As the UK reacts to the high court ruling the landmark Brexit ruling, it’s clear that the journey from referendum to article 50 won’t be straightforward. Despite the vote to leave the EU, Brexiters and Remainers still argue on what’s best for the UK and with the route to Brexit still seemingly unclear, there is definite doubt over its potential impact on the industry and wider economy. But assuming the UK does leave the EU, you may be wondering how this will impact the UK travel industry and more specifically your organisation’s business travel programme.
We are likely to be on an economic roller coaster for a long time, as the only thing that is certain is uncertainty, however, with challenge often comes opportunity and it’s important UK businesses remain positive and don’t dwell too much on the unknown.
Last week I took part in an event organised by Hull and Humber Chamber of Commerce's World Trade, to discuss these concerns in more detail with local businesses. The speakers and delegates shared a huge amount of insight into the implications of brexit, here are the 5 key takeaways you should keep in mind...
#1 Trade with the EU
There are many points to consider when looking at international trade within the EU post Brexit. The UK is a large and diverse economy not dominated by a certain sector and companies should consider their capacities to conduct trade deals and explore how they can seek extra support, such as through trade organisations or trade missions if looking to enter new markets or protect current markets. Domicile requirements will need to be explored and with a new union custom code put into play recently, supply chain security will also need to be addressed.Our current free trade agreements also affect the travel industry such as aviation movement as well as people movement. All these factors could have a bearing on the business travel market and the quicker there is a clear agreement with businesses knowing their parameters, the faster we can take advantage of the new landscape that will inevitably open up.
#2 Making way for the inbound market
One area in which the forecast does seem to be clear, is the hospitality industry, as it's likely to be set for a huge hike. With potentially less outbound travel from the UK and more inbound, the United Kingdom will become more attractive in this field as a visitor destination. On the flip side, for business, the export opportunities are opening up for UK companies as a result of the weakening pound.
#3 Having a robust hotel programme is essential
For companies and organisations with a large UK domestic travel spend, be aware that the UK hospitality sector is expecting to see a rise in room nights sold. This will mean businesses will need to make sure they have a robust hotel programme and manage costs for contracts undertaken. As hotel availability becomes more pressurised, expect to see price rises. A good travel management company will help you to implement a strategy to manage the effects of this by negotiating rates, added value benefits and focusing your hotel spend on a smaller number of properties, whilst also taking advantage of market rates at times of lower demand or occupation.
#4 Watch the financial market worldwide
With 85% of foreign exchange deals involving the US Dollar, there there will be many factors that will affect the foreign exchange market as we part way with the EU, along with the current Amercian election and the risk of a rise in UK Interest rates. Keeping an eye on what is happening financially worldwide is critical. Forecasts by UK banks on exchange rates for the next 12 months are varied to say the least - so when trading overseas ensure that you provide for a degree of uncertainty.
#5 Keep an eye on airline markets, prices and route availability
With airlines such as Ryanair drastically taking action and moving their plans for expansion away from the UK, it's not surprising questions have been raised. Only this week, Easyjet said it can’t wait for Brexit to seeking a new EU licence. Under present rules, airlines have unlimited flying rights within EU countries, but it is not yet clear whether Britain will be allowed to keep this arrangement when it leaves the bloc.
Airlines are now downgrading their profits in their post brexit forecasts, this is partly due to airport taxes/charges and fuel surcharges which have a major bearing on future costs, but also as they await the outcome of negotiations on the current freedom of movement for UK residents and EU openskies agreements for airlines to operate in.
However, despite the risk of some price rises, remember that average fares have fallen 40% in the EU over recent years and thanks to routes increasing by 180%, air travel is at its most competitive in years and yet figures have yet to return to the levels before the recession of 2008.
Outside of the EU it is vital that airline routes match with trade agreements and opportunities. The Guild of Travel Management Companies (GTMC), of which Good Travel Management is a member, pro-actively conduct research and lobby government to ensure that the UK is as well connected and has the capacity to meet trade opportunities. The value of business travel is often under-estimated, but without a convenient way to travel then growth can be stifled.
Companies who regularly travel on business have to acknowledge the result and stay focused to drive business forward, even when planning ahead is impacted in unknown quantities. Whilst the business travel industry effectively sits in limbo (along with the rest of the UK), for now it looks like it's business as usual...
If the content of this blog resonates with you or your company's international or UK business travel requirements then make sure you are well planned to manage your way through some uncertain times ahead. To read more about using a travel management company and how to choose the right one click here.