Uncertain business conditions created by Brexit are continuing to have a negative effect on the number of European visitors booking to travel to the UK.
Germany has overtaken France as the main declining market, new research shows.
And one in three UK tourism firms have found recruiting EU staff harder since the 2016 Brexit referendum.
Business confidence also suffered a small drop with 53% of companies stating they are confident about the upcoming 12 months, down 6% on November and December 2018.
This is still higher than the 40% figure from September and October last year, according to the UKinbound study.
However, 73% of companies said their bookings/visitor numbers/customer orders were the same or higher than in the same two months last year based on business activity in January and February.
Yields were also the same or up for 79% of businesses during the same period.
Companies attributed this to a positive performance of the US market and the popularity of Scotland, which has seen less seasonality with Chinese consumers visiting in January and February this year.
China and the US continue to be the leading growth markets, with almost half (46%) of UKinbound members experiencing growth from one of the two countries – up 14% on the two previous months.
UKinbound CEO Joss Croft said: “It’s encouraging to see that even while our politicians are still debating the future of the UK’s relationship with the European Union, the UK’s fantastic tourism product is continuing to attract international visitors particularly from the USA and China.
“Unfortunately, visitors closer to home are worried about coming to the UK post-Brexit which is impacting on bookings and revenue for our members.
“It’s also no surprise that one in three of our members who responded to the survey have found it harder to recruit EU staff since the referendum, but as shown from our research, extending student visas post-graduation could help the industry in the short term.
“This, however, is really a sticking plaster approach and in due course, we will be challenging the government over its proposed £30,000 cap on employees from the EU post Brexit.”