Home Travel Articles Brexit and the UK’s Inbound Tourism Industry

Brexit and the UK’s Inbound Tourism Industry

by Jo Chipchase
Brexit Referendum UK

After the UK’s EU Referendum of June 24, travellers could be forgiven for thinking that the flight codenamed “Brexit” has crash-landed in unknown territory and the pilots are clueless about taking off again.

So what will the impact be on the UK tourism industry?

Read also: Brexit – what it means for holiday makers – your questions answered

Firstly, the UK has a huge inbound tourism sector. Two thirds (63%) of holidaymakers to Britain are from EU countries and 85% of passenger traffic to UK ports hails from the EU.

According to VisitBritain, inbound tourism was up 6% in the first quarter of 2016 compared to the same period of 2015. However, this was before the Brexit.

63% of holidaymakers to Britain are from EU countries.

In the face of an awkward UK-EU divorce (if and when it is triggered), Pound Sterling (GBP) has fallen significantly against the Euro, the United States Dollar (USD) and other global currencies since June 24.

Simon Phillips, retail director at No. 1 Currency, comments: “With Brexit causing the Pound to plummet, British holidaymakers face paying more than they bargained on their summer holiday this year: about 16% more than they were paying in July 2015.” He adds, ominously: “Sterling is widely predicted to continue heading south in coming weeks.”

Weak Pound strengthens long-haul tourism

This is good news for overseas visitors who now have more bang for the buck. For example, for every 100 Euros exchanged into GBP on 2 August 2016, the EU visitor now has 84 GBP to spend in Britain, compared to 70 GBP on 2 August 2015.

However, the Viajopólis travel agency in Lanjarón, Spain, says: “Our customers who want to visit London or Scotland see a trip that costs, say, 1,000 Euros and don’t have much interest in what the exchange rate was beforehand or what it might be afterwards. They simply book the trip based on its current Euro cost.”

British Airways saw a third more US customers searching for flights to the UK directly after the Referendum.

Nevertheless, the long-haul market is already benefiting, with some thrifty travellers quick to spot a bargain.

Patricia Yates, director of VisitBritain and VisitEngland, says: “Britain offers good value at present, especially for high-spending markets such as China and the USA. British Airways saw a third more US customers searching for flights to the UK on British Airways from Monday 27 June until Sunday 3 July (i.e. directly after the Referendum) than during the same time last year. The peak was on June 28, with an 80% increase in searches from the US.”

Heathrow Airport also reports that the weak GBP is attracting foreign investors and encouraging international passengers to spend in its terminals. Now Heathrow’s expansion plans look likely to materialise, which could process more inbound visitors.

Europe’s airlines have been reporting mixed fortunes since June 24. Monarch Airlines speaks of a “sweating period”. Easyjet says its costs have increased because the weak GBP makes aviation fuel more expensive but it is “too early” to see all the implications. Ryanair is reporting profit but is considering re-focusing away from the UK. Air France-KLM has joined other European airlines in warning of falling demand after terrorist attacks in France and Germany, along with uncertainty caused by Brexit.

VFR visitors to the UK on the decrease

A proportion of Britain’s inbound tourist traffic is classified as “VFR” – “visiting friends and relations”. VFR visitors to the UK spend five billion GBP a year on accommodation, domestic travel, tourist attractions and wining and dining. If Brexit causes fewer EU workers to exist in the UK, because free labour movement could be restricted, then VFR tourism could suffer accordingly.

Kathryn Chambers of Onecall Hospitality, a company based in South Lakeland, says: “The UK hospitality industry relies on hard working EU workers, particularly in London where 70% of hospitality employees are foreign. Many staff are uncertain of their future and are frightened – they feel they are no longer welcome here now.”

Is Britain damaging its own reputation?

With widespread media reports of racist attacks occurring in the UK since “Leave” won, is the Great British reputation diminishing overseas? As with all things Brexit, opinions are polarised.

Thanks to Brexit, EU residents are unlikely to feel more welcome in Britain.

Paco Rodriguez, a farmer on the remote slopes of the Sierra Nevada mountains, Spain, remains positive about the UK. He says: “I followed the Referendum on the Spanish TV news. I think that Britain is a strong nation. The effects of Brexit will be felt now but, surely, in a couple of years, everything will have calmed down and the UK will be the stronger for it.”

Nick Clayton, a UK journalist who lives and works in Ibiza, says: “I haven’t spoken to anybody Spanish who thinks the UK is doing the right thing but they’ve always thought Britain was a bit ‘loco’, especially with the binge-drinking culture. There are strong links between countries that go beyond a single vote. In the bars of San Antonio, we haven’t heard the Brexit mentioned in weeks.”

Bernard Brunet, a French citizen from Angoulême, says: “I think the UK has taken the most stupid decision in ages. The Brexit would not put me off visiting the UK for a holiday but I believe that the border control might revert to how it was in the past – i.e. similar to the recent scenes at Dover, with people stuck inside their vehicles for 18 hours. I remember having to reach the ferry port a day early to sit in a queue for passport control with thousands of other vehicles. That is hardly a good image to portray.”

Nicholas Calland, an American data analyst who lives in the Eurozone, is unimpressed by the UK’s behaviour. He says: “Thanks to Brexit, EU residents are unlikely to feel more welcome in Britain whether they want to visit or invest, while travellers from outside the EU could potentially decide to experience Europe by visiting a more tolerant country.”

VisitBritain is taking a proactive approach to the potentially negative picture being painted. Patricia Yates says: “From September, we will be increasing our marketing in Europe to promote Britain as a welcoming destination and emphasising what’s on offer across all our nations and regions. We monitor perceptions of welcome and, in recent years, Britain has gone up the international rankings for this attribute. TripAdvisor rates the UK second globally – after Italy – for its hotels and B&Bs.”

Staycations on the rise

While Brits might want to “take back our country”, this does not necessarily mean they want to take off from their country. With the Brexit after-shocks and a spate of terror attacks within Europe, the staycation market continues to gain ground, with Britain’s coastal resorts and country retreats reporting increased bookings since June 24. East Anglia, the Isle of Wight and Yorkshire are all reporting a boom in domestic holidaymakers.

Brighton Beach, Sussex

Brighton anticipates a strong resurgence of the ‘staycation’.

Brighton is a city that promotes itself on tolerant values and has a large LGBT community. Could Brexit rattle this tolerant reputation? Howard Barden, head of tourism and venues at Visit Brighton remains optimistic. He says: “We anticipate seeing more Brits holiday at home over the coming months and a strong resurgence of the staycation as Brighton hoteliers report a bumper month. The improved value of the pound will entice more overseas visitors, while Brighton and Hove’s pro-EU stance positions us as a welcoming European-focused and cosmopolitan city.”

Read also: Holidaying in Britain? Here are 5 great British beaches

Some domestic tourist destinations could miss their EU funding in a post-Brexit regime, causing them to suffer. Kathryn Chambers of Onecall Hospitality says: “Many regions rely on EU funding to help build tourist attractions or recover from adverse weather incidents. In South Lakeland, many businesses were ruined in the floods in December 2015 and roads and bridges still need repairing. The region was hoping to receive £30-£40 million to fund recovery works. The fear is that it will become a cheap tourist destination and not the quality destination we’ve worked towards creating.”

Destination Unknown

As social media broadcaster, CPGrey, says: “The UK can only speculate, stand in the fog and pick a path.” Although millions of people are trying, it is impossible to predict the future post-Brexit: a stone has been cast into the water and nobody knows how far the ripples will go. If 1967 was the ‘Summer of Love’ then 2016 has been the ‘Summer of Uncertainty’.

In the short term, at least, Brexit is unlikely to damage the UK’s inbound tourism trade.

And it’s not just Brexit. Terror attacks in Paris and Brussels, the Bastille Day horror in Nice, the attacks in Germany’s Munich, Würzburg and Ansbach, and the attempted coup in Turkey are all likely to make short-haul travellers nervous, detract from airline profits and encourage UK residents to pack their buckets and spades into the car and visit Torquay instead of Turkey. The UK staycation sector, which been growing for a decade, is a clear beneficiary.

As for the free movement of travellers between the EU to the UK, nobody knows what the eventual scenario will be: it could take several years to negotiate reciprocal arrangements between countries or to decide on visa requirements. Or nothing may happen at all. Similarly, nobody has a crystal ball about future currency movements and the impact on flight costs. Or the impact on the tourism industry’s labour force if their employees sourced from Europe have to be replaced.

Meanwhile, visitors to the UK from locations such as China and the USA are already seeing the greatly increased “bang for the buck” on UK holiday bookings. If GBP weakens further, as predicted, holidays in Britain will become even cheaper.

In the short term, at least, Brexit is unlikely to damage the UK’s inbound tourism trade.

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