Brexit and recent effects in Hospitality

Brexit and recent effects in Hospitality   -   Sep 2nd 2016

What’s really driving some of the effects of Brexit? and is it all that bad or good for Hospitality?

The famous phrase – do you want the good news or the bad news? Well it depends on where you look and what you want to see apparently.

On the one hand it now looks like Brexit – together with its Exchange rate swings has been worth £1.4Bn to the Tourism Economy

Other sources in London saying they have seen a huge swing (+31%) – especially via Foreign visitors

On the other hand –  US Travel and US Travel Search more precisely have dropped – by up to -20%

All this is essentially – at the ‘bottom line ‘– Exchange Rate based – although terrorism  would have undoubtedly had an impact. So perhaps less on the Brexit please and more to do with the $ or £ in everyone’s pockets 😛 

Another impact just received is …wait for it..on Bacon Sandwiches or Bacon Butties (I prefer mine with Brown HP Sauce). The price of Bacon is going up as announced by Beacon Purchasing on . To quote the article “the surge in Chinese demand has been fuelled by recent floods, which have devastated the Chinese domestic pork industry, and the devalued British pound post-Brexit that has made British bacon more attractive and affordable to import.” So it’s a particular surge in demand from China plus…Exchange rates again.

Even retail sales appeared to have bounced back albeit from a small data set –

Even the “good and the great” got caught up in the bluff and counter bluff. The IMF were very clear they thought Brexit would be catastrophic

with commentary in the build-up saying “The IMF used its annual report on the British economy to say Brexit would plunge the UK into recession next year” and “A vote to leave the EU next month could precipitate a stock market crash and steep fall in house prices, the International Monetary Fund has warned”.

Well we saw the dip in the week after in the FSE 100 and now where is it? 15% Up….  However more recently the commentary goes “the IMF all but admitted on Tuesday that it had been bluffing, forecasting that the impact would be largely benign after all.”

The one headline said “IMF ‘clowns’ admit they got it wrong with Brexit doom and gloom warnings”

Interestingly the overall comment is now one of “Instead of Brexit, prospects for the world economy will be shaped far more by the outlook for China and the US. Recent data suggest that growth in both economies is holding up fairly well” – and there just may be something happening in November in the US that affects all this – or is it October or December Donald?

The longer run future picture and view of course is much more complex. The government and its Exit team, have got to extricate the UK from a whole heap of complex agreements that the UK has managed to permeate itself into with Europe. I can imagine we will never quite be completely ‘out’ as we once were – it cannot possibly be done unless you take the Alexander the Great approach to the Gordion knot and just slice right through it (see – but no one is that brave in today’s politics.

One of the areas the UK can take action on of course – that affects rates whichever way you look at it – is Hospitality VAT. As Ufi Ibrahim (Chief Exec of the BHA) said upon seeing Theresa May on holiday in Switzerland where the Hotel VAT rate is 3.8% the BHA Chief Executive said “A reduction in tourism VAT would create 123,000 jobs and improve the UK’s trade balance of payments by £20bn over 10 years and generate investment for regional businesses right across the country

Well that would be easier than all the complex trade agreements – just to start with 🙂