What Brexit Could Mean for the Global Tourism Industry


July 13, 2016

3 min read
Reading Time: 3 minutes

The surprise favourable Brexit vote has left the world reeling, sending stock prices and the British Pound plummeting as soon as the results were announced. As borders close between the UK and Europe, what are the possible implications for the global tourism industry?

Short term:

There will be no impact on British citizens’ ability travel in Europe for at least two years before the changes are rolled out, that is no changes to passports, insurance regulations, duty free and mobile phone regulations.

As many British travellers will have already pre-booked their vacations this summer, little is expected in terms of change to immediate travel plans; however discretionary spending may be lower while abroad to compensate for the weaker pound, which at the time of writing was at a 5 year low against the Euro.

The Brexit vote will see winners and losers in the tourism market: countries relying heavily on British tourists may suffer, particularly vulnerable economies such as Ireland and Greece. Likewise, big European destinations like Paris are no longer expecting a bumper season in 2016. On the flip side, England is the cheapest it has been in years, especially for US travellers, currently with the pound at a 31 year low against the US Dollar. This may result in a bump in inbound travellers to the UK, and prompt UK travellers to travel more domestically in the short term.

For airlines, a weaker pound may also impact the cost of flights in the short term.

Long term:

Whether longer-term bookings start to slow, particularly for Christmas and early 2017 will be seen in the coming months. Travel patterns will shift noticeably if the currency rates remain at current levels in the longer term.

Cheap foreign labour makes up a significant portion of tourism industry, so longer term, prices may rise as employers pay higher wages demanded by UK workers, which could have a huge effect on prices.

There could be a major impact on airlines if the UK leaves the Open Skies Agreement, however the UK Government is likely to negotiate full access to the agreement to mitigate this.

What does this mean for tourism businesses?

If you rely heavily on tourism from the UK, consider targeting other markets. Upgrade your marketing efforts into different markets, such as China, the Middle East and Mexico. Make your website multi-lingual to accommodate these markets.

Alternatively, if your primary market is the UK, you may need to offer promotions or lower-cost options to entice these travellers to your destination or business.

For the time being, uncertainty is certain. Although there may be short term winners and losers, ultimately having the exchange rate return to a non-volatile state is the best option for the travel trade. A stable exchange rate allows the industry and travellers to predict their cost of travel, which will boost confidence and increase the likelihood that people will make travel plans.

TripAdvisor’s position on the issue is “It’s too soon to tell what, if any, impact there will be to travel and tourism. We are confident that the United Kingdom will work through an orderly transition with the European Union to mitigate any long term impact to our industry and to travelers.”

Locally in Canada

Tourism is off to a great start in the first quarter of 2016. International visitor numbers are up 14.7% year to date heading into the summer season. A similar pattern is seen in British Columbia, who has seen record breaking visitation numbers in several markets.

While the Brexit vote may have put the brakes on UK tourism to Canada, a good news story for the Canadian tourism industry is the recent move (June 28, 2016) by the Trudeau government to lift Mexican visa requirements. Effective December 1st, 2016, Mexican tourists no longer will require a visitors visa to come to Canada. “By lifting this visa, we expect that visitation will increase by up to an additional 82,000 Mexicans a year – spending up to $122 million more at Canadian businesses”. Charlotte Bell, TIAC President & CEO.

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