Are you in the Tourism Biz?
Steve’s breakdown: With the drastic fall on the British pound, travel to the UK will surge. If there’s any international travel/tourism/destination/hospitality account your circling, now’s the time to pounce.
EVERYWHERE USA: The UK’s tourism industry is poised to benefit from Britain’s vote to leave the EU, as the crashing value of the pound attracts an influx of international visitors and encourages Britons to take “staycations”.
British leisure companies and foreign tourists could gain from the market turmoil following the outcome of the EU referendum last week that has led sterling to fall to a 30-year low against the dollar and to drop faster against the euro than it has since the financial crisis.
The shrinking value of pound against the euro and dollar represents an opportunity for domestic leisure companies, according to Nick Varney, the chief executive of Merlin Entertainments, the UK-based operator of Legoland and Madame Tussauds, and the chair of the British Hospitality Association.
“Holidays in Europe will be a little more expensive and encourage Brits to take more holidays in their home country,” he said.
“We’ll get more eurozone visitors coming in as it will be relatively cheaper than to holiday in the UK. My view is that this scenario will endure and the pound will settle at a more competitive rate.”
Donald Trump, the US property mogul turned presumptive Republican presidential nominee, has also espoused the upsides to Brexit. Speaking at the reopening at the Turnberry golf resort in Scotland, where the billionaire had spent £200m renovating the course, he said: “If the pound goes down, more people will come to Turnberry.”
Widespread international news coverage of the UK could also provide a boost to a tourism industry that has grown steadily since 2010. According to the UK’s Office for National Statistics, the country saw 36.12m international visits in 2015, an increase of over 5 per cent compared with the previous year. Expenditure by overseas tourists was £22.07bn last year, a 1 per cent rise from 2014.
“It’s certainly been great to see how much cheaper things have become since last Thursday,” said Denis Fourey, a banker from Guadaloupe, who was coming to the end of a three-week visit to the UK.
“We got a taxi from London to Southampton. Your taxis are a rip-off. It cost us £400. But the favourable rate means it wasn’t as expensive as it could have been.”
Jacques Gounon, the chief executive of Eurotunnel, which runs the Channel tunnel railway line between the UK and France, has suggested another gain could be the return of duty-free shopping.
Before its abolition in 1999, the “booze cruise” trade between the UK and France had generated a tenth of Eurotunnel’s revenue. “It would be an incredible boost for my business,” Mr Gounon said last winter.
But Liz Hall, head of hospitality & leisure at PwC, the consultancy, said the falling pound will do little to encourage the 6m business travellers that enter the UK every year and the wider economic fallout from Brexit is likely to reduce corporate travel budgets.
“We’ve spoken to banks and other businesses, and they have already restricted travel,” she said. “The continued uncertainty won’t help.”
Ms Hall added that reports of racist abuse directed at eastern Europeans and ethnic minorities following the Leave vote could also hurt interest in travelling to the UK. “If there is social unrest, will the country be as nice a place to visit if people continue to go potty?” she said.
Tourism flows could also slow over the long run if Britain imposes limits on the free movement of people and trade between the UK and the EU.
Deloitte, the consultancy, and Abta, the trade body for travel agents and tour operators, released a report earlier this year showing that 76 per cent of holidays taken by Britons were in the eurozone, representing 29.3m trips in 2014.
About 63 per cent of inbound holiday visitors to the UK were from EU countries, representing 4.6m people and dominated by visitors from France, Germany, Italy and Spain.
The report’s authors also expressed concerns that UK leisure groups employ a “significant number of immigrants” and future curbs on EU migrants could “challenge many travel and hospitality businesses in filling a number of roles”.
Analysts warned that UK travellers to Europe could be hit with higher charges for travel insurance, as British citizens may no longer be entitled to public healthcare when travelling to EU countries.
“Once the drunken high-fiving has faded away, there will be a dawning realisation,” said Mark Brumby, analyst at Langton Capital. “You can have your straight bananas, but you’re on your own if you get sick in Spain.”