Britain’s decision to leave the European Union, after a national referendum ended with 52% voting for Leave versus 48% for Remain, flew in the face of most predictions and its likely effects on travel are slowly sinking in.
Currencies fluctuated wildly as the result of the vote became apparent. The Australian dollar sank against the US dollar (not good for tourism to the US) but the Aussie unit may well rise again. It’s about 73.5 cents to the AUD at the moment (mid-rate Tuesday morning AEST). The pound sterling also sank, and should stay down a while, particularly as Moody’s credit rating agency acted on Friday to downgrade Britain’s outlook from stable to negative.
That certainly isn’t negative for Australians thinking of visiting Britain. It should make Britain a very good deal for visitors from Australia.
For the industry generally, periods of international volatility can mean people put spending and booking on hold until exchange rates and the share market sort themselves out. Self-funded retirees, for instance, may put off booking trips they enjoy (such as cruises) until the world’s financial markets settle. The result of the UK referendum was reported to have wiped AUD 70 billion off the Australian stock market.
EU President Donald Tusk earlier warned that a Leave vote could “end Western political civilisation” but that is generally considered an over-reaction.
Britain’s eventual exit from the EU, a process dubbed Brexit, could take a year or two. Tourist travel requirements to Europe or Britain are unlikely to change in that period or even beyond it. Those EU countries which use the euro currency, including Ireland, will continue to do so. Countries in the EU which use their own currencies rather than the euro are: Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Lithuania, Poland, Romania, Sweden and UK.
Britain will continue to use the pound. The fall in the pound, if sterling stays down for some time, will make visiting Britain massively cheaper for some tourists, Americans for instance. The pound fell on Friday to its lowest level against the American dollar in over 30 years.
There should be savings for Australians too, though that will become clearer this week as the AUD finds its level. One year ago, 1 pound sterling was worth two dollars (AUD 2.03). A month ago, 1 pound sterling was worth AUD 1.97. On Friday close, it was AUD 1.83, so quite a fall. It was AUD 1.80 this morning (Monday) at 9.15am.
The graph below from foreign exchange site xe.com on Friday shows the brief spike that occurred as a false rumour spread that the Remain camp was going to win, followed by an abrupt plunge as the truth emerged that the opposite had happened.
A weak pound will help fill British hotel rooms. London hotels, which charge stratospheric rates, may become more affordable.
Big travel companies in Britain, such as Thomas Cook and Tui, may find the going harder if the pound slumps, as they prosper by sending Brits on holiday abroad.
Irish newspapers have quoted Tourism Ireland saying that the swift fall in the value of sterling on Friday, coupled with the general economic uncertainty surrounding the Brexit vote, will probably affect tourism to Ireland in the short to medium term.
However, Northern Ireland could see some short term gains, according to Tourism Ireland. Tourism Ireland says maintaining the common travel area between the UK and Ireland will be “a key priority” for tourism.
What Brexit will do to the global economy remains to be seen, but rules for visiting Europe are unchanged. Australian tourists planning to spend less than a total of 90 days within a 180 day period in the ‘Schengen area’ do not in most cases require visas for countries which are parties to the Schengen Convention. Aussie travellers can still enter the Schengen area and move between the member countries with a single Schengen visa.
Britain is not in the Schengen area and never was. The following countries are parties to the Schengen Convention: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, The Netherlands, Norway, Poland, Portugal, Slovenia, Slovakia, Spain, Sweden, and Switzerland. Some countries have imposed border controls and travellers have to show a passport.
Meanwhile, the Amsterdam-based World Youth Student and Educational Travel Confederation wants to find what the industry thinks about Brexit.
It has sent out this plea:
Dear Industry Colleague,
The result of the UK referendum to remain or leave the European Union has been declared today in favour of leaving. Whether shocked, enthusiastic, or uncertain about the decision, WYSE would like to hear your opinion on how you believe it will impact your business.
I therefore request your participation in the WYSE Brexit Survey that will canvass the youth and student travel community. It will only take a few minutes to complete.The aim is to help us all to understand the potential impact anticipated for the global business of youth, student and educational travel and ultimately the personal and professional growth of young people and the global community.
Thank you in advance for your swift cooperation.
Director General, World Youth Student and Educational Travel Confederation
Written by Peter Needham