How this city became the most expensive in Europe for tourists

While the number of tourists coming to Britain fell almost a quarter last year, in France there has been a sharper rebound: visitor numbers to Paris are just 13 per cent below where they were in 2019.

Countries such as Italy, Spain and Portugal are on course to draw in record levels of tourism revenues this summer.

Martin Williams, chief executive of M Restaurants, which runs the Gaucho chain, says it is little surprise that the likes of Paris and Milan look “infinitely more attractive and affordable” to tourists.

For months, industry chiefs have been urging the government to reintroduce VAT-free shopping for overseas visitors.

Ministers axed the relief when the UK left the European Union, claiming it would save the Treasury £2 billion ($37.5 billion) a year and have a limited impact on spending.

Many relying on income from tourists say the move was an own-goal, however.

Spending by US tourists in France and Spain has more than tripled so far this year compared to the same period in 2019, according to data company Global Blue. Spending in Britain has risen by just 1 per cent over the same period.

The reasons are easy to understand.

Visitors to Paris, where overseas tourists can still benefit from VAT-free shopping, are able to save hundreds on a purchase of a new Gucci or Yves Saint Laurent bag, or thousands on jewellery. Many are opting to do exactly that.

Even British tourists are now travelling overseas for their luxury purchases, Burberry said earlier this month, shopping in countries where they too can now benefit from the VAT schemes.

The number of weekend and leisure trips from London to Paris on the Eurostar are currently 15 per cent higher than they were in 2019.

But the challenges for London go much deeper than simply the tourist tax.

Williams says London’s mayor and the broader government “have proved to be hugely out of touch when it comes to understanding how to make the capital attractive to either domestic or international tourism since the pandemic”.

At high-end restaurants, it is now the norm for customers to be charged £200 ($A376) a head, up from around £100 ($A188) in 2017, as food inflation and staff costs pushes prices up, according to guide books.

Analysis by the London Telegraph of two- and three-star Michelin restaurants in London shows that, on average, a tasting menu will now set customers back £191 ($A360).

Where Paris was once seen as a much more expensive city in which to dine, the gap between it and London has started to narrow, though diners in the British capital are still much less open to higher prices.

“London is not Paris, it is not Tokyo and it never will be,” chef Jason Atherton said last month, as he cut his own menu prices over fears Brits were not visiting.

The cost of getting to London is also soaring. The UK capital last year was named the second most expensive city to drive in, ranking only after Hong Kong, simply because of fuel prices and the amount of congestion in the city.

When combined with policies designed to lower emissions and cut traffic, such as Mayor Sadiq Khan’s Ultra Low Emissions Zone (Ulez) and the congestion charge, the price of using a car in London has shot up.

The regime has helped to create “ghost towns in the centre of London”, the chief executive of retailer Heal’s, Hamish Mansbridge, said last month.

“We’re seeing significantly lower footfall than we did before the pandemic, and that is a challenge. You’ve got the congestion charge, parking difficulties, tube strikes, train strikes, the cost of living crisis, and then Ulez.

“You name it, it’s like they’re actively trying to discourage people coming into the centre of London.”

Mansbridge is correct to suggest that public transport is becoming a less attractive way to get around.

Earlier this year travellers were hit by a 5.9 per cent increase in average fares on trains and on the London Underground, the biggest hike in more than a decade on London transport. It cemented the UK capital as the most expensive place to use public transport in Europe.

Williams says each day of industrial action – regardless of whether it is train drivers, tube staff or teachers striking – “costs the restaurant sector hundreds of millions of pounds of lost revenue”.

He warns that “the government has failed to engage and resolve over six months of disruption”.

Pressure is mounting for ministers to take a deeper look at these issues as a whole.

Harrods boss Michael Ward has long been urging the government to develop a tourism strategy. “The lack of this is being felt,” he says.

“Without real thought being given to how we maintain the UK as an attractive destination we risk harming the many different sectors that benefit from tourist spending.”

In Mayfair, at Benares, Taneja is hopeful that tourists will carry on coming through his doors this summer. “These are clients who book months and months in advance, so for now, we’re not doing too bad,” he says.

He admits that luck plays a part but, for now, the accolades help. “There are fewer people around,” Taneja admits. “But, for now, I think we are managing to catch them.”