Visitors have a positive impact on a city’s local economy. First, they bring in spending from outside. Second, they support a broader range of amenities than would be the case without them. Beyond this, becoming a visitor destination can enhance the reputation of a city. So it is no surprise that tourism and the ‘visitor economy’ often feature in local economic strategies.

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The other side of the coin is that the visitor economy is relatively large in only a handful of places. Using a rich dataset of card transactions, this report shows that only a third of the UK’s 63 cities can claim status as a domestic visitor ‘destination’.

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Splitting these destination cities into two groups provides an insight into what policy should focus on within each group. The top ten cities for visitor spend are established destinations for overnight visitors. Here around one in every £5 spent on the high streets in these cities are from visitors. York leads this list, with one in every £3 spent in 2023 from people who do not live, work or study in the city, and visitors accounting for half of in-person shopping and food and drink spend. Other cities in the ‘top ten’ include Blackpool, Edinburgh, Brighton, and Cambridge. For these cities, the focus should be on how to attract more visitor spending while managing the success of their visitor economies.

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The remaining destination cities – places like Belfast, Newcastle and Plymouth – have amenities that visitors want to travel to. On average visitors to these cities account for one in every £7 spent, with higher shares in retail, eating out, and leisure activities. Given that they have a ‘visitor offer’, the challenge for them is how they can increase the number of visitors to them and, in particular, convert day visits into overnight stays, alongside wider interventions to improve other parts of their economies.

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For the remaining majority of cities where visitor numbers are small, the question for local leaders – who have been asked by the Government to start writing up their Local Growth Plans for 2025 – is how much priority they should give to the visitor economy in boosting local economic development.

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These cities have two issues to grapple with. The first is to ascertain how realistic is it to increase visitor footfall given the assets they have. The second – for those places that also have weak economies – is getting the balance of focus right between attracting more visitors and the more fundamental challenge of attracting higher productivity businesses to improve the prosperity generated by the city.

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To support the roles that destination cities play as places of leisure, policy should do the following to increase visits:

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• Given they have a proven ‘visitor offer’, many domestic destinations could improve their international offer to bring in more visitors – London currently takes the lion’s share of foreign visitor spending. Destination Marketing Organisations (such as Visit England) should work within newly established Local Visitor Enterprise Partnerships to expand a destination’s appeal abroad, as well as at home for the domestic destinations looking to expand their visitor economy.

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In order to manage the success of their visitor economy, destinations should both monitor the supply of accommodation relative to demand and explore ways to raise revenue from overnight visits.

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• In the face of housing supply constraints across the UK, there have been many discussions on whether short-term lets impact this supply in destination cities, given the overlap between housing and accommodation infrastructure. But evidence on this topic in the UK is currently limited, so reliable and nationally comparable data is needed for cities to understand and assess the relationship between visitors and local housing pressures. Introducing short-term let registration, as set out by DCMS earlier in 2024, will be essential to address this key evidence gap.
• As with any other sector, the visitor economy requires infrastructure investment to succeed. For this, wider planning reform – as recommended previously by Centre for Cities – will allow increased housing provision to the benefit of both locals and visitors alike, as well as wider provision of specialised visitor accommodation. Local housing and visitor accommodation will only act as substitutes when new infrastructure for both cannot be built.
• To cover the costs that visitors generate in destination cities, national legislation is needed in England to give local authorities the power to apply a ‘tourism tax’ via a levy on overnight stays. This should come as part of a broader package of fiscal devolution giving local government greater revenue raising powers. But the rate at which the levy is set – and the question of whether it should be implemented at all – must be proportional to a city’s existing visitor economy. Due to the concentrated nature of the UK’s visitor economy, such a levy would only raise a meaningful amount in a select few destinations. English city regions currently have the option to follow the example of Liverpool and Manchester, using an accommodation Business Improvement District to generate revenue on overnight stays. But this solution is limited in scope compared with a levy directly administered by the local authority or metro mayor, already implemented in many other European countries.

• Introduction
• Visitor spending in UK cities
• How different cities should think about their visitor economy
• What needs to change