Travel Management Blog

Should We Stay or Should We Go Now? What a Brexit Could Mean for the Travel Industry

What would "Brexit" mean for the travel industry?

The responses to a possible “Brexit” range from “meh, nothing will really change much” to “we’re all doomed!” But what would Britain leaving the EU actually mean for the travel industry?

Worryingly, a great deal of what will happen if the UK leaves the EU is still up in the air – no one will be sure exactly where we stand until the finer details of the (as yet unknown) settlement have been hammered out. It is during this negotiation period, which could take a number of years, that uncertainty and a lack of confidence could really kick in – lasting until a new set of trading relations and regulations are implemented.   

The UK would be the first Member State to leave the EU, so there is no precedent to indicate how the process would work in practice. 

Our Strong Travel Ties to Europe

For both business and pleasure, the EU is the main destination for travellers from the UK – and our main source of inbound tourists and business travellers. Europe provides the UK with more than double the tourism of the rest of the world.

According to ABTA and Deloitte's report on What Brexit Might Mean for UK Travel:  
  • Around 76% of UK holiday travel is to countries in the EU, and 63% of incoming leisure travellers are from countries in the EU 
  • Around 68% of business travel from the UK is to countries in the EU, and 73% of incoming business travel is from EU countries. 

The free movement of goods and services, investment and people across the EU facilitates these travel ties – while we are not part of the border-free Schengen area, we do currently allow other EU residents to enter the UK unrestricted, so long as passport checks are passed.  

Effects of an EU Exit for Travellers and the Travel Industry  

In Skift, Jason Clampett claims: "We’ve yet to find a travel brand in the UK that supports Britain leaving the European Union," and there does seem to be ample reason for concern.

It is largely agreed that operating externally to the EU would bring increases in costs to the UK’s travel industry, but the level of increase depends on the settlement reached, the agreements the industry is able to put in place and how well it is able to manage the transition. The industry may be further impacted by increased costs that could hit consumers in the event of the value of sterling dropping (as is widely predicted).

Costs of a deterioration in the value of sterling

Though a weak pound might increase the UK’s appeal as a destination, this is likely to be outweighed by negative effects on our outbound travel – as well as wider economic concerns – since that far outweighs the overall inbound travel we receive.

One thing we’ve not seen much discussed is how this might affect the balance of traditional vs. sharing economy travel choices. The sharing economy, particularly the likes of AirBnB, may continue to rise in popularity as travellers seek to mitigate the increased costs created by a feeble pound.

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Exiting the single aviation area

An issue that could have a big impact on the travel industry in particular is the possibility of our exit from the single aviation area. Being within the area has allowed budget airlines to offer low-cost flights, turning air travel from something largely for the elite to something accessible to the majority. The loss of these, along with the possibility of travel costs increasing in general, could lead to a reduction in inter-Europe travel.

Though technological advancements in remote conferencing have not, as yet, lured businesses away from corporate travel and face-to-face meetings, a sharp increase in costs could be the sticking point that makes an organisation decide that the benefits of their current level of business travel is no longer worth the added cost.

European workers

Further disruption and uncertainty could arise if changes were made to the travel industry’s ability to recruit or retain immigrant workers – the sector currently employs a high number of EU nationals. 

This could also see a reduction in longer term inter-Europe travelling and gap years, often sustained through casual jobs taken up in, for instance, bars or ski resorts, without the need for a work permit. Though rights to work may be retained, it's highly likely it would become a more restricted and awkward process. 

Consumer concerns: EHIC, mobile roaming and the death knell for the booze cruise? 

Other knock-on effects might be felt if the UK loses the benefits of the European Health Insurance Card (EHIC) and/or reduced roaming charges. Depending on how renegotiating emergency healthcare works out, travel insurance costs could rise   

All mobile roaming charges are set to be abolished across the EU (ironically following an agreement for which the UK led the charge) from June 2017, but if an EU-free UK is not covered by the agreement, these may instead rise.

Though travellers would likely regain the benefits of duty-free shopping while visiting the EU, with it would come the loss of our right to buy almost limitless amounts of duty paid items in Europe. This would likely wipe out the niche travel category of, for instance, hopping on a ferry or Channel tunnel train to stock up on French wine and beer. 

The level of change we feel may well come down to whether we remain part of the EEA and become a member of the EFTA (European Free Trade Association) like Norway, or if we are member of neither EU nor EEA, like Switzerland.

If We “Do a Norway” (in EEA, out of EU)

In the event of a Brexit, the factor that will most affect the UK’s position, and the consequences (or lack thereof) for the travel industry is whether we join the European Economic Area (EEA). Doing so would likely mean that there would not be too much change felt by the industry (beyond those caused by such external factors as a deteriorating sterling value).

If We "Do a Switzerland" (out of EEA as well as EU)

Should we enter a free-trade-only agreement, losing the free movement of people and services, then the travel sector is much more likely to feel effects.

If visitors from EU Member States need a visa to enter the UK, then it is reasonable to assume that visitors from the UK will also need visas to enter the EU. This may disincentivise travel in both directions, but particularly in the case of inbound tourism from Europe. While businesses will likely still send travellers where they are needed, family holidays to the UK may look very unappealing compared to an EU neighbour that requires no visa. 

On the Bright Side…

Should the UK opt to leave the European Union, it is reasonable to assume that new regulations will be brought in to replace those that currently protect travellers within the EU. Since the “free movement of goods and services, investment and people across the EU” has been beneficial to the rest of the EU, not just the UK, it also seems reasonable to hope that the Member States would want to preserve as many of these mutual benefits as possible when hammering out new agreements.

While a Brexit would be the first EU departure of its kind, we do at least have examples such as Norway and Switzerland with whom terms have been negotiated that could act as a starting point.

While the issues around data roaming charges may create a pain point for travellers, it is unlikely to have a significant impact on the wider industry. It’s enough of a problem to be an annoyance, but not enough to put any but the most aggrieved or thrifty travellers off their trip entirely. It also seems likely that ways around the problem will become more prevalent, such as increased availability of local SIMs for travellers to a region.

It’s not unreasonable to hope that EHIC issues may be avoided entirely, regardless of the settlement agreed, since visitors to Switzerland and the EEA are entitled to medical treatment with their card, and it seems likely that EU countries would prefer to retain NHS access for their own citizens visiting the UK.


In Conclusion

When weighing up all the potential risks and rewards for the travel industry, it's hard not to conclude that remaining in the EU is the smarter choice for the sector. However this is all completely unknown territory and any effects will be dictated by the settlements and regulations agreed, should the Brexit campaign succeed. And, as a business that works closely with a great number of companies and organisations throughout the sector, we've seen first hand its resilience and ability to adapt to change, so we can say with confidence that the industry may need to evolve but it certainly won't fade away. 

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