American big-spenders give UK a miss

WAR in Iraq and global economic worries could together punch a £5.4 billion hole in Britain's earnings from foreign tourists this year.

While budget airlines and the strong euro have brought Continental tourists flooding into Britain, big-spending Americans have stayed away.

As a result, figures due on Friday are expected to show that revenues plunged, even though the number of tourists this summer was relatively unchanged.

Direct spending on flights, hotels, coach trips and other tourist sectors was predicted at £12 billion in 2003.

But Iraq, security fears, economic problems and the Sars outbreak will cut that by up to 15%, said Stephen Dowd, chief executive of the British Incoming Tour Operators Association.

'Numbers through the door do not matter if they don't spend,' he said. 'The July figures will show little change in the number of visitors compared to a year ago, but a lot are Europeans on budget airlines enjoying special deals.

'The long-haul US passengers have stayed away. There was a small renaissance last year, after the September 11 fears, but now we are floundering again.'

Last week, Hilton hotels chief executive David Michels unveiling a 15% pre-tax profits fall in the first six months, admitted: 'We said the Americans would return, but we got it wrong.'

Dowd said: 'There are signs they may start coming back in the autumn. If they do or not will decide whether we see a ten% or a 15% fall on our expectations this year.'

Analysts calculate that for every £100 of direct spending by tourists on hotels and flights, three times that amount feeds through the economy from theatres, restaurantsand shops to public transport-painters, decorators, food and drink businesses and farmers.

Graham Wason of the World Travel & Tourism Council said: 'Only a third of the effect of spending by foreign visitors is reflected in their direct expenditure. Two thirds is hidden.'

In 2000, direct spending totalled a record £11.9 billion, giving a £35.7 billion total economic effect.

Dowd added: 'American visitor numbers are only partly governed by headline issues such as war or security fears. At least as important is the economic background.

'Now there is something of a recovery, this makes US citizens feel more comfortable about spending cash on a holiday here.'