Overseas visitor numbers to the UK dropped by 3% year-on-year to 37.9 million in 2018, resulting in a 7% fall in spend to £22.9b.
The announcement of the figures from the Office for National Statistics follows a record-breaking year in 2017 when inbound visits increased by 4% to 39.2 million compared to 2016, alongside a 9% increase on spend to £24.5b.
At the same time, UK residents undertook fewer overseas visits, down by 1%, although spend was up by 1% to £45.4b.
The most frequent reason for overseas residents visiting the UK was for holidays, accounting for 40% of all visits.
The US provided the highest number of oversea visitors to the UK, a total of 3.9 million visits, followed by France (3.7 million). Eight EU countries filled the top 10 locations whose residents visited the UK the most frequently in 2018, with Australia filling the 10th position with one million visits.
Ian Bell, head of travel and tourism at accountancy firm RSM, said that the decline in visitor spending will be a worry for hoteliers and restaurateurs.
"The UK benefitted from a post-Olympic boom in the years after 2012, so it would be really disappointing if this were to mark the start of a downward trend in the appeal of the UK as a tourist destination.
"The UK tourist industry will have to work hard to fight for its share of the tourist market but there are clouds on the horizon. Following Edinburgh's lead, a number of local authorities appear to be pushing for the introduction of local tourist taxes. If and when these are introduced, they could take the shine off a number of popular destinations.
"Given last year's heatwave and the pound's weakness, it's probably less surprising that there was a drop in the numbers of UK residents travelling overseas. This year we could well see a further decline as a result of Brexit uncertainty, but the staycationers could provide a welcome boost for the UK economy."