Brexit: What does Article 50 mean for the tourism industry?

As Theresa May signs the letter that will formally begin the UK’s departure from the European Union, Duncan Marson, Lecturer in Tourism and Spa, discusses the impact it will have on the tourism industry both in the UK and abroad.

There has been a significant amount of uncertainty surrounding Brexit and the impact leaving the EU will have, and the tourism industry is no different. The nature of this uncertainty has spread like the proverbial wildfire across a wide array of industry intent on knowing the specifics of how it will impact upon the nature of trade, investment and employment.

Tourism is one such area where this ambiguity stretches across both supply and demand; from the agents and operators promoting holidays across the world, to the destinations (both here and abroad) relying on the British market, through to the tourists with their intention of understanding the impact on their much-valued holiday time.

Tourism is a resilient beast when considering the variety of external factors which impact upon global success and how quickly it can respond to negative changes in demand. So, what are the changes being discussed most within the industry, and do they have an impact upon ourselves as consumers?

Impact on the inbound market (international tourists to the UK):

For the industry, a key question is what will be the short and long term impact on the inbound markets (those coming to the UK). According to VisitBritain statistics for 2015, the inbound market was worth £19 billion in international receipts alone from 31.8 million trips taken, so there is an inevitable trepidation regarding the direct and indirect impact of a fall in visits.

This is not just the preserve of the UK. Take, if you will, the recent ‘Trump Slump’ phenomena highlighted in the US media warning of international tourist markets being put off the recent travel restrictions imposed there. Also of note here is the prospective induced impact, and all those suppliers who provide for firms who flourish with the help of international inbound tourists.

Along with this, consider a statistic proposed by ABTA that London, for example, has a 70% dependency rate currently on migrant employment in travel and tourism (a large proportion of these are from the EU).

Some of these sectors in tourism are classified as ‘hard to fill’, requiring employment from outside the UK (when considering current employment levels in the UK and skills shortages). These too will inevitably impact to a greater or lesser extent on the cost of staying in the UK for a holiday.

Impact on the outbound market: What it means for us as travellers?

The surface has only been scratched regarding these and the potential it will have, but already patterns in the discussion for UK holiday makers are starting to emerge. These are some of the choice discussions:

Exchange rates:

The short term prediction is that UK travellers going abroad will not receive the ‘value for money’ we have been accustomed to in previous years. The recommendation from consumer groups is to plan ahead when considering your budget for a holiday aboard this summer.

This requires shopping around for the best deal when exchanging the British Pound (and consider other options than buying currency at the airport) and understanding fees charged if you use a card abroad. This also means that other destinations may come into play for a larger UK tourist market (Mexico is nice this time of year). Also consider the importance of the all-inclusive holiday as a method of managing your budget when abroad.

Free movement and visas:

For Europe, at least, this will be a key discussion post Article 50. While the government is stating that EU citizens will need a work visa in future to work in the UK (with preference being given to certain sectors like high-tech), the perspective for UK travellers is that they may need one to enter Europe. This will inevitably lead to added cost and more time processing.

Current rumblings from the European Parliament suggest that the EU is considering an Electronic System for Travel Authorisation (ESTA) which is akin to the US model. Regarding Ireland, the line is that the government intends to continue with the common travel area post-Brexit, meaning little impact to travel between the two nations.

Airfares, bilateral agreements and UK flights:

One of the key reasons for success of low cost carriers such as Easyjet, was the unrestricted access to the European Common Aviation Area (ECAA). This has provided destinations throughout Europe with an opportunity to take advantage of a market like the UK.

While this is not the utopian vision of tourism development anticipated, it did provide emerging destinations such as Croatia as a more attractive proposition to airlines (at least initially). What this means when the UK finally leaves the EU is unknown, although there are options. In short, the UK could continue to follow the ECCA, which means nothing much will initially change for ourselves as jetsetters throughout Europe.

The UK would have little impact on policy and regulation in the European Aviation sector however, so it may wish to enter into a separate agreement with the EU or generate a raft of bilateral agreements with European nations. Both these two options are lengthy, and could result in an increase in fares.

Duty Free:

Recent reports in the media suggest that exit from the EU, and more specifically from the European single market, would mean that duty free shopping would be fundamental business opportunity for both the UK and European travel retail sectors.

So, in essence, while your bottle of French or Italian wine may rise in price at the supermarket, we may see the rebirth of duty free shopping. The other distinctively British tradition, the ‘booze cruise’ may also suffer depending on the change in allowances allowed to be brought back into the UK.

The European Health Insurance card scheme:

Murmurings suggest that it will be difficult for the UK to continue in this scheme without paying a cost to the EU. As a result travel insurance will become more of a focus, with a potential rise in insurance premiums.

So, in conclusion, while the nature of Brexit will undoubtedly cause an anxious outlook in some quarters of the tourism industry, travel for the purposes of leisure, recreation, adventure, landscape, relaxation, insight, culture, history, family, continue to grow in demand.

The rich variety of experiences both here and abroad fuel our desire as travellers to use our hard earned money and holiday time regardless of current issues.

Trevor Williams, Visiting Professor at the University of Derby and Chief Economist at Lloyds Bank Corporate Markets, talks to Senior Lecturer in Economics, Melanie Powell, about Brexit and the triggering of Article 50:

For further press information please contact the News Team on 01332 592032, pressoffice@derby.ac.uk or @derbyunipress

Join the conversation

  • Tony Loynes

    Having recently visited Switzerland, I can confirm that the exchange rate change is making things very expensive but, surely, this will have a positive impact on inbound tourism to the UK?

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