There has been much argument on either side of the political divide about the likely economic impacts of Brexit. While it is very difficult to make detailed predictions at this early stage, we decided to look at some likely effects for the hotel industry:
The crash of the Sterling means that there’s no better time than now for international tourists to visit Britain. EU nationals made up 44% of all inbound travel and tourism spend in 2014 and spent a whopping £9.55bn. Americans alone spent £2.3bn in 2015. They can’t get enough of our exotic cuisine and weather and now their euros, dollars and yuans can stretch just that bit further we can expect to see even more inbound visitors and/or more spending. One hotel in York has seen bookings by American guests increase by 236% in the days following the EU referendum.
Conversely, for Brits, holidaying abroad is all the more unappealing financially. We can expect to see more Brits opting for a staycation, which could give another boost to the UK hotel industry. UK nationals spent £19.76bn travelling in the EU in 2014, which accounted for 56% of all travel spend. If Brits were to spend more of that money at home it would provide a massive boost to UK tourism.
However, it’s not all good news. The free movement of people between EU member states is a major help in recruiting good staff to the UK hospitality sector, which suffers a perpetual skills shortage. There is a high turnover in the industry that costs employers £274m annually. The problem of sourcing talented staff could be hugely exacerbated by having a shallower pool of candidates to select from if restrictions are placed on free movement of EU nationals. Highlighting the industry’s reliance on foreign employees, a study published by the Migration Observatory at the University of Oxford found that, in 2015, only 4 per cent of the workforce across the sector was British. An estimated 442,000 EU migrants work in Britain’s hotels and restaurants and many of these jobs may have to refilled by British people if those migrants are forced home. This would likely result in increased wages and higher labour costs which would be passed on to the customer.
Business as usual
It is impossible to know exactly what long – or even short – term impact Brexit will have on the hotel industry so, in the meantime, all hotel owners and managers can do is make sure they run their businesses as efficiently as possible and offer the best possible service for all their guests.