The Brexit vote in June was not just a major political event; it sent shockwaves through every sector of the economy. But what does the decision to leave the EU and the slow process of withdrawing mean for the hotel trade?
One trend is already becoming obvious. A report carried out by auditing giants Pricewaterhouse Coopers (PwC) after the Brexit vote revealed that, while London hoteliers are facing short-falls in the business customer sector, regional hotels are experiencing a corresponding rise. In fact, PwC forecasted that occupancy rates in regional UK hotels would be the highest ever recorded.
In the first month after the Brexit vote, the regional hotel sector saw significant growth, with Manchester, Birmingham, Brighton, Edinburgh and Cardiff all experiencing growth of over 4%, with Brighton hitting a rate of 10.7%. Meanwhile occupancy rates in London are forecast to decline by 1.8% and by a further 0.8% next year.
The decline in the London hotel business is largely down to the uncertainty produced by Brexit, which has left a question mark hanging over the capital’s future as a worldwide economic hub. The broader economic downturn has also forced many companies to cut travel budgets, and, given its economic primacy, London is inevitably hit hardest.
But another side of the Brexit vote could be contributing to the mini boom in regional hotels. As the value of sterling continues to plummet, holidaying in the UK has become a more attractive proposition, and ‘staycationing’ has been increasingly popular, as the cost of holidaying abroad rises. The falling pound may also offer a route for London hotels to recover, by doing more to attract leisure rather than business customers.
Hotels with a strong brand, particularly if they are not disproportionately focused on the business travel market, may decide to take a cautious approach to the immediate post-Brexit period, but it is clear that the trend for people holidaying at home offers considerable opportunities to those hotel businesses that can adapt.
Outside London, hotels that focus on the attractions to be found in their region and cities, not just for the local UK market but also for an international market, can take advantage of the post-Brexit shift. Highlighting not just the unique qualities of their local area, but also the fact that overseas tourists can now effectively get more holiday for their money, thanks to the ever-declining pound, offers a way for regional businesses to boost their takings.
Tourist-based marketing strategies are also likely to be the best option for London hotels, which are in a position to capitalise on the considerable cultural and heritage attractions of the capital, and lure significant numbers of international tourists from Asia and the United States. As ever, though, reputation counts, and in the scramble to get a share of the increase in tourist trade, hotels that focus on offering the most comfortable customer experience will fare best.