A great growth market for London

 
Allister Heath
IT’S Friday, so for once let me recount a positive, upbeat success story. Increasingly, we are paying our way in the world by attracting visitors from overseas, who spend lots and sustain a growing number of jobs. London is third in the Euromonitor overseas visitor rankings, behind Hong Kong and Singapore. We are easily the top destination in Europe, with twice as many overseas arrivals as Paris. There were 15.38m overseas visits to London in the year ending last September, 7.6 per cent up; they spent £9.2bn, a stagnation-defying nine per cent uplift.

Visitors and tourists come for our cultural attractions – three London museums are in the top 10 most visited worldwide: the British Museum (5.85m visitors), the Tate Modern and the National Museum (5m each) – they come to study – there are more than 105,000 international students, making us the world’s top city for foreign students – and perhaps most strikingly of all, they come to shop.

Thanks to the massive influx of often high-spending tourists, London’s retail sales of £62.4bn in 2010 were worth more than those of Los Angeles, Milan, Rome, Madrid and Berlin combined. London is also ahead of New York, Tokyo and Paris, according to the Centre for Retail Research. It all helps to explain why London is the most popular city in the world for international retailers, with 56 per cent of them having set up shop, more even than in Dubai. Despite the downturn, London last year still remained the top destination city globally for retail foreign direct investment, with more than double the number of projects than its closest rival Hong Kong.

Now for the bad stuff. While we are good at attracting leisure tourists, we are bad at attracting business people. Given just how central City remains to the global financial system, this is depressing. Roughly 20 per cent fewer business travelers came to London in 2011 than in 2006, a decline much greater than warranted by the downturn. London’s place has slipped from 10th in the International Congress and Convention Association rankings in 2005 to 14th in 2010, with emerging economies grabbing business. For years, there weren’t enough good quality, branded hotels – fortunately, despite restrictive planning rules, this is increasingly changing. The recently enlarged Excel centre will also help.

But the UK is also behind in attracting Chinese visitors, partly because of visa issues but also because of our woeful lack of airport capacity. London only has direct flights with Beijing, Shanghai and Hong Kong, which is pathetic. As London and Partners point out, competitor cities in France, Germany and elsewhere are much better connected and are grabbing far more Chinese tourists. For example, Air France/KLM and its partners provide direct connections to Beijing, Shanghai, Hong Kong, Guanghzou, Chengdu, Hangzhau, Xiamen and Taipei, with a new route to Wuhan coming on stream in April.

London needs to tap into this latent demand, not only from China but also India, Brazil and other massive emerging markets. Global visitors have become a huge source of jobs and growth. At a time when the UK desperately needs more of both, it’s insane that the government is still pursuing policies that are reducing our ability to tap into this market. The private sector needs to be unleashed to build more facilities – but especially to build the enhanced airport capacity and connections London so desperately needs.

allister.heath@cityam.com
Follow me on Twitter: @allisterheath