Spending from domestic tourists is forecast to surge by 25% during the next four years to over £108b, according to new research from Barclays.
The Barclays' Tourist Dynamics Report 2014 reveals that continuing pressures on the cost of living will contribute to many consumers choosing to holiday at home, rather than go abroad.
It also highlights that London will continue to be the top place for domestic tourism spending, followed by the South East, South West and Scotland.
Pubs and restaurants will be the greatest benefactors of the trend, with spend expected to rise by 26% to £37b as more people dine out, while hotels and B&Bs will see domestic tourist spend increase by 25% to £17b.
Leisure attractions and the retail industry will be the other major winners of the growth in domestic tourism.
Mike Saul, head of hospitality & leisure at Barclays, said: "The economy is improving and confidence is certainly growing, and while this will lead to a gradual rise in the number of consumers looking to holiday abroad again, it is unlikely to precipitate a return to the holidaying habits we were seeing prior to the downturn."
Saul added that businesses with a clearly targeted strategy will be the ones to benefit most from increased domestic tourists.
"It is key that operators understand their customer base and crucially how to communicate with them via the channels their clients prefer to use, be it through social media, print advertising, television or radio.
"Online channels continue to present a huge opportunity to drive sales and the increasing popularity of search engines and review websites suggests that time and effort would be well spent monitoring and responding to any reviews of their business."
Ufi Ibrahim, chief executive of the British Hospitality Association (BHA) said the forecasts from Barclays is "a testament to the Olympic legacy" when British hospitality and culture were showcased to their best advantage.
"These predictions show us that in spite of the recession of the previous years, the hospitality and tourism industry has beaten all the odds and goes from strength to strength," she said. "Our priority over the coming months should be to capitalise on the feel good factor, spreading the positivity across the UK regions."
The Barclays survey results have been published two weeks before the Hospitality & Tourism Summitat the Novotel London West on 5 June, when leading UK industry and international hospitality bosses will debate for the future of hospitality and tourism.