James Ashton: Time has come for tourists to pay their way

The record influx of Chinese tourists to London reported last week is a vital vote of confidence in the capital as it grapples with its post-Brexit future.

An 81% increase in Chinese flight bookings this month is another sign that last year’s boom is continuing. Since summer, there has been a flurry of hotel upgrades and West End spending sprees as tourists found their plunging pound went further.

Even without sterling’s slide, last year was shaping up to be another tourism record, helped by events around the Queen’s 90th birthday celebrations and the Tate Modern extension.

A best-ever total of 8.8 million overseas visitors arrived in the first half of the year before the Brexit vote properly took effect. The trend is upwards. London drew 31.5 million visitors in 2015, up 20% on five years earlier. Of those, 18.6 million came from overseas, exceeding the Mayor’s 18 million target two years ahead of schedule.

Here is an export industry that the UK has got right, worth £121 billion, or 7% of our gross domestic product. Oxford Economics predicts that, despite measly marketing budgets, London will welcome 35.6 million visitors by 2020.

As the debate rages over how best to earn our way in the world after quitting the European Union, one question emerges: can our tourism success contribute more to the capital’s coffers? It can and should.

Consider that St Paul’s Cathedral cannot be uprooted to Frankfurt as can the headquarters of a bank. Or that the crowds of royal watchers who come to marvel at Buckingham Palace are not going to trade London for a trip to New York. So much the capital offers cannot be cheaply replicated abroad as if by an automotive production line. What assets we have should be exploited in full.

A levy on visitors is not a new idea. Every time it is brought up, it sends shivers down the spines of hoteliers and travel chiefs, who point to the hefty contribution tourists make in the form of VAT — which is discounted on hotel stays in many European centres — and air passenger duty.

Yet a central pillar of their defence — that London is already a highly expensive destination — has crumbled as the pound fell. A small supplement, well-targeted and well-spent, need not kill the goose that lays the golden egg, especially if it is introduced in tandem with a simpler tourist visa regime which takes into account the fact that the world is becoming more accessible by the day.

Sir Michael Lyons, former chairman of the BBC Trust, floated a similar proposal a decade ago but the idea was pooh-poohed before the ink dried on his report for Gordon Brown into the future of local government finance. One of the main arguments was that his so-called “bed tax” would have driven domestic tourists out of the country. Simple: don’t sting staycationers, just those visiting from overseas.