With the UK government seemingly determined to sever all ties with the European Union, things don’t look great for the travel industry. For the time being there’s not much companies can do but hope for the best.
Three months have passed since the UK voted to leave the European Union and still no-one is certain what Brexit will mean.
What has become clearer – especially in light of the governing Conservative Party’s recent conference – is that publicly at least the politicians in charge of pushing it through are determined to play hardball with the rest of the continent.
There has been an escalation in anti-immigrant rhetoric and any possibility that Britain could remain loosely tied to the EU through retaining some form of loose trade association through the access to the single market seems remote.
This leaves the travel industry in a very difficult position. Many businesses in the UK backed “remain” and are now having to plan for a future that has yet to take shape.
Issues such as how UK airlines will access the single aviation market and whether the new Package Travel Directive, which update rules on the sale of holidays, will ever be implemented, remain up in the air.
Last week EasyJet, Europe’s second largest airline, once again blamed the impact of the Brexit vote for its poor performance in 2016 (other travel firms such as TUI and Saga have seen no adverse effect).
Elsewhere, though, people and companies are trying to put on a brave face.
At a recent panel discussion on the topic at the Elman Wall Travel Directors’ Summit in London there was a sense of forced optimism about the current situation.
“There is going to be opportunity. It’s going to be great for the industry in some shape or form but actually what is that going to look like, we just still don’t know and we’re not going to know for some time,” said Julia Lo Bue-Said, who serves as Managing Director of The Advantage Travel Partnership, the UK’s largest travel agent membership organisation.
This attempt to put a positive spin on something that is likely to hinder the travel industry was echoed by a fellow panelist Derek Moore, the chairman of the Association of Independent Tour Operators.
“Generally speaking our members are trying to be positive about it and not looking back, which I have to say I think is very important because as the remain people keep trying to talk down the horrors of what we’ve done it’s going to be very difficult to build that appearance of confidence, which affects the market, affects foreign exchange, affects everything,” he said.
Both Lo Bue-Said and Moore work for organizations that primarily serve outbound tourists. The June 23 vote came too late in the summer holiday season for any travel trends to become apparent with many trips booked earlier in the year. However, holidaymakers have suffered from one of the biggest economic changes to have happened post-Brexit: the devaluation of the pound.
On June 23, £50 would have bought you about $74 or €65. On October 11 the same amount buys you only $61 or €55. With uncertainty set to continue for several years it seems likely that travel abroad next summer will be more expensive.
“Is somebody not going to travel because the pound is at an all-time low? No. it may influence whether they decide to go all-inclusive or go half board. It may challenge some of those behaviours but it’s not going to fundamentally stop people from traveling,” said Lo Bue-Said.
She did couch her response by saying this would be the case as long as everything else stayed the same. And so far this has largely been the case.
Predictions of economic meltdown in the event of a vote to leave have failed to materialize – something Brexiteers have been key to point out – but there are two points worth considering.
Firs, the UK is still in the EU, and will be for at least another three years, and second, the state of the economy going into the vote has helped shield the country from the impact.
Marcus Wright, a senior economist at RBS bank, who was also speaking at the same conference said that low inflation and job growth had propelled the UK economy in the run-up to the vote.
“The momentum has allowed us to sail through the initial shock of the vote and the uncertainty that followed. That momentum will take us through 2017 but it’s reasonable to assume that growth will slow because at the margins some businesses will hold off on investment and planning decisions,” he said.
An attractive place to visit?
The slide in the value of the pound post-Brexit has had its upsides, especially for those trying to attract tourists into the UK.
In July, the first full month after Brexit, overseas visitors spent $3 billion (£2.5 billion) a rise of 4 percent on the previous year.
Deirdre Wells, CEO of trade association UKinbound, was also speaking on the Brexit panel and while she acknowledged the obvious benefits to visitors from the US and mainland Europe she also voiced some concerns.
“From an inbound perspective we have had the benefit of the falling pound over the summer, which I think has enabled us to get a very strong message out that now’s the time to come to the UK because I think one of the worries we had was that: is there a slightly xenophobic message coming out about Brexit, how off-putting was that to visitors?” she said.
Wells did reveal that some members had had cancellations from groups from Germany and Poland because of the perceived rise in anti-European sentiment as a result of the vote.
“You have to re-enforce the fact that we are welcome and we are open to dispel any concern that we might be unwelcoming to foreigners and if we really want to demonstrate it, then talking about listing workers, or talking about what the borders might or might not look like and whether or not we’re going to bring in visas for UK migrants or whether we’re going to maintain hard visa requirements for Indian tourists… all of those sorts of things are not helpful.”
The Brexit vote – like the current U.S. presidential campaign – has helped stoke up a type of inward looking anti-elite populism, which politicians are now trying to ride.
Of course the rise in aggressive, anti-European remarks by members of the ruling Conservative Party could just be a tactic to ensure the UK gets what it wants during the years of negotiations.
But if it chooses to push through a Brexit that eliminates membership of the single market and freedom of movement, then the travel industry and travel in general is likely to suffer the consequences.
Until then, it seems to be a case of smiling and hoping for the best.
The Daily Newsletter
Our daily coverage of the global travel industry. Written by editors and analysts from across Skift’s brands.
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Photo credit: The UK's Brexit vote has left a lot of travel companies searching for answers. Ben Chapman / Flickr