How Will Brexit Affect Business Travel?
On June 23, 2016, the United Kingdom held a nationwide referendum to decide whether to stay in the European Union or leave it. This historic vote resulted in a 52-48% majority in favor of Britain leaving the EU: a result that has sent shockwaves around the world, throwing Britain’s political and economic future into question.
Britain is already reeling from Brexit’s immediate aftermath. British (pro-Europe) Prime Minister, David Cameron, announced he would be stepping down from office — effectively leaving someone else to handle the divorce. And following the ‘Leave’ result, the British pound plummeted to its lowest level since 1985.
So, now should be a great time for travel managers to start booking business trips to the UK, right? Not so fast.
Brexit has brought major uncertainty to the travel industry; among other sectors. There are so many questions that need to be answered. For example, when will Britain invoke Article 50 of the Lisbon Treaty — which puts a two-year timeline on the official separation — ? What kind of exit terms will be negotiated? What will be the impact on issues like border control rules, entry visas, and airline regulations?
Until these questions are answered, corporations may be hesitant to send their employees to the UK — which would be disastrous for Britain’s economy.
Mike McCormick, executive director and COO of the Global Business Travel Association (GBTA), has reiterated this uncertainty, but is keen to maintain business as usual where possible.
“While it is impossible to immediately assess the implications of the result on the British, European, and global economies; or on international relations and world order at this point, GBTA remains committed to the same principles it always holds strong. These include ensuring business travelers maintain freedom of movement, that business is not disrupted, and that travel infrastructure remains strong.”
Given the current UK business environment, many predict a major drop in capital investment, including hotel investment. This would have a huge effect on business travel in London and other major UK cities — and on the wider hospitality industry.
On the other hand, with the big drop in currency exchange rates, traveling to Britain will become more affordable. This would help offset the drop in domestic demand for hotels, and pump more money back into the British economy. How much will this counterbalance the negative effects? We just don’t know.
Many changes are expected over the next few years. For now, all we can do is wait and see.