UK Tourist Report
Task 1
Introduction
On June 23, 2016, the UK held a referendum to decide if it should remain in the European Union (EU), or leave. Those in favour of exiting the EU prevailed by 52% against those in favour of staying (48%) (Hunt & Wheeler 2017). The decision led to the resignation of Prime Minister David Cameron who was opposed to Britain leaving the EU. The Brexit Bill, currently under debate by the House of Commons and House of Lords, will also be subjected to Peer voting in order to arrive at a conclusive decision (Hope 2017). Leaving the EU will have far-reaching implications for various spheres of the UK economy. This report explores the likely impact of the UK's decision to withdraw from the EU on UK tourism.
UK-EU Tourism relationship
The UK tourism industry is heavily reliant on that of other EU member states. Among the visitors who come to the UK, 67% of them are from EU member states (Morris 2016). Every year, the residents of the EU make a visit of 23m to the UK. Of these, 39 percent come to the UK for a holiday, while 26 percent come for business. Visitors from the EU who come to the UK stay in the country for an average of 6.1 days, during which time they spend an average of £411 (Tourism Alliance 2016). Exiting the EU would thus have far-reaching effects on the UK tourism industry in terms of access to visitors, loss of human skills, business travel, and costs to consumers, among others.
Access to visitors
A key basic principle of the EU is that people can freely move across the national borders of member states. The existence of diverse EU regulations and agreements is hence instrumental in facilitating the travel of individuals from EU member states to the UK, and vice versa. In the likely event that the UK exits the EU, it would have to renegotiate these regulations and agreements because the country would no longer be governed by them. Besides experiencing a lengthy renegotiation process, the UK would also likely experience an increase in the cost of travelling, not to mention having to resolve the issue of immigration control. Currently, EU residents can enter the UK with just their national identity cards, but they would be required to have a visa after the UK exits the EU (Deutsche Welle 2016). This is likely to further hamper tours and travel to the UK. Conversely, UK tourists would have to pay more to go on holiday to the EU, preferring instead to remain as domestic tourism.
Costs to tourists
It is generally accepted that the projected depreciation in the value of the sterling pound relative to the Euro (albeit in the short-term) following Britain's exit from the EU would make the UK a preferred tourist destination (Calder 2016). However, both outbound and inbound visitors would still have to incur other additional costs such as extra travel insurance costs should the European Health Insurance be terminated, as well as a rise in cellphone roaming charges. On a positive note, exiting the EU could allow the Government to reintroduce duty-free travel from and to EU countries. Consequently, travellers could once more purchase alcohol and tobacco duty-free. However, all of these save for the short-term benefit if the depreciating value in currency points towards no observable long-term effects on the costs to visitors following the UK's exit from the EU.
Skills
The UK tourism industry accounts for 9.6% of the entire workforce in the UK, employing some 3.1m individuals (Tourism Alliance 2016). Unlike other sectors of the economy that have had zero or no growth, the UK tourism industry helped create some 300,000 extra jobs between 2010 and 2013. This phenomenal growth has clearly outstripped the ability of the UK educational system to train sufficient and skilled workers to help manage the tourism industry. Consequently, the UK has been largely reliant on EU immigrants to fill such vacancies. Between 2004 and 2014, the number of foreign workers in the UK tourism sector increased from 19 percent to 28 percent. With projections showing that the industry shall require an additional 993,000 new employees by 2022 owing to high turnover and growth rates, the UK's exit from the EU is likely to exacerbate the shortages in skills currently being felt in the tourism sector. This could result in rising wage bills for businesses and the likely lowering in quality of service that the businesses offer their customers.
Business Travel
Of the 8.3 million visitors who come to the UK for business, 72 percent are from EU member countries. This is a clear depiction of the high level of alignment between the UK economy and those of other EU member states. Exiting the EU, is likely to impact the UK's business travel in a number of ways. To begin with, we are likely to witness a decrease in business travel not just from EU member countries, but also from other overseas countries. This is because businesses may decide to adopt a wait-and-see approach to business travel for some time to witness how the UK handles its operations post-EU. Secondly, there could be a reduction in the number of conferences travels to the UK, on the understanding that not many EU delegates would be willing to attend a conference held in the UK.
Conclusion
In sum, exiting the EU could have far-reaching implications for the UK's tourist industry. Besides the obvious decrease in business travel, visitors to the UK would likely encounter additional requirements to access the UK, such as the need for a visa and travel insurance, thus increasing travel costs. Also, the UK tourism industry, buoyed by its rising revenue and growth, is in dire need of human skills. It has been reliant on the EU market for the provision of such skills as the UK education system cannot provide the human resources required. Exiting the EU could thus exacerbate the current shortages in skills.
Task 2
The tourism industry in the UK has been recording phenomenal growth in recent years, but this could be hampered by the UK leaving the EU. Calder (2016) opines that the EU accounts for nearly two-thirds (63 percent) of all inbound tourists. This is a clear indication that the EU market contributes significantly to the UK tourism industry. Similar findings are also reported by the Tourism alliance (2016), which estimates that the EU market accounts for 67 percent of all inbound tourists to the UK. Deutshe Welle (2017) also reports that the UK is a preferred tourist destination for nearly three-quarters of travellers from the EU. The aforementioned three sources are also in agreement that exiting the EU could see the pound lose its value against the Euro, and this could make it hard for UK travellers who wish to go on holiday abroad. This is however short-lived and on the brighter side, it could help boost local tourism.
Conversely, while all three articles have identified the likely depreciation in the value of the pound as a possible boost for UK local tourism, only Calder (2016) has endeavoured to further explore this intricate occurrence. He notes that in the likely event that British travellers find it expensive to go on holiday abroad and instead choose to remain in the UK, there is no guarantee that they will divert the money they would have invested abroad into local tourism.
References
Calder, S (2016). How Brexit will affect British tourism. [Online].
Deutsche Welle (2016). The effect of Brexit on tourism. [Online].
Hope, C (2017). Britain will be plunged into its biggest turmoil in over a century in peers attempts to thwart Brexit, William Hague warns peers as Theresa May attends House of Lords Articel 50 debate in person. [Online].
Hunt, A & Wheeler B (2017). Brexit: All you need to know about the UK leaving the EU. [Online].
Morris, H (2016). How the UK plans to tempt international tourists post-Brexit. [Online].
Tourism Alliance (2016). EU Referendum: Impacts on the UK Tourism Industry. [Online].
