Impact of Brexit on UK's Hospitality Industry

This report examines the impact of Brexit on the UK's hospitality industry, specifically focusing on the hotel sector. It discusses the effects on future growth, structure, and operations, including the challenges faced by the industry. The weakening pound, uncertainty around labor and immigration, and changes in market sentiment are all factors influencing the industry's outlook.

Assessment Brexit

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
UK’s withdrawal from the European Union (Brexit)..................................................................1
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
The tourism and hospitality industry both are essentially concerned with providing effective
services to audiences. Tourism sector are focused towards serving those individuals who have
travelled away from their general areas of residence for relatively shorter time duration (Dutta
and et. al., 2020). While hospitality sector is concentrated with services associated to leisure as
well as consumer satisfaction. The aim of this report is to understand the impact of Brexit upon
Hospitality industry (hotel). The topics that are going to be covered under this report are the
Brexit impact on future growth, structure and operation of UK’s Hospitality industries.
MAIN BODY
UK’s withdrawal from the European Union (Brexit)
Brexit is the term that is generally developed from Brexit and exit which is considered to
the UK’s decision into June 23, 2016 referendum for leaving the EU. Moreover, this is
undertaken as the withdrawal of United Kingdom from European Union after voting to perform
so into June 2016 referendum. The European Union is a group of 28 countries and they will
perform together for try to develop things such as buying as well as selling goods from one
another, and going to live and perform into each other’s countries in simple way. But various
individuals though that United Kingdom could have much control over how they operates
themselves in case this is no longer a group members. In addition to this, most of the person who
voted thought that this would be effective for decisions which are to be made within UK instead
of in European Union, so they voted to leave. At present, the government of United Kingdom
would required to have various conversation with EU for deciding what its relation would be like
in upcoming times after leaving. Whole these have impact upon all the industry including
tourism and hospitality (What do all the Brexit words mean?, 2020).
Impact of Brexit upon Hospitality Industry
(Source: The Impact of Brexit on Hotel Industry and 2020 Outlook, 2020)
1

As early as referendum outcome related to United Kingdom’s exit from European
focused among various sector mainly into tourism and hospitality industry that is the fourth
largest into Britain. So, the huge cause of worry is identified across the staff amount which
hospitality sector attract from European migrants. Additionally, the hotel, restaurants, leisure and
entertainment business the employee above 400,000 migrants’ staff. Along with this, the Pre-
Brexit , EU nationals-various of whom are employed inhospitality were free for entering the
United Kingdom without a Work permission, that is about to modify into post Brexit reality (The
Impact of Brexit on Hotel Industry and 2020 Outlook, 2020). In addition to this, The settlement,
pre-settlement and another categorisation across residences as well as corresponding rights states
that EU national would identity itself doubting if they would manage for remaining or putting off
on its arrivals to United Kingdom. Additionally, as with various industries and overall British
economy, hotel sector is prone to be the weakness of pound which took place after Brexit
Voting. Along with this, the reductions into pound value have drives towards enhanced costs for
imported products (Fetzer and Wang, S., 2020). Whole on another side, the weakness of Britain
currency have sparked a bounce of Brexit with an enhancing overseas visitors number, seeking
for bargain.
Brexit impact on future growth OF Hotel industry
According to STR, the exit of European Union into EU referendum could hinder future
growth within hotel sector. The hotel sector have observed 30 consecutive month of shifting
average per available room development. moreover, the London as well as regional United
Kingdom hotels have experienced longest 12 months shifting revpar growth average period since
January, 2007, although development have slow down. Within year 2019, it has been described
that while London’s monthly performance have been optimistic, their year to date might revpar
was minimise 3.0 % to £ 99.88, leads through 2.7% minimises into occupancy level. Whereas,
regional United Kingdom witnessed an enhancement into revpar of 2.2% to £46.87, as there is
enhancement of 2.9% into average daily rate offset the 0.6% minimisation into occupancy.
Along with this, according to the Data And Analytics Specialists of STR and Tourism
Economics recommends the current fluctuation of British pound upon currency marketing
exchange is an early shown of affect Brexit could has upon economy, that would reduces the
hotel sector.
2

(Source: Brexit could hinder hotel industry growth, warns STR, 2020)
Short term impact
The weaken domestic demand of hotel, into line with weaken gross domestic product,
customer spends as well as higher unemployment could be anticipated should Britain vote for
leaving the European Union. The huge falls would be anticipated in capital investment,
incorporating the investment into hotel due to uncertain business atmosphere (Heffer-Flaata,
Voltes-Dorta and Suau-Sanche, 2020). Additionally, that would impact business travel that is a
huge element of London Hotel market. However, the reduction into currency exchanges rates
anticipation following a Brexit would also develop London much reasonable to few extents. In
addition to this, it is possible that would be enough or offsetting the pessimistic impact from
weak domestic demand. Also, the market sentiment would play few roles as well as could
accentuate any adverse impact in case vote for leaving is followed through sourcing relationship
with European countries. In addition to this, a smooth transition as well as regular conception of
London as affirmative areas to visit as well as perform business could accentuate the impact of
optimistic price.
Long-term impact
The longer term affects might be optimistic for sector because of enhanced affordability of
United Kingdom as well as London as a destination derived from weak rate of exchange.
However, the few uncertainty is likely to stay, specifically from potential affect of low
3

investment that would affect the decisions of business travel (Brexit could hinder hotel industry
growth, warns STR, 2020).
Brexit impact on structures and operations of UK’s hotel industry
The Brexit have affect upon UK’s hotel sectors operations as well as structures. As per
the head of hospitality and leisure research at PWC, the Brexit reduces the pound value which
means as the enhancement in maximisation costs for imported goods, while fears above the
rights to remain have meant that European union from mainland are employed into hospitality.
Moreover, it has identified itself wary of staying or putting of coming to United Kingdom at all (
Kleibert, 2020). In addition to this, the weaker pound has leads a Brexit bounce, with overseas
the reducing visitors numbers, seeking for bargain. Also, the maximisation for inbounding
holidays from weaker pound have initiated for fizzling out as well as continuous uncertainty
around Brexit as well as fragile economy is undertaken to be the recipe for few tough year upon
year comparison for upcoming few months.
Additionally, the United Kingdom hospitality travel monitor reported an rise reduction
into inbound passengers numbers, minimisation 11% year-on-year into December, an essential
reversal compared to development of 9 % within first half of year. Along with this, reduction
was driven through continued minimisation within business travel. Within initial half of year,
visitors’ numbers from North America had enhanced 28 %, but then minimised 8% into month of
August, September and October as essential 17% in month December. Moreover, supply is
exacerbating the problems. Based upon the data from STR, an efficient 9000 new rooms could
open into London in year 2018 forwards of 8000 which opened in year 2012.
During that time, the pressure is maximising the profitability vice versa. Within capital,
rather than reduction into occupancy rate of 0.9 % points to 81% for April, Revpar raise by 1.4%
with 2.5% enhancement into rate, while gross revenue per available room daily maximise
through 1.2%. However, the gross operating profitability per room drop down by 0.3%.
Additionally, the payroll as a revenue percentage maximised through 0.6% highlighted on that to
23.3% within London hotels into April and also it have been determined that wages inflation was
grown at faster rate in comparison of inflation of revenue. Moreover, the Brexit uncertainty
states that hotels have to pay much upon attracting individuals towards them (Rizzo, 2020). The
last four years has been steady get maximises across London but they are observing that the
detachment from income growth was not deliver profitability development.
4

Beside this, within the provinces, RevPARwas enhanced through 3.4 % along with
occupancy rate by 0.4% as well as rated through 2.8%. In addition to this, the whole RevPAR
was raised by 2.5% but payroll as percentage of overall income was flat this also implies that
payroll costs has drives at similar rates as revenue. Along with this, the “revenue of rooms have
to be outcomes in payroll reduction as revenue percentage. But the gross operating profit per
room availability was enhanced by 2.8% as well as cost of sales per rooms enhanced through
2.6% upon year.
Pound Power
As per the analysis released in June by workforce collaboration software, this has been
determined that around 11 % of staff which is equivalent to across 330, 000 workers nationally
within United Kingdom’s restaurants, bars, hotel and catering were analysing regarding leaving
UK as Brexit outcomes. Also, based on the analysis performed through KPMG, among 12.3% as
well as 23.7% of UK hospitality personnel was developed of European Union nationality.
Therefore, in order to address the potential labour drop down as well as assure various hotel meet
their ambitious expansion plans. Rather than this, the staffing is vital for the success of their
operation. So, they required to hire efficient staff for developing home from home feeling which
would be related with concepts of extended stay within several manners get minimised (How
Brexit and the pound are impacting operations and profits at UK hotels. 2020).
Additionally, they identified individuals who develop relations with them in simple and
natural manner as well as would therefore be capable for offering tourists effective personal
experiences, chatting with them for forming good connections. Such as the Cycas’s portfolio
have various number of brands from operators incorporating Hyatt hotels, Inter Continental
Hotel groups as well as Marriott International’s. So, the brining talent is not just regarding the
salary at month end but it also about the brand as well as how several individuals undertakes this.
In addition to this, a trusted international brand automatically instils confidence as well as
regards which is led from top to develop a family. In which all staff required to feel a sense of
belongingness as well as it is a form of atmospheres which is vital in order to identify the
appropriate individuals, keeping them as well as maintaining the higher level of productivity (Zu
and Krever, 2020).
5

CONCLUSION
As per the above report, it has been concluded that both hospitality as well as tourism
industry plays crucial role within economical development. Moreover, the Brexit have impacted
the both sector in positive and negative way. Along with this, various industries and overall
British economy, hotel sector is prone to be the weakness of pound which took place after Brexit
Voting. Along with this, the reductions into pound value have drives towards enhanced costs for
imported products. Apart from this, the market sentiment would play few roles as well as could
accentuate any adverse impact in case vote for leaving is followed through sourcing relationship
with European countries. In addition to this, a smooth transition as well as regular conception of
London as affirmative areas to visit as well as perform business could accentuate the impact of
optimistic price.
6

REFERENCES
Books and Journal
Dutta, A. and et. al., 2020. Brexit uncertainty and volatility persistence in tourism
demand. Current Issues in Tourism, pp.1-8.
Fetzer, T. and Wang, S., 2020. Measuring the regional economic cost of Brexit: Evidence up to
2019.
Heffer-Flaata, H., Voltes-Dorta, A. and Suau-Sanchez, P., 2020. The Impact of Accommodation
Taxes on Outbound Travel Demand from the United Kingdom to European
Destinations. Journal of Travel Research, p.0047287520908931.
Kleibert, J.M., 2020. Brexit geographies of transnational education: uncertainty,‘global
Britain’and European (re-) integration. Territory, Politics, Governance, pp.1-22.
Rizzo, C.R., 2020 THE IMPACT OF BREXIT ON TOURISM AS RELEASED BY THE
PRESS: A CORPUS-DRIVEN LEXICAL ANALYSIS.
Zu, Y. and Krever, R., 2020. The United Kingdom has spoken: The receding impact of European
jurisprudence on the UK interpretation of the common VAT system. Common Law World
Review, 49(1), pp.75-91.
Online
What do all the Brexit words mean?. 2020.[Online]. Available through:<
https://www.bbc.co.uk/newsround/38637145>
The Impact of Brexit on Hotel Industry and 2020 Outlook. 2020.[Online]. Available through:<
https://www.hospitalitynet.org/opinion/4096893.html>.
Brexit could hinder hotel industry growth, warns STR. 2020.[Online]. Available through:<
https://www.thecaterer.com/news/hotel/brexit-could-hinder-hotel-industry-growth-warns-
str>.
How Brexit and the pound are impacting operations and profits at UK hotels. 2020.[Online].
Available through:< https://www.hotelmanagement.net/own/operating-uk-hotels-a-brexit-
world>
7