023, visitation declined by 5% compared to 2022, with both international and domestic figures decreasing over that period. That could be explained by factors such as the necessity for foreigners to apply for a visa since Brexit or the cost-of-living crisis.

Additionally, major events in London during 2022, such as Queen Elizabeth’s Jubilee, the UEFA Women’s Euro final, the first Notting Hill Carnival post-pandemic, and Queen Elizabeth’s funeral, contributed to high visitation figures that year. Consequently, the drop in 2023 could reflect a natural readjustment following the high levels of visitation in 2022.

We note, however, that Visit Britain is confident in the UK’s ability to return to 2019 levels of visitation. In 2019 the UK welcomed 40.9 million inbound visits before substantially decreasing during COVID. In 2022, visits had recovered to 31.2 million, and the latest inbound forecast for 2024 (made in May 2024) was for 38.7 million visits, 95% of 2019 levels.

International Visitation Still Lagging Behind Pre-Pandemic Levels

Source: HVS Research

Hotel Performance

• Hotel performance rebounded strongly post-COVID-19, with steady growth in occupancy, average rate, and RevPAR from 2021 to 2023.

• Average rate and RevPAR notably increased in 2022 and 2023, eventually surpassing pre-pandemic levels.

• Occupancy rates surged in 2022, reaching 75% from 39% in 2021, and increased by a further 2% in 2023. However, the occupancy in 2023 still lagged some 3% behind 2019 levels.

• Year-to-August 2024 RevPAR figures show a minor decline in comparison to the previous year, mainly driven by a lower average rate performance, while occupancy increased only marginally.

• When comparing year-to-August 2024 to the same period in 2019, RevPAR is significantly higher, mainly driven by the significant increase in average rate since then.

Read the full report here