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Potential Impact of Brexit on Hotels

Spanish-based consultant Ivar Yuste published his own vision of consequences of the historic vote, in accordance to which the UK decided to exit from the EU. The forecast is divided into several parts dedicated to EU and UK hotel markets.

First of all, Brexit will sure have significant impact on hotel investors. Currently, most non-European companies, which invest into hotels in Europe, operate from London. They use the UK as a “bridge” to the Euro zone. Once the UK is no longer a part of the EU, these investment groups may find another country as a base. The UK hotel market, in its turn, is expected to slow down. The UK will exit the largest common economic market of the region and that will surely result in less business activity, hence lower hotel occupancy. Ireland may become the only beneficiary in this case.

Tourism within the EU has always been very active, with the largest flow of tourists coming from the UK to Spain. This concerns not only hotels booking, but also apartment rental and residence purchases. There is a big UK community in Spain, and people live in Spain freely as EU members as they are protected by the Spanish social security system at no extra cost. After Brexit, tourism market of Spain is expected to suffer big loss. Conventional British tourists may also find it more expensive to travel to Spain due to the devaluation of the British pound. In 2014, Spain was visited by 8.9 million British tourists, and in 2015 the figure grew by 4.5%.

Airlines, key feeder for hotels, will have to go through hard times after Brexit. Most air service agreements with the US, Brazil, Morocco, Canada and some other countries were made on EU-level, and after Brexit these agreements will have to be renegotiated, which may not be a simple task. Brexit may become a big challenge for the UK, so both the government and industry will need to work together for positive outcome.

04.08.2016

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