The Decline of UK Staycations Signals Growing Concerns

The recent financial analysis indicates a significant downturn in the spending patterns of British holidaymakers, particularly in seaside, countryside, and small town destinations. In the twelve months leading to September, holiday expenditure in these regions dropped by £1.8 billion, even amidst what was reported as the hottest summer on record.

Research conducted by the New Economics Foundation reveals that the number of overnight stays has decreased by 14 million, translating to nearly 65 million fewer nights since 2022. This sharp decline raises questions regarding government policies that may be discouraging domestic tourism.

Higher costs, coupled with tax reliefs for international air travel, appear to be significant factors driving British tourists abroad. The pandemic had previously revitalised the staycation market, as travel restrictions had placed pressure on international travel options. Many hospitality and tourism businesses that had suffered during Covid were temporarily buoyed by domestic tourism.

A report from Visit Britain highlighted the importance of domestic visitors for the hospitality sector outside metropolitan areas. In the Southwest region, for instance, domestic tourists accounted for a staggering 75% of overnight tourism spending in 2024. Nevertheless, the volume of domestic visits recorded during the same period fell by 11%, reflecting ongoing cost of living challenges and increasing international competition.

Recent government proposals suggest giving local authorities the authority to impose levies on both domestic and international visitors staying in hospitality establishments, including hotels and Airbnb rentals. Analysis from UKHospitality estimates that this could result in an additional £518 million in tax costs for the public.

The impending increases in business rates are expected to lead to considerable distress in the hospitality industry, with warnings of potential mass closures and job losses. Meanwhile, the Chancellor recently offered immediate relief measures targeting pubs; however, broader sectors such as hotels, restaurants, and nightclubs remain excluded.

The financial landscape for the tourism industry demands a comprehensive review of business rates and a strategic shift towards local empowerment. A focus on revitalising historic destinations while reconsidering subsidies for air travel could potentially offset the challenges facing domestic tourism.