So, that’s it; the decision has been made. On June 23rd the UK voted to leave the European Union and the nation is now faced with the political and economic uncertainty that will inevitably come with it. Not to mention a new Prime Minister, of course.
At first glance, as has already been reported, it does not seem like good news for many UK industries, including leisure and hospitality. Visa UK’s Consumer Spending Index shows that consumer spending on hospitality grew at its lowest level for three years in the run-up to the vote and there is already confusion and concern over the future of migrant workers in our hotels, bars and restaurants. All this, of course, clouded by a backdrop of alarming headlines about the low pound and initial drop in the FTSE 100.
There is, however, no need to panic. In fact, I believe there is genuine cause for optimism for hotel operators, restauranteurs and others in the hospitality industry.
The pound may have hit a 31-year low against the dollar, but this of course makes it cheaper for international travellers to visit the UK. It also pushes up the cost of Britons travelling abroad, which means it is more likely that Brits will opt for domestic breaks instead.
All of this will help to ensure holidaymakers from the UK and overseas will be spending their money in British towns and cities, sleeping in British hotel rooms, eating in British restaurants and shopping in British stores. It could be a great opportunity to tap into increased tourism trade – and I’m not the only one to look forward with optimism.
Richard Solomons, chief executive of the Holiday Inn owner InterContinental Hotels Group (IHG), said in July that sterling’s drop is likely to encourage more Britons to holiday at home, providing a welcome boost to the UK tourism and hotel industries. He also said we should enjoy a boom in tourists visiting the country. Nick Varney, chairman of the British Hospitality Association and chief executive of Merlin Entertainments has echoed similar sentiments, as has Barbara Clark of Visit Scotland.
There is potentially a more long-term opportunity too. If hotel occupancy levels spike as a result of increased staycations and overseas visitors – and that spike continues beyond the UK’s withdrawal from the EU – then there will have to be a reaction from the commercial property sector.
Hotel construction levels had reached unprecedented levels in recent years since the recovery of the credit crunch, and whilst it is unlikely these levels will continue in the short-term period of uncertainty, it does offer some hope for renewed recovery in the coming years.
This could even be the case sooner rather than later in the regions, where hotel occupancy is already strong. In Yorkshire, for example, where we operate, occupancy rates reached record levels in 2014. PwC has forecast UK regional occupancy levels of 77% in 2016 – which would be the highest ever figure, even before the positive impact of the low pound comes into play.
The advice from many is ‘don’t panic’ and look forwards to seize the opportunities. While the pound remains low, there could be more green shoots than you first thought.