Four thought leaders of the travel and tourism industry share their views with Reema Lokesh on the immediate effect of the Brexit on the tourism industry
–
The UK is currently still part of the European Union and nothing changes with immediate effect. The UK remains a full member state of the EU, all EU rules and regulations continue to apply until the country evokes Article 50 of the Lisbon Treaty, after which, there is a two year period for negotiations to take place. The most significant effect in the immediate aftermath of the referendum result is the drop in the pound sterling, which makes it more expensive for the British to travel abroad as their spending power has decreased. Nevertheless, we have registered little immediate impact on the British or European travel market as many summer trips had been booked before the referendum and will continue to go ahead over the summer. Our analysis does suggest, however, that this impact may be felt more intensely in 2017. This could have implications for the Indian tourism sector for which the UK is an important market. At this time it is impossible to predict the longer term impact of Brexit on tourism in India, however it could present a significant opportunity as the UK seeks to intensify trade relationships with emerging markets such as India, and given the close historical ties between the two nations.
– David Scowsill, President & CEO, World Travel & Tourism Council (WTTC)
The long – term effect of Brexit needs to be watched. India has been the third largest source of foreign direct investment (FDI) into the UK in 2014-15, behind the US and France. In 2014, India was the most common non-UK country of birth. An estimated 793,000 residents of the UK were born in India (9.6 per cent of the total number of non-UK born residents in the UK in 2014). There is a significant amount of travel both leisure and business between India and UK. If the pound sterling continues to have a balanced run against the rupee, it will be a great influencer in determining travel both inbound and outbound between the two countries. It will mean that the Indian outbound traveller will have a greater propensity to spend in travel to the UK and vice versa. For the Indian outbound, Brexit will not have much impact, because, in any case, an Indian travelling to UK and Europe still needs to obtain two separate visas. According to Visit Britain statistics, India in 2015, accounted for 422,000 visitations to UK with spends of GBP 433 million. India ranks 18th in the top 50 source markets to UK and 16th on spend capacity. India is the only country in Asia to make it to the top 20. UK cannot afford to ignore the Indian outbound. In terms of inbound to India, UK ranks 3rd as India’s prime source markets in 2015 and continues to be an important established market for India. The Government of India has also made considerable efforts to entice travellers from all over the world with its newly launched e-Tourist Visa (e-TV). Under this scheme an UK citizen can get an Indian visa of 30 days duration for GBP 39. This is competitive with offers made by destinations like Thailand or Cambodia. We need to spread this awareness and open up the rich travel experiences one can have in India through massive “Brand India” campaigns targeted at every segment of consumers in the UK. Today, air connectivity between London and all cities in India is multiple times daily and the ease of getting to India is like never before. India is also a great value for money destination in terms of quality of hotels and pricing. Ease of travel – visas being the primary trigger of travel – will influence outbound travel from India to the UK. There needs to be reciprocation between governments – the Government of India’s decision to extend e-Tourist Visa (e-TV) to citizens of the UK, its terms and pricing must be matched and rationalised by the Government of UK, in order to attract more tourists in the longer run from India. Intrinsic historical and trade linkages between the UK and India dates back to more than two centuries, this we foresee, will grow.
– Kapil Chopra, Chairman, WTTC India Initiative & president, The Oberoi Group
The weakening of the pound by about 12 per cent in the last one month is a boon for Indian travellers who intend to travel to UK this year as this will automatically bring down the cost of their holiday. Once in UK, all services such as entry to museums, attractions and dining out will become cheaper. This in itself will lead to a substantial saving of between 10 to 12 per cent. In 2015, close to 4.5 lakh Indians visited UK and this number is expected to grow by at least 15 per cent this year as well. The additional savings will spur holiday traffic to the UK. As for inbound, the booking pattern is very different. They book at least six to eight months before travel. So those who have already booked will not have to factor a higher outgo. However, those who book now will be careful as the pound has weakened against the Rupee and they will still travel but may trade down to a certain extent.
– Karan Anand, Head, relationships, Cox & Kings
The UK is a significant source market for many countries and the referendum results have undoubtedly created a level of uncertainty for many, especially for Asia and South America. The concerns are of the potential shift of outbound British groups away from long haul destinations brought about by the severe depreciation in the British Pound. There is also the potential impact on suppliers’ bottomline for groups already contracted for the near future. However, British travellers tend to be very resilient. Regarding the outbound impact, I feel, although travelling to the UK has become somewhat cheaper, I doubt if that will create long term effects for Indian travellers to the UK. The destination was always expensive and the ten off per cent depreciation in costs is unlikely to divert significant numbers. It will however reduce the cost of experiencing the destination for the existing traveller.
– Rajeev Kohli, Joint MD, Creative Travel and president, SITE 2016