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Brexit: who in travel has said what
With just a week to go before referendum day, the travel industry’s response has been a mixed and muted bag of views
If France’s visa policy has anything to do Brits behaving badly, UK travellers might have something to worry about. Indeed, it’s not entirely absurd to suggest that a response to chants of ‘F**k off Europe, we’re all voting out’ from England fans in Marseille this week could be: ‘Good riddance… oh and if you want to sip champagne in our sunshine, from now on in it’s going to cost you a whole lot more”.
The reality, however, is that football fans are just one segment of the 44 million British travellers who head to Europe each year to holiday (73%), do business (44%) or visit friends (44%), and these tourists are a welcome stream of revenue for European tourism, particularly on the Mediterranean (although it also works the other way).
Cheapflights MD Andrew Shelton puts it this way: “The UK market is a large, very well established and lucrative source of fiscal well-being across Europe, vital to the economy of many countries and localities, for whom it will be in the interest of which to seek to maintain the status quo.”
He adds: If the vote is ‘out’, then we believe that there will be a lot of people working to ensure that the UK cash cow isn’t put out to pasture.”
If the vote is ‘out’, then we believe that there will be a lot of people working to ensure that the UK cash cow isn’t put out to pasture
Cheapflights MD Andrew Shelton
While there are many unknowns, probably the most comprehensive overview of the impact to the travel industry can be found in a Travel Association-Deloitte report – What Brexit might mean for UK Travel – which was published in March, and seems to be saying 'remain'.
Few would dispute the risks contained in the report – which include labour and employment, travellers’ rights, currency and investment risk, consumer confidence and more - but views on the extent of those vary widely.
Global firms seem less worried and in May Amadeus CFO Ana de Pro told CNBC that she believed the travel industry would be fairly insulated from Brexit. There may be a short-term impact, she said, but it wouldn’t impact the travel industry in the long run.
That seems to be backed up by Nick Longman, the UK boss of TUI, the world’s biggest travel company, who is quoted in the the Daily Mail: “If Britain does vote to leave, there’ll be some things we’ll have to work through, such as aviation permits, staff issues, but we’ve done a full risk analysis and there’s nothing insurmountable that we wouldn’t be able to deal with”. (For the record TUI, and Longman, would like the UK to remain).
Another C-Level executive at a fast-growing online UK travel provider, who preferred anonymity, told EyeforTravel: “My personal view is that while I'll be voting to remain I think the practical impacts of an exit on travel will be pretty muted. I'm cautiously optimistic that an exit will be relatively orderly as regards travel regulation and so on.”
He did, however, believe that it would make it harder for UK businesses to raise capital.
Other ‘steady’ views have come from Willie Walsh, the chief executive of International Airlines Group, British Airways’ parent company; he argues it will be business as usual for Britain’s national carrier.
Walsh also dismissed claims from the low-cost camp that a Brexit would lead to price hikes. This has been the rallying cry of EasyJet’s Carolyn McCall, an ardent ‘in’ supporter who has said that voting out would “end an era of cheap flights” and that “how much you pay for your holiday really does depend on how much influence Britain has in Europe”.
Andrew Swaffield, chief executive of the budget airline Monarch, has echoed that view: “If the UK were to exit the EU, Monarch would view the outcomes for the travel sector as very negative, not least because of the uncertainty that would follow in the aftermath.”
It’s one too that PM David Cameron has used in his campaign, warning voters that the cost of a holiday to the Mediterranean could rise by £230 and new limits on duty free could put an end to ‘booze cruises’ to the continent.
In the case of airlines, it is the low-cost crowd that are most affected as it was a liberalised internal aviation market that allowed LCCs to operate anywhere within the EU without restrictions on capacity, frequency or pricing.
In typical irreverent form Virgin Atlantic founder Richard Branson, who would see leaving the EU as the “saddest day”, sums up their predicament by saying, “the budget airlines easyJet and Ryanair are “s****ing themselves”.
Hard though it is to imagine, even Ryanair’s Michael O’Leary, once the EU’s biggest critic, has come out with this: “I despise much of the regulation that comes out of Europe that add to consumer costs, but there are sensible arguments for staying in, there are very few sensible arguments for leaving”.
The Irish carrier is even offering its best fares to fly Brits abroad home to vote. Bet those Brits living abroad are wishing that Ryanair Rooms, due to launch in October, was happening a little sooner – they may even have been given a cheap hotel deal for a vote!
Speaking of the UK hotel industry, it’s been relatively quiet on the subject of Brexit. However, a survey published by law firm Berwin Leighton Painser in March finds that hotel professionals believe that M&A activity and/or revenue per available room would be adversely affected, should Britain leave the EU.
One British CEO who has come out publicly is in Travelodge’s Peter Gowers who in 2015 said he feared the UK “might be “sleepwalking into real danger if [the sector] doesn’t stand up and be counted”.
Recently the UK chain, which generates 99% of revenues in the UK, issued a new bond to raise funds and, in what is being attributed to Brexit impact, has paid more than one would expect for a company of this size and creditworthiness, according to analysts at ratings agency Standard & Poors.
Another poll of the investor clients by commercial real estate firm CRBE Hotels in February 2016 found that 73% believe the UK would be a worse place to invest should the country vote to exit. In the first quarter of 2016, uncertainty has led to transactions being down by 58%.
Also concerned is Whitbread which owns Costa and Premier Inn. Brexit, it has said, would “be both unwelcome and potentially damaging to our business”.
As the ABTA report highlights, for accommodation and food & beverage providers one of the big issues is labour; in London, for example, as much as 70% of sector’s workforce are foreign workers, and many come from the EU.
Leave campaigners recognise this too. Speaking at a Meetings Industry Association debate alongside senior execs in the F&B space,Vote Leave campaigner Luke Springthorpe argued that Britain needs to remain open for business, with a sensible immigration policy. “Those working and living here have acquired rights to remain in the UK. It would make no sense to start deporting migrants from the EU,” he said.
Interestingly at the start of this debate 18.8% said they wanted to leave, by the end of the debate the show of hands was 34.1%.
Road, rail and sea
With rail, road and sea it’s a mixed bag. Speak to many a London taxi driver, fed up with Uber, and they will tell you it’s time to get ‘out’. The rail unions too, citing the proposed Fourth Railway Package and the TTIP trade between the EU and the US, are calling on members to leave. They argue that privitasation in the UK has been a disaster, and will be in Europe too.
However, Mark Watts, a former a Labour MEP who now runs the public affairs consultancy Luther Pendragon Brussels, is a co-ordinator of UK Transport in Europe told European Railway Review that investment could fall, fares could rise and winning tenders would be much tougher to win, in event of Brexit. “It’s not just about regulatory compliance: it would be about retaliation,” he said.
It’s not just about regulatory compliance: it would be about retaliation
Europe is also an important market for bus operators and some argue that Brexit could make it more difficult for them to grow their operations outside the UK, and this could lead to competitive disadvantage.
And, just for the record, EU countries contribute over 85% of the total passenger traffic to UK ports.
The tech brigade
Representatives from the UK tech sector seem largely against Brexit; firms cite the ability to recruit the right labour, raising capital, increasing costs of their activities in the EU and regulatory uncertainty, particularly around the handling of data – the lifeblood of the tech sector – as reasons.
While none of the big global players in online travel have taken an official line, in April more than 200 entrepreneurs got behind the ‘remain’ campaign. Among those from the travel camp - Travelex founder Lloyd Dorfman, lastminute.com founder, Martha Lane Fox and Dinesh Dhamija, founder of e-bookers.
British unicorn Skyscanner, however, is a 'no comment' although has taken the opportunity to explain to its customers what Brexit could mean.
Meanwhile Nigel Huddlestone, former UK head of Google Travel, has said, however, that there is no doubt that travel will be affected by a 'leave' vote but agrees that if ‘out’ it is, then there would be a deal struck with the EU that would probably have to include some sort of freedom of movement. That's how important labour is to the travel & tourism.
So risk, yes. How much, who knows. Cheapflights’ Shelton sums it up: Amid all the claims and counter-claims, scare-mongering and vested interest reassurances, all that is really clear right now, is that it’s all just speculation”.
Watch out for our European views on Brexit early next week. Share your views in the comments in box below or email Pamela Whitby