Vinod Zutshi IAS (Retd.)The United Kingdom has always been one of the most visited tourist destinations in the world. The UK set a record for inbound tourism in 2017, both in terms of visits and spend. The year recorded 39.2 million tourist visits, up by 4.3 per cent on 2016. The growth in inbound visits last year has been in line with the trend seen over the past five years. Forecasts made for the current year 2018 expects inbound visits to increase to 40.9 million, an increase of 4.4 per cent on 2017. A similar growth trend has been witnessed in earnings on account of inbound tourism. Tourists arriving in the UK spent £24.5 bn during 2017 registering over 9 per cent increase on 2016 and are expected to spend £26.3 bn in 2018, an increase of 7 per cent over last year.
Despite Brexit being on the horizon, inbound tourism in Britain is still booming.
The weaker British Pound vis-a-vis other currencies, particularly US Dollar & Euro is enticing overseas visitors with better exchange rates. The weaker British Pound vis-a-vis Indian Rupee also contributed to a larger number of outbound travellers from India to visit the UK particularly, from second half of 2016 till August this year, as travelling to UK for Indian travellers became less expensive.
The weakening of the Indian Rupee over the past few months is however, reversing the trend and the British Pound-INR exchange rates are gradually being restored back to June 2016 level. The weaker British currency over the past two years has also accelerated the pace of domestic tourist visits as more and more Britishers are holidaying at home. As a result, inbound and domestic tourism are booming in the UK, contributing to GDP growing by 6.2 per cent in 2017 as compared to the global average of 4.6 per cent.
On the outbound tourism front, although the UK sent a record number of visitors abroad globally in 2017, the average spending per trip however has been lower than the spending made by UK tourists in 2016. The growth rate in outbound travelling has also been a mere 3 per cent in 2017 on 2016, relatively much lower when compared with a growth rate of 9 per cent in the year 2015 on 2014 and 7.75 per cent in the year 2016 on 2015. The UK’s outbound travel growth is certainly slowing down. The top ten travel destinations for UK residents include eight European Union countries namely France, Spain, Italy, Germany, Portugal, Poland, Netherlands and Greece.
The overall outbound travelling from UK into these countries may therefore suffer a major impact on account of Brexit. More British holidaymakers are opting to stay at home on ‘staycation’. With less than a year ahead of Brexit taking effect in Britain, the UK travel industry is already feeling an impact of uncertainty.
For outbound travellers of the UK, India has always been one of the preferred tourism destinations. The UK is currently one of the top three source markets for inbound tourism into India. UK also has the largest share amongst all countries in the use of e-tourist visa for travelling to India. More than 0.3 million UK citizens travelled on e-tourist visa, accounting for 18 per cent of the total international tourists arriving into India on e-tourist visas during 2017.
The first six months of 2018 have shown a further growth of 25 per cent in use of e-tourist visas by British travellers. During the year 2017, India received 0.98 million travellers from UK registering an increase of 4.7 per cent on 2016. The growth of 4.7 per cent however, was almost half of the growth rate of 8.56 per cent registered in 2016 on 2015. The share of United Kingdom in the total foreign total arrivals in India during 2017 was 9.83 per cent which has also been lower than the previous year, when the share of the UK traveller into India was 10.7 per cent. The decline in the growth rate of outbound travellers into India has been largely on account of pre-Brexit sentiments which resulted in the weakening of British Pound vis-a-vis Indian Rupee.
The impact of Brexit on outbound travellers from the UK travelling into India, however, is not likely to be as critical as for outbound travelling into countries of the European Union. The impact of Brexit on inbound tourism into India will largely depend upon the exchange rate between British Pound and Indian Rupee. This point seems valid for the reason that the pre-Brexit negative sentiments that temporarily affected outbound travelling from the UK to India seem to be reducing with British Pound becoming stronger vis-a-vis Indian Rupee. It is noteworthy that the strengthening of the British currency has been happening since March 2017, when the recent trend of the weakening of Indian Rupee vis-a-vis US Dollar had not even started. The impact of Brexit may not be severe for outbound travellers travelling into India also for the reason that the Indian tourists travel into Europe and into United Kingdom with two different visas. Brexit or no Brexit, the current visa protocol between the two countries is not likely to change. However, post Brexit, if British Pound gets weaker or Indian Rupee stages a recovery, inbound tourism into India from the UK will certainly face a setback through reduced inflow of outbound travellers.
With the UK’s departure from the European Union, the travel and tourism industry all over the world is uncertain about crucial issues such as freedom of movement of travellers and workers. According to a research study, a ‘no-deal Brexit’ is likely to curb the expansion of the British outbound travel market and outbound departures are predicted to grow slowly reaching only 96 million travellers by 2025. A free trade agreement will however take the figure of outbound departures to 102 million by 2025. The prospect of the UK’s departure from the European Union is making travel firms more uncertain about the future. With less than a year left for Brexit, it will dominate the debate once again at the forthcoming WTM, London 2018 as was during the 2017 edition.
The impact of Brexit on inbound tourism of India from the UK can be sensed from the recent fall in the growth rate of tourist arrivals from there. The weakening of the value of Indian Rupee may have been beneficial for increased inbound tourism into India but it is just a matter of time. With the exchange rates between British Pound and Indian Rupee remaining volatile, the remaining part of 2018 and 2019 will be of uncertainty about the trend of inbound tourists from the UK into India. The Indian Government including the Ministry of Tourism needs to start working on a contingency plan to deal with the issue of the possible impact of Brexit on India’s inbound travellers from the UK, keeping in mind the fact that India gets almost 10 per cent of its total foreign tourist arrivals from the UK.
