With 51.9 percent of Britain’s voters deciding to leave the European Union behind, the country has begun a process that has never taken place before. Because exiting the EU is a concept that has never been explored in the past, the future of England’s relationship with Europe is yet to be seen, but the initial reaction from the rest of the world has been negative, with the value of the British pound dropping to levels not seen since 1985 immediately after the polls closed.
How, then, is the U.S. hospitality industry responding?
The situation is and will remain fluid. John Hach, senior industry analyst at TravelClick, said having access to advanced business intelligence tools is imperative to monitor the future of the industry, as historical data is going to leave hotels wanting for more.
“It’s a watershed moment for business intelligence,” Hach said. “Macro-economic moments like these can see demand change in a day or a week, and if you are managing solely through historical data you are in a quandary because you won’t be able to keep pace.”
No one is in a position right now to forecast when the British pound may stabilize, but Hach said the already strong U.S. dollar has created barriers for international travel in recent time. Should the pound’s value continue to plummet, Hach said there will be definite repercussions for inbound travel into the U.S. from the UK, especially because travelers tend to benchmark the value of their currency on the lowest going rate. But even with all this, the strength of the global hospitality market keeps Hach optimistic.
“People want to get out and travel, even in light of terrible tourism incidents in places like Paris and Belgium,” Hach said. “After 2008 we saw some markets contract by 40 percent, but while we haven’t seen organic growth this year like that in 2015 and once continues to slow… I would be surprised if this turns truly negative only because of what I have seen to date.”
Leland Pillsbury, co-founder of Thayer Lodging, said that the market’s volatility will remain high as investors and analysts keep pace with developments and reassess the situation as it evolves. However, Pillsbury said the pound’s declining volume will ultimately transform the U.K. into a more attractive tourism destination. Particularly for business travel, Pillsbury said London is expected to benefit most from the decision whole tourist hotels in the U.S. will take the biggest hit.
“It will take two years, more or less, of intense work to disengage from the European Union, which will bring a lot of business travel to London,” Pillsbury said. “The uncertainty will at least temporarily tamp down investment decisions. The UK is a very big investment partner with the U.S., and how investment in particular will play out is very much unknown.”
The major brands aren’t making dramatic moves, primarily because it’s too early to know the full effects of the UK’s decision. A spokesperson from InterContinental Hotels Group clarified that the company is active in nearly 100 countries, and isn’t immediately shaken by the vote.
“While the U.K. is an important market for us, it accounts for less than 5 percent of our overall global business, with Europe accounting for approximately 10 percent,” IHG said in a statement. “At this early stage, there are still a number of uncertainties around what the U.K.’s exit from the European Union will mean for businesses, however, we are very used to dealing with volatility and will manage the situation as it evolves.”
Similarly, Marriott International is poised to monitor the situation as it develops, but has little else to say at this time. “It is too early to know what potential impact the decision will ultimately have on our business,” a Marriott spokesperson said. “As the implications are more clearly defined over the coming months, we will work to adapt to any changes that may result while continuing to deliver the best experience for our guests and remaining committed to our employees.”