Only time will tell if Brexit will turn out in Britain’s favor, however generally the prospects of being cut off from Europe’s single market do not bode well for the British economy. The British economy has already suffered somewhat, primarily the result of a weaker pound. The only silver lining in this whole debacle has been that Britain is a cheaper destination for Chinese tourists, and Chinese arrivals have risen since Brexit.
This trend has continued with the ongoing Golden Week Holiday, with an estimated 6 million Chinese tourists going abroad. For example, the Hippodrome Casino estimated that London could attract 300,000 visitors during this holiday, as compared to 54,000 in Q1 2017.
While Chinese arrivals have been substantially higher this year so far, 27 percent higher in Q1 2017 vs Q1 2016, 300,000 Chinese visitors in a single week still seems a bit farfetched. In 2016, a total number of 260,000 Chinese visitors came to the United Kingdom.
Moreover, of the estimated 6 million Chinese going abroad, most of them will likely be gravitating to closer, cheaper destinations like Thailand. Ctrip has said that 20 percent of Chinese outbound Chinese travelers will be going to Thailand.
Obviously, it will be impossible to know how many Chinese visitors will visit Britain during Golden Week this year for some time, but the optimistic 5 percent of all Chinese outbound travelers predicted by the Hippodrome Casino is likely an overestimation. Nonetheless, total Chinese visitors will most likely be substantially higher than last year.
Going forward, how should Britain maintain current growth in Chinese visitation? The “best” tool, of course, is to keep the pound’s valuation against the yuan weaker to make Britain cheaper compared to other European or North American destinations. From a macroeconomic perspective, this is not an ideal situation.
Marketing could help maintain momentum. VisitBritain has already been stepping efforts in China with initiatives like “Destination Britain China,” a four-day sales mission to Guangzhou during which British firms and destinations can showcase their offerings to Chinese buyers.
VisitBritain has also engaged in an advertising campaign in partnership with Hainan Airlines and Tuniu.com, a Chinese online travel agency (OTA), by promoting flights between Britain and China, like Hainan Airlines’ Beijing to Manchester direct route.
Altering visa policy for Chinese visitors to the UK is another option. While visa fees are not necessarily prohibitive, especially not for travelers willing to spend thousands on flights and accommodation in Europe, the hassle of arranging a visa for every trip can dissuade travelers.
In January, the British government created a two-year, multi-entry visa for Chinese travelers to the UK. Ideally, this will help encourage repeat visits.
Fundamentally, these steps will likely encourage long-term tourism growth for Britain, but they do not address the fundamental issue. Eventually, the pound will recover and increased demand for hospitality services and air tickets will buoy prices.
The only way to boost tourism long-term is to maintain Britain’s price competitiveness. In this sense, there may not be much Britain can do and this will largely rely on how the Chinese government envisions the yuan valuation will be going forward.