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Business Travel Blog





Browse through our selection of business travel resources and the latest travel industry updates

Brexit

During a tumultuous year for politics on both sides of the Atlantic, the surprise vote by the UK to leave the European Union in June is continuing to reverberate around the world. But what impact will it have on business travel in 2017 and beyond?

With so much uncertainty, there have been only a few facts to grasp hold of since the referendum: these include the slump in the value of the pound against major currencies, most crucially against both the US dollar and the Euro, since 23rd June; and the continued growth of the UK economy, which has dodged the immediate recession so vociferously predicted by former Prime Minister David Cameron during the referendum campaign.

Even with the fall in the pound’s value, the short-haul European aviation market is so fiercely competitive that many forecasts are for airfares to fall during 2017 - particularly when a major player such as Ryanair has adopted a policy of reducing prices to fill its seats with its fares set to drop by 13-15% year-on-year over the next six months.

The Global Business Travel Association thinks there will be “modest” increases in overall airfares around western Europe in 2017 due to “intense competition” between airlines. GBTA predict that overall UK airfares will rise by 2,2% this year.  As for hotel rates in the UK, forecasts range from a slight year-on-year increase of 0.2% to rises of up to 6.9% depending on which piece of research you choose to read.  PricewaterhouseCoopers is forecasting that average daily hotel rates in London will only go up from £141 this year to £142 in 2017, while regional UK hotel rates are set to rise from £68 to £70 year-on-year.

Liz Hall, head of hospitality & leisure research at PwC, said “Uncertainty is dangerous and lower confidence pre and post the EU referendum, as well as an economic slowdown, have impacted corporate budgets and travel.”

A survey of travel buyers carried out by the Institute of Travel Management (ITM) following the Brexit vote found that the 64% thought that leaving the EU would eventually push up the cost of flying from the UK, while 70% fear the new border controls, will “create a new level of complexity for business travel that doesn’t exist today”. 

For now, most travel buyers are adopting a wait and see approach to Brexit, with 90% currently not planning to do anything differently following the referendum result.

One global travel buyer said: “In a rational world, it should have no effect whatsoever in 2017. Many will use Brexit as a scapegoat to make unpopular decisions not in the least bit related to Brexit on their root cause - or worse, to hold back on improvements and positive change due to ‘uncertainty’.”

Perhaps it’s unwise to even attempt predictions these days, given the failure of pollsters to forecast the result of the referendum and Donald Trump’s victory in the US presidential election.  

One safe prediction is that the uncertainty caused by the Brexit vote is unlikely to go away any time soon - buckle up, it could be an interesting ride in 2017 and beyond.