The UK has voted to exit the European Union. There’s tremendous gnashing of teeth over what this means for the world and those are very real concerns. There are also concerns within the travel industry, and amongst travelers.
There were tremendous misconceptions behind the arguments being made over this decision. The UK, of course, was never a part of the Schengen zone and didn’t have the borderless migration that even the EU itself seems to be moving away from. There are millions of EU citizens living in the UK, but leaving the EU doesn’t mean that British immigration policy will necessarily reject these people. Although it does likely make European migration to Britain more difficult in the future.
I’m personally disappointed in the results — that for all the validity in arguments against the over-regulation of the EU, it seems this is a vote for nationalism and against trade and migration. But nothing has actually changed today, other than an announcement of results and the pending resignation of Britain’s Prime Minister.
While there was much campaigning in favor of British self-determination and against Brussels, as well as against immigration, it’s not yet clear how (or that) UK policy will differ from the status quo going forward.
- It’s not a binding vote, the UK Parliament must invoke Article 50 of the EU treaty and that will take at least a couple of years once invoked that won’t itself happen right away. There will be negotiations and formulation of policy during that time (assuming that Parliament follows the directive of the referendum once David Cameron is replaced, which seems likely at this point).
- We also don’t yet know what it will be replaced by. The UK could leave the EU, while remaining a part of the European Economic Area. I’m not predicting this, because it would mean accepting migrants and free trade within the zone and that’s contrary to the political forces which favored Brexit. And because it would involve a willingness on the side of the EU to negotiate this quickly as well. But ‘leaving the EU’ doesn’t tell us very much itself about what policy looks like after.
- Scotland voted against leaving the UK two years ago, but voted in favor of remaining in the EU. Could part of the UK itself secede in favor of joining Europe?
The uncertainty and expectation should have some negative consequences for the stock market and the currency. But does that mean we’ll see fantastic travel deals?
The British pound has been declining for a year and isn’t yet back to bottom. The US dollar has already been a relative value for travel to the UK.
Assuming we see tighter immigration restrictions, we’ll see less travel and so less demand for existing accommodations. In the medium term that should reduce hotel costs.
Airplanes are easier to redeploy quickly than hotel rooms are. So we may see a reduction in schedules, especially intra-European schedules. How reduced demand and fewer seats shake out in terms of price is hard to say.
But many changes that follow — predictive markets aside — will happen slowly. Today is no different than yesterday except in terms of expectations. There is a different view of risk today than there was yesterday when it appeared as though the UK would vote by a slim margin to stay in the EU.
Monumentally stupid decision.
Major crack for George Soros and New World Order believers.
I remember years ago living in London when one pound = $2 US. Now one pound=$.073 US.
So, ignore the pundits except for you? lol
While technically true that the referendum isn’t binding, in practice it is. In reality anyone thinking otherwise is living in a fantasy world.
One pound = $1.37…
@Eric I’m not saying that this isn’t happening, I’m saying we don’t know what “this” is exactly yet and it’s going to take awhile to sort out. Travel isn’t going to change right away. (And here I’m only talking about travel, I suggest that prices based on future expectations will very much change because of a shift in relative risk from the vote — no doubt there will be an impact on stock prices etc — but that’s very much not the point of and beyond the scope of this post.)
@Ed
Monumentally stupid comment.
As anyone who knows anything about it, the arguments for and against are complicated and nuanced. It’s absolutely not a vote for nationalism (although, of course, people who want that voted Leave) because none of the leading politicians from the Government who were supporting Leave even mentioned nationalism – indeed they were at pains to stress it was a vote for internationalism.
But, of course, Gary is right in that it’s very unclear where Britain will go. We know the direction of travel: trying to negotiate free trade deals with important trading partners – Australia, NZ, US, Canada and even the EU, although the latter seems unlikely. A merit based immigration system but probably still allowing in very large numbers. Pulling out of the ECJ is an almost certainty. And none of this will happen quickly as it’s quite likely that Article 50 won’t be invoked until after the forthcoming French and German elections, so an exit will likely not happen for nearly four years.
My guess is that the relationship with the USA will become even closer, especially with whomever replaces Obama. And it’s difficult to see why anyone will not come to Britain for vacation because of the vote – indeed it’s quite possible Britain will see higher tourist numbers if the pound remains depressed, whereas if it goes up, then the opposite will happen.
So, hold your breath and witness a whole lot of nothingness in the coming years.
@NB–agreed, and this coming from a dual passport holder (US and UK). I don’t see this as a nationalistic move a la Trump. I see it as an opportunity for the UK to forge new and improved trading relationships, fiscal policies, and immigration laws which work to benefit the UK first, and then Europe–not Europe first, then the UK.
“Assuming we see tighter immigration restrictions, we’ll see less travel and so less demand for existing accommodations. In the medium term that should reduce hotel costs.”
I can see this possibly reducing demand for youth hostels several years from now. But I seriously doubt it’s going to have much impact on occupancy rates at the Park Hyatt Vendome. 😉
Does the exit have any impact to EC261 rules? If a non-European origin flight that is supposed to fly into UK airport got delayed, do consumers still have protection of EC261?
Gary,
What about IAG? Dropped over 20% in London, and 25% in Madrid. It seems like an overreaction, but it wouldn’t surprise me to see a big change there.
More importantly, what is the effect on the onerous APD which keeps me from visiting the UK except in 23h59m increments???
@Fran I wrote before markets opened that we’d see a reaction there. Those are predictive of future events. And of course they can influence real decisions. But nothing has legally changed today as a result of the vote, it will take over 2 years to work out, and indeed I think we can expect more wrangling over the coming DECADE.
What we do know, the pound had lost almost 10% of its value today, so its perfect to book lots of airfare tickets now on UK OTAs!
IATA wont adjust exchange rates til next Wednesday, so the weaker the GBP becomes, the better for us booking any airfare on any UK OTA
When did nationalism become a dirty word? Family first then my country then the rest of the world. Even for us there are more important things than travel
I hope this doesn’t mean that transiting T5 at LHR would be an even bigger nightmare.
Witness the Birth of “Anglo Summer!”
Yeah, like those UKIP retread National Socialism posters were totally meant to appeal to the “complicated and nuanced” arguments for leaving the EU, and not simply nationalism and xenophobia.
Tighter immigration restrictions will have no impact whatsoever on tourist entry, so it’s a stretch too far to suggest hotel prices will decline. UE immigrants to Britain come seeking a better economic future, and are not likely to hole up at the Hilton or Hyatt, having practically no money on arrival. So what is you rationale for making this statement?
Gary,
I understand that legally nothing has changed yet, and it will take some time to sort things out. But precisely that may be the point: don’t you think that at the minimum that uncertainty is going to hurt IAG? I wonder whether they may have to break the whole thing up and go different ways now. Also, wondering how QR may react.