West End hit by ‘tourist tax’ despite rising footfall, new data suggests

London’s West End is feeling the impact of the UK’s ‘tourist tax’ despite an increase in footfall, new data suggests.

While the iconic luxury shopping hub is enjoying a continued return of tourists following the end of lockdown restrictions, the gap between footfall and spend has widened in the second quarter when compared to pre-pandemic levels.

That’s according to new data by The West End Company (NWEC), which represents around 600 retail, restaurant, hotel, and property owners across the capital’s bustling shopping and entertainment district.

The data also suggests the situation is getting worse quarter-on-quarter, as awareness spreads on Britain's ‘tourist tax’, and that “savvy” overseas shoppers are diverting spend to tax-free shopping destinations like Milan and Paris.

Flight bookings to London from the US were up 17 percent in the three months to June 2023 on the same period in 2019, according to NWEC. However, the total spent by US visitors in the West End was down by 1 percent.

Similarly, travel from the Gulf Cooperation Council (GCC) countries to London was up 7 percent in Q2 in the same comperative period, but spending fell by 17 percent.

In contrast, US spend in France was up by 183 percent in Q2 2023 compared to Q2 2019, and up 174 percent in Spain. Spend from GCC visitors was up by 118 percent in France and 112 percent in Italy.

‘Tourist spending gap’ widens in West End

Dee Corsi, the chief executive of the (NWEC), said that “whilst it’s reassuring that our capital hasn’t lost its appeal when it comes to attracting overseas visitors”, the data should “set alarm bells ringing in Westminster”.

She continued: “We’re hopeful that the Treasury will make the right decision after hearing evidence from businesses directly impacted by this ‘tourist tax’ and will review the impact and cost of losing tax-free shopping as a first step towards possible reinstatement of the scheme.”

Parliament is set to discuss the topic of reinstating tax-free shopping for international visitors - which was scrapped when the UK left the EU - at an upcoming debate on September 7 following calls from both retailers and MPs backing the ‘Scrap the Tourist Tax’ campaign.

Last month, the CEO of British department store chain Harvey Nichols urged the government to reinstate tax-free shopping for tourists, arguing that the UK is now a less attractive shopping hotspot compared with rival fashion capitals like Milan and Paris.

Earlier this year, luxury handbag label Mulberry closed its flagship store on London’s Bond Street, citing a direct link to the scrapping of tax-free shopping.