What Brexit Britain Means for Hospitality

on September 5 | in Hospitality Industry | by Guest Authors | with No Comments

Brexit impact on hospitalityJune 23rd, 2016: the day the nation cast its vote in favor of Article 50, and the ripple of the Brexit wave became a harsh reality for many.

With Brexit’s marginal win of 51.9% to 48.1%, and the UK deciding to go it alone for the first time in over 40 years in March of 2019, industries that previously thrived on European trading and travel were spun into a state of panic — and rightly so. What now? What does this mean? Better yet, what does hospitality – an industry with travel and culture at its very epicenter — look like post-Brexit?

Industries such as food, travel, retail and entertainment stand to come up against some pretty hefty red tape as a result of impending travel restrictions, changes to trading agreements, amendments to migration law and even employment. Cluboid wanted to delve a little deeper.

Here is what the hospitality sphere can expect from the fallout of the Brexit bang…

EMPLOYMENT & MIGRATION

The hospitality industry stands to face a shortfall of 60,000 workers a year in the UK following Brexit, with staff from the EU making up an estimated one quarter of the entire sector. A recent poll by the KPMG revealed that 75% of waiting staff, 37% of housekeeping staff and 25% of all chefs currently in employment were from the EU. With many EU migrants now also seeking to flee Brexit Britain, the UK is seemingly sitting right on the brink of a skills shortage.

Brexit impact on hospitality

The British Hospitality Association have said it will be “very very tough” to replace EU staff in hotels and restaurants following Brexit, with BHA chair Ufi Ibrahim claiming it could take a staggering 10 years to remedy this “recruitment nightmare.”

75% of waiting staff, 37% of housekeeping and 25% of all chefs currently in employment are from the EU.

*KPMC for the British Hospitality Association

As it stands, freedom of movement between Britain and the European Union will end in March 2019, however cabinet ministers are currently discussing the possibility of a “Free Movement Minus” regime, which would mean only minimal restrictions to citizens looking to live and work away from their native countries. In the meantime, many hospitality companies have been actively seeking to reduce their reliance on EU employees by pushing to recruit more British workers.

TRAVEL

Following the announcement of the Brexit result, British airline stocks plummeted a massive 20%. This came as a result of the weakened GBP making travel more expensive, leading to the need for bigger discounts to incentivize the same amount of travelers (which then in turn threatened to undermine many travel companies’ profit margins.) The future of the travel industry became instantly unstable. Fearing that an EU departure would rock the travel industry on a fundamental level, many airlines such as Ryanair campaigned tirelessly for the remain vote.

Brexit impact on hospitality
While battling the movements in fuel prices and exchange rates expected to add an estimated £25m to costs, Britain’s leading low-cost airline, EasyJet, reported a humongous pre-tax profit drop of 28%.

As the EU was responsible for removing bilateral air service restrictions, making it easier for low-cost European carriers such as Ryanair, Vueling and EasyJet to charge low rates throughout Europe, last-minute getaways could be significantly curbed, causing a knock-on effect on the demand for hotels, hostels and accommodation agencies the continent over.

And it doesn’t stop at the economy either. At present, traveling from the UK to the Italian Riviera or the Swiss Alps only requires one swift movement of handing over a passport; however, following Brexit, the whole procedure becomes a little more complex. Those not in possession of a Schengen visa will likely now require ETIAS visas (European Travel Information and Authorisation System), or otherwise hand over a small fee and/or endure a long-winded slog through border control just to make it beyond airport security.

Due to this, it’s likely we will also see a slump in spontaneous travel as customers are deterred from last minute bookings. However, although we may be experiencing a decline in outward European tourism, the Euro’s rising strength against the pound at least makes it cheaper to travel to Britain. Every cloud…

Just when I think I have learned the way to live, life changes. Hugh Prather

TRADING

Those fruitful partnerships with traders over the border are about to become even trickier for the UK. Theresa May has asserted that Britain will in fact be leaving the single market, and forfeiting the UK’s right to free movement of capital, goods and services between EU countries.

Brexit impact on hospitality

With the EU currently providing a whopping 31% of Britain’s food supply, it looks as though the UK will lose many of its most important trading partners (excluding the US and China,) meaning imports to and exports from the UK will be subject to taxes and tariffs previously waived by EU regulations. This will mean astonishing mark-ups on imports such as certain fruits and vegetables, olive oil, wine, and flowers, as well as limited availability on many other essential food items. Restaurants will have a hard time maintaining the full scope of their menus under these conditions.

However, Britain’s secretary for international trade, Liam Fox, has begun to develop free trade agreements with countries such as South Korea and Switzerland in search of new trade alliances throughout the world.

It’s safe to say the landscape of hospitality stands to change beyond recognition as of March 2019, when the UK attempts to wade into the waters of independence. For now, all we can do is wait and see.

How stressful. Almost enough to make you need a holiday, wouldn’t you say?

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