Earlier this week, we ran an Atlas article about how the United Kingdom’s decision to exit the European Union is impacting its own business travelers. In today’s post on Brexit, a topic we will continue to explore here on the Atlas from time to time, we are looking at how it has been affecting UK-bound business travelers and what will happen leading up to and after the process is final in March 2019.
Despite the British pound falling sharply following the Brexit referendum in June 2016, we can’t say that the weaker sterling has brought in larger herds of business travelers. According to a recent Skift report, corporate travel to the UK actually was down 4 percent for the quarter that ended June 30, 2017, and 3 percent for the first half of the year. As the article suggests, it is likely due to a lack of confidence over how the UK will fare economically.
For those of you still heading there for business, fair warning: Despite the corporate travel slowdown, you’re bound to face longer lines and crowds at the airport and in big tourist destinations like London.
While the weaker pound may not have done much for business travel, it really benefitted UK tourism, with 21 percent more visitors going there for vacation in the first three months of 2017, according to the Office of National Statistics.
The influx of tourists isn’t the only reason for longer lines at UK airports and other ports of entry. Once the Brexit process is complete in 2019, it’s likely the “fast track” lane for customs will be exclusively for British passport holders and therefore EU nationals will have to file into the same long queue as all other non-UK citizens.
As Charlie Leocha, president of consumer advocacy group Travelers United, explained to Bloomberg, he expects that “getting in and out of the UK will be an absolute horror show” once that scenario happens.
There was one recent decision made, however, that should help ease the congestion somewhat — or at least not exacerbate it. As the BBC reports, the British government plans not to require visitors from any of the EU countries to apply for visas. Likely factoring into their determination is the fact that the UK already grants visa-free travel to nationals from 56 countries.
As we pointed out in other Atlas article, there is one issue that has not been resolved that significantly could impact the cost of air travel post-Brexit: Whether or not the UK still will have access to an “open skies” kind of arrangement. Since 1997, any EU airline has been free to fly between any two points in Europe, enabling no-frills airlines like easyJet and Ryanair to offer discounted rates and more flights. In fact, a Telegraph article states that since the introduction of the “open skies” policy, fares have fallen by around 40 percent and routes have increased by 180 percent.
If a similar arrangement is not reached before Brexit is finalized, those coming in and out of the UK could be hit with a higher airfare and there likely will be fewer options for flying around Europe. Ryanair’s CEO Michael O’Leary even has said that unless an aviation deal is signed soon, it plans to ground flights between the UK and EU after Brexit.
It’s not only the airfares that will be climbing. We already are seeing hotel rates going up, partly due to the high demand these days. According to research by hotel data firm STR, London enjoyed a new record for its average daily hotel rates at £133.38 for the first quarter (up by 6.2 percent on last year for the same quarter).
But, you will see rates continue to soar for a reason beyond supply and demand. Currently, EU citizens are free to live and work in the UK without a permit. However, as a report by Politico indicates, the British government will require visitors from EU countries who want to work in the UK to apply for permission first. While the proposal says EU citizens will be able to move to the UK and look for jobs without restrictions, prospective employers will have to sponsor EU applicants by applying for permits issued by the government.
One sector that will be impacted greatly? Yep, you guessed it — the hospitality industry, which relies heavily on Europeans, particularly from the poorer ex-communist states, for cheaper labor. And citizens of other EU countries could make up as much as a quarter of the 3 million workers in hospitality, according to a KPMG report based on a survey of British Hospitality Association members.
Even before the government announced its intentions to require EU nationals to obtain a permit to work in the UK after Brexit is finalized, the industry has been facing a workforce dilemma. European workers are starting to leave Britain, seeing that their pay in pounds doesn’t stretch as far as it used to, and those who were planning to come are having second thoughts, worried about their uncertain status after Brexit. If the UK hotels cannot fill these vacancies quickly enough, one option they may be forced to take is to pay higher wages — which guests undoubtedly will see reflected in their hotel bills.
Hmm…Guess this is really about supply and demand after all.