UK hospitality crisis deepens as domestic tourism spending plummets by £2.6bn
The UK's hospitality sector outside London is struggling as domestic tourism declines. New figures show a sharp drop in spending and overnight stays, leaving businesses under pressure. Experts warn that current policies are making the situation worse for local destinations.
Spending on domestic holidays has fallen by £2.6bn (8%) since 2022. The number of nights spent on UK breaks has also dropped by 14m (5%), with a fifth fewer stays compared to two years ago. International visitors are staying away too, with 5m fewer nights recorded in 2023–24.
The government's 2021 plans to boost domestic tourism have failed to deliver. Despite schemes like the £2.5bn Welcome Back Fund, the £125m Tourism Recovery Fund for SMEs, and the £300m Reopening Fund for high streets, many businesses still face tough conditions. Tax reliefs, including 40% business rates cuts for tourism firms, were extended to 2026, but critics say they haven't gone far enough.
Meanwhile, pubs received exemptions from higher business rates, and Heathrow airport got £900m in tax cuts. Yet the wider hospitality industry saw no similar support. Dr Alex Chapman, senior economist at the New Economics Foundation (NEF), argues that soaring costs and tax breaks for air travel are pushing Britons to spend more on foreign holidays. This shift is hitting UK destinations hard.
NEF is now calling for a major tax reform to help high streets compete. Proposals include splitting business rates into a local property tax and a national land value tax. Without changes, the group warns, the decline in domestic tourism could worsen.
The drop in domestic tourism spending and visits is putting pressure on hospitality businesses across the UK. With international tourism also falling, local economies face further challenges. Calls for tax reform and fairer support measures are growing as the sector seeks ways to recover.
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