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The UK Has Invoked Article 50. What Does It Mean for Europe’s Travel Industry?

by Sarah McCay Tams, Contributing Editor, EMEA |

The uncertainly surrounding Brexit has already had an impact on the European hotels market, but what will the actual invocation of Article 50 of the Lisbon Treaty mean for hoteliers across the EU? Already, last June’s Brexit referendum has impacted the hotels market.

On 29 March, 2017, UK Prime Minister Theresa May signed and delivered to Donald Tusk the letter invoking Article 50. This marked the formal start to proceedings for the United Kingdom to exit the European Union.

Germany-based TUI Group, which is the world’s largest leisure, travel and tourism company, along with Thomas Cook, the second largest travel company in Europe, have both raised concerns about the uncertain economic outlook and competitive pressures being placed on the travel sector.

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Both have said that a weaker pound makes travel to Europe more expensive for UK travellers, a fact that is impacting booking patterns.

TUI has pointed to increased demand for long-haul travel, as travellers look to avoid the Eurozone and destinations such as Turkey and North Africa, which have been affected by terrorism incidents.

Thomas Cook has also seen increased demand for destinations outside of the Euro, with Bulgaria and Croatia among the most favoured destinations for 2017.

How will Brexit affect hotels?

Duetto has been following the Brexit story with interest. In June, we looked at how the UK’s hotels industry would be affected. The second quarter of 2016 saw RevPAR at London hotels drop. However, since then currency fluctuations have worked in London’s favour, as Michael McCartan, Managing Director of the EMEA region for Duetto, predicted.

Last year’s Revenue Strategy Forum in London saw industry leaders come to the table to discuss how hoteliers could maximise on the devalued pound. The general consensus was to hold rate, even when currencies fluctuate, and focus on markets such as the United States where the better value pound presents a win to the consumer.

Hotels are advised to use forward-looking data to set rates. In times of uncertainty, short-term and mid-term forecasting can prove more accurate than a hotel’s typical 12-month forecast. How did your hotel perform over the last two months, and what trends is your data showing for the next two months? Avoid knee-jerk reactions to drop rates.

Brexit presents at least a two-year period of market uncertainty. But all European hoteliers are in the same situation. Those who monitor the market and employ a Revenue Strategy using predictive analytics will limit the risks and maximise on opportunities.

Article 50 FAQs

Infrastructure Intelligence summarised the key questions surrounding Article 50, including:

Is the United Kingdom still a member of the European Union? Yes. The UK will remain in the EU until 29 March 2019.

Will we have a transitionary agreement with the EU at the end of the withdrawal negotiations? The EU has stated that the next two years be withdrawal negotiations only. The UK is pushing for withdrawal negotiations alongside discussions on the UK’s future relations with the European Union.

How is the withdrawal process determined? The EU will lead the process, with the European Council first adopting a framework for the withdrawal negotiation process. Once that framework is in place the negotiating will begin.

Does Article 50 allow for a partial withdrawal, allowing the UK to withdraw from some but not all membership aspects? No, Article 50 concerns the full withdrawal of the UK’s membership to the EU.

What if we do not reach an exit agreement to the satisfaction of the UK within two years? An extension is up to the European Council. The UK cannot extend this.

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Sarah McCay Tams, Contributing Editor, EMEA

Sarah McCay Tams, Contributing Editor, EMEA

Sarah is contributing editor covering Europe, Middle East & Africa (EMEA) for Duetto. An experienced B2B travel industry journalist, Sarah spent 14 years working in the Middle East, most notably as senior editor – hospitality for ITP Publishing Group in Dubai, where she headed up the editorial teams on Hotelier Middle East, Caterer Middle East and Arabian Travel News. Sarah is now based back in the UK.
Sarah McCay Tams, Contributing Editor, EMEA

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Sarah McCay Tams, Contributing Editor, EMEA

Sarah is contributing editor covering Europe, Middle East & Africa (EMEA) for Duetto. An experienced B2B travel industry journalist, Sarah spent 14 years working in the Middle East, most notably as senior editor – hospitality for ITP Publishing Group in Dubai, where she headed up the editorial teams on Hotelier Middle East, Caterer Middle East and Arabian Travel News. Sarah is now based back in the UK.