Brexit impacts US and UK hotel industries, now and in the future
June 23rd, 2016 will be a date in the history books for Britain and the rest of the world. The people of Britain voted for a British Exit, or Brexit, from the European Union (EU), in a vote that sent shockwaves around the globe. The big question that American’s are asking themselves: how is this going to affect travel? (Or “holiday”, as the British are known to call vacations.)
As of early July, Americans preparing to travel in Britain are reaping the rewards of the historic vote. In fact, this week the value of the pound against the dollar is at its lowest rate in over thirty years, which gives American’s more buying power. Another indicator that the pound is on tenuous ground is from market research firm Gfk showed that UK consumer confidence fell at its fastest rate in 22 years following the Brexit vote.
Historically, London has been an expensive destination for European travel, and increased value of the dollar against the pound is now allowing American tourists the opportunity to visit London for a smaller budget.
American’s looking to holiday in Britain post Brexit was also confirmed by bookings website Hotels.com, who reported a 50% increase in US searches for British hotels compared to this time last year. This increased travel would be a win-win, for both travelers and British hotels.
Americans, or anyone interested in traveling to Britain, should be prepared for political volatility, especially by famous landmarks. There will likely be an uptick in demonstrations and protestors, although the UK have protested peacefully thus far about the Brexit.
However, the British hotels are heavily populated by business travelers, and experts are predicting corporate travel to slow down in the uncertain environment. In previous transition periods, business travel tends to decline. Hotels in Britain should consider implementing strong business reward programs to sustain business occupancy.
Another important factor to consider is the British traveling around their own country. If Britain thrives financially in the long term, their people will have more spending power and thus have the financial security to take a holiday (or extend a holiday). On the flip side, if Brexit turns out to cause economic decline, then taxes will likely increase and unemployment will rise. The flip side is not appealing for the British or anyone traveling to Britain.
The impact on Britain’s finances is paramount to American hotels, as their finances will impact future travel to the United States. If the weakened pound relative to the dollar continues in the future, British travel could decline in popular destinations like New York, Miami, San Francisco, and Chicago.
Longer term issues are the new travel restrictions. Post transition, there will likely be confusion and complications in travel from the EU to Britain, resulting in less travel and less income for hotels from visitors from other European countries.
Those on both sides of the issue – travelers and hoteliers – should keep in mind that the transition out of the EU is going to take a minimum of two years, so while changes are occurring in the industry, they won’t be overly dramatic anytime soon.