BREXIT


Known unknowns


As the dust from the EU referendum continues to settle, BBT asks what the result means for the industry


By BOB PAPWORTH R


OUGHLY TEN WEEKS AGO, the UK – and most of Europe – was plunged into a fog of Brexit bewilderment. In roughly eight weeks’ time, that fog could turn into what used to be known as ‘a real pea-souper’. On November 8, the US will go to the polls to elect a new president. Like her husband before her, Hillary Clinton has her faults but, on the evidence to date, she seems unlikely to upset too many international apple-carts. Donald Trump’s foreign policy is less predictable (unless you happen to be Muslim or Mexican) – in his case, there could be apples everywhere. Since the early hours of June 24, when the UK’s European Union (EU) referendum result finally became clear, business travel leaders have been holding forth about the ‘new normal’ and ‘the certainty of uncer- tainty’. Come November 9, we could be


60 BBT September/October 2016


looking at an entirely new ‘new normal’. ‘Uncertainty’ may well turn into ‘opacity’. Roughly translated, that means we can’t really see where we’re going now; in two months’ time, we could all be blundering around in pitch darkness.


STABILITY OR SLUMP? Post-Brexit, one of the more extensive as- sessments of the UK’s prospects came from hospitality analysts STR and its Oxford Economics forecasting partner Tourism Eco- nomics, which pointed out that the slump in the value of sterling – against most major currencies – began to stabilise within days. “Nonetheless, considerable uncertainty remains as the details of Britain’s exit are worked out, and it could be two years or more before these issues are fully resolved,” their report said. “For the travel industry, the prolonged uncertainty will influence both the magnitude and persistence of the


economic impacts. While is it impossible to quantify the exact extent of the Brexit, it most likely would have some impact on current hotel performance in the UK.” It continued: “Most of the impact is likely to be on travel confidence, especially busi- ness travel, driven by the uncertain environ- ment, although the depth of the negativity is difficult to gauge. On the other hand, the sharp drop in currency exchange rates would make London more affordable... pos- sibly enough to offset the negative impact from weaker domestic demand.” For multinational corporations, most currency fluctuations are a matter of swings and roundabouts – if sterling stays low, ex-UK travel budgets will be stretched, but inbound business trips will become comparatively cheaper. Smaller companies will be hit hardest. However, there is no real way of knowing – yet – whether the pounding of the pound


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