Last updated: 02:25 PM ET, Tue July 12 2016

As Brexit Dust Settles, Travel Measures Impact

Features & Advice | Robin Amster | July 11, 2016

As Brexit Dust Settles, Travel Measures Impact

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It’s too early to determine exactly what the effects of the recent Brexit vote—now famous, or infamous, depending on your point of view—will be. The only thing certain though, is that those effects will be far reaching for the U.K., obviously, and for Europe, the U.S., and, in fact, the world.

Canadean, a U.K.-based consumer insight firm offers some perspective on Brexit, the U.K. travel and tourism industry, and U.K. travel agents.

“Overwhelmingly, as with other industries in the UK, the travel sector faces uncertainty as we await the U.K. government’s exit negotiations with the European Union over the coming years,” said Gillian Kennedy, an analyst with Canadean.

But, the firm believes Brexit poses “a particular threat” to the U.K.’s travel and tourism market because it is intrinsically linked to the “faith of the EU economy.”

Brexit, it says, will have far-reaching effects on the entire EU travel market, due in large part, to the fact that Europe is the U.K.’s largest tourist inbound market, with more than 60 percent of its visitors coming from EU states.

The firm notes that the World Travel and Tourism Council (WTTC) sets the number of people employed in the U.K. tourism industry at more than 4.3 million. And travel and tourism directly contributed 3.4 percent to the U.K.’s GDP for 2015.

Nearly three-quarters of business travelers also come from the continent and, according to the U.K. Department of Transport, EU countries contribute over 85 percent of the total passenger traffic to U.K. ports, Canadean adds. And in aviation, travel to EU destinations accounts for 64 percent of the U.K.  outbound market.

But what about the effects on U.K. travel agents?

“Consumer protections instigated by the EU, such as the European Health Insurance Card, could also be at risk,” said Kennedy. “Indeed, the Association of British Travel Agents pointed out that U.K. consumers could risk losing financial protection for compensation for flight delays, alongside caps on mobile phone charges.

“Flight compensation is currently paid for long delays on departures from EU airports. Following Brexit, airlines may no longer be bound by this legislation,” Kennedy said. “There is also the issue that Britain may be forced out of the Open Skies EU agreement, which keeps air fares relatively cheap.

“Again, there is no concrete decision to be made for this until Britain’s exit negotiations with the EU take place over the next two to three years.”

U.S. agents have weighed in on how Brexit will affect the industry on this side of the pond—at least in the short term.

Keith Waldon, founder and director of the Departure Lounge in Austin, Tex. reported immediately receiving requests from clients about travel values in the U.K. and Europe.

“Some savvy travelers want to take advantage of the deflated British pound and Euro,” said Waldon. “For travelers who have found five-star rates a bit too rich in recent years, the stronger U.S. dollar makes the best hotels and restaurants an immediate better value for Americans.”

But while there is, “for the moment,” a significant shift in the GBP versus the USD exchange rate—making immediate travel in the U.K. less expensive for Americans, that same exchange rate difference will shortly be corrected by changes in hotel, cruise, tour, restaurant, etc. rates, according to Eric Goldring of Colts Neck, N.J.-based Goldring Travel. 

 That’s because items purchased outside the U.K. used for those services will cost more in GBP.

“I do anticipate a bit of a chilling effect on travel by U.K. residents due to the uncertainty of their financial position more so than the exchange rate,” Goldring said.  “As they are significant travelers to most European countries, there will probably be a bit of a lag in an already somewhat soft travel market.”

Lindsay Pearlman, co-president of the Ensemble Travel Group consortium, summed it up:

“I think it’s a wait-and-see situation,” said Pearlman. “For travel, short term, the Pound is down so it’s more attractive to travel to the U.K. right now. Long term, access to the EU regarding passport control and potential visa requirements are all to be determined.”

However Brexit ultimately plays out for U.K. travel agents and the travel industry, one thing is certain: U.S. agents will be monitoring the situation. We live in a global economy: what affects one country or group, affects us all.

And we’re all, no doubt, hoping for the best for our British cousins.

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