The UK's inbound tourism is on a high. In 2006, over 32 million international arrivals were recorded - 7% more than in 2005, and representing the third consecutive year of strong growth - with visitor spending up 8% to £15.4 billion (€26.5 billion). The bad days of foot & mouth disease and other negative influences appear to be well and truly a thing of the past. The country's tourism industry is now sharply focused on the future and, in particular, its hosting of the Summer Olympic Games in 2012 - an event that is already stimulating greater interest in the UK as a tourism destination.

One sector that is more than happy with the UK's current performance is the hospitality industry. Deloitte's HotelBenchmark Survey shows that the UK's hotels were among the best performers in Europe in 2006. Revenue per available room (revPAR) in the UK grew by 9.6%, with Aberdeen, Belfast and London all enjoying double-digit increases. In 2005 the UK capital had suffered a drop in occupancy as a result of the July bombings in the underground system. But last year London was once again back on top, achieving the highest occupancy of all cities in Europe, according to Deloitte, at 82.3%. In Aberdeen, revPAR increased by 16.3%, driven by strong weekday business and demand from North Sea oil activities. And the story was similar in Belfast, which hosted a number of key conferences and events pushing revPAR up 12.5%.

Nevertheless, while overall numbers were well on target last year, there are still some sectors and markets that remain disappointing in terms of performance. North America is a good example. Although the region generated a 6% increase in visitors in 2006, to 4.5 million, it has yet to regain its all-time high of 2000 when it recorded 400,000 additional arrivals.

VisitBritain, which has not had a budget increase from the government for nine years, resulting in a 22% decline in spending power for marketing campaigns, is also concerned about the long-term trend to stagnation in length of stay - and even a decline in some markets. The last 12 months saw a slight increase in average spend per visit, but the long-term trend over the past decade has also been one of decline as an increasing share of visitors travel to the UK on short breaks with low-cost/no-frills carriers. Western Europe accounts for the bulk of arrivals in the UK - 21 million, or 66%, in 2006.

Emerging markets - mainly from long-haul countries, but also from Central/Eastern Europe - continue to turn in much better than average performances, although China remains disappointing, especially in terms of ADS (Approved Destination Status) group tour package business. India is a star performer, clocking up 25% growth in arrivals in 2006, and contributing to the emerging markets' three-point increase in market share, to 17%.

While the dry weather in 2006 is good news in driving home the message that the UK is by no means always wet and foggy, the longer-term threat of drought could threaten the gardens and landscapes that draw millions of visitors. Other downside risks for 2007 and the longer term, which are of concern among industry players, include the unfavourable exchange rate for many visitors - sterling is at a high against the US dollar, for example - the impact of the recent outbreak of avian flu, increased visa fees from April 2007, the hike in German VAT, further delays to the introduction of the Airbus A380, and the recent doubling of the Air Passenger Duty.

But, on the whole, the risks are primarily on the upside. Literary and film tourism in Britain looks set to be in the spotlight again in 2007 with the release of The Golden Age, and the Lake District in particular, with the release of the Miss Potter, a big attraction for the Japanese.