How Brexit has created opportunities for the UK’s leisure market
Tuesday 26th July 2016
Simon Mydlowski, partner in the commercial property team, looks at how the leisure sector could be set to benefit from the Brexit vote as domestic tourism increases in popularity.
When the UK voted to leave the EU in June’s referendum, much was made of how it would impact the economy, with many analysts predicting uncertainty across the markets.
The immediate fallout was a drop in the value of the pound, but stability has gradually returned to sterling, and what was once viewed as potentially detrimental may actually prove fruitful to some sectors.
The unavoidable fact is that uncertainty often breeds belt tightening among consumers; something that was witnessed in the wake of the recession in 2009, which gave way to the rise of discount retailers and a shift in the way that the public used their disposable income.
History repeating
It is reasonable to assume that a similar approach in 2016 could see consumers adjust their recreational habits in line with reduced spending, and – as always – one of the first things to be affected is the family holiday.
As well as the rise of the discount grocer, the post-recession environment also gave way to the concept of the staycation – the return of the great British holiday.
Indeed, there was a significant rise in the number of people choosing to stay in the UK for their holiday, with a notable shift towards more frequent, shorter weekend breaks than the traditional two-week trip to mainland Europe.
As well as saving on air fares, it meant consumers were also not at the mercy of exchange rates – something that is again at the forefront of the travel agenda in the wake of the pound’s slight fall against the euro and other currencies in recent weeks.
While this may not be great news for overseas tour operators, it certainly is for domestic venues, which could see a marked rise in business in the summer months and beyond.
Shifting tastes
Figures from Visit England show that 2016 has already seen a rise in the number of people choosing to holiday in the UK, with a 23 per cent increase in the amount being spent on overnight domestic trips in the first quarter of the year, totalling £1.8 billion.
Of course, the data from January to March does not take into account changing habits resulting from the result of the EU referendum, but it is fair to assume that it will further stimulate domestic tourism spending as people favour UK trips
Another key factor in increased revenue is visits from overseas, with strong growth from markets such as the US, Germany and the UAE underpinning performance.
The favourable exchange rates resulting from the Brexit vote could stimulate these overseas visits further still, and provide a further boon for the UK’s leisure sector.
A record year ahead?
In 2015, both inbound tourism and spending hit record levels, with 36.1 million visits and £22.1 billion spent, and the figures suggest this will rise further still in 2016.
The difference this time is cost-conscious UK citizens, who are aware of the uncertain global economic climate and the UK’s position, post-Brexit. This could further stimulate domestic spending as they forego their foreign holiday – something that will provide a ray of sunshine for the leisure market.
Halfords has already predicted a boost in business due to more people staying in the UK and the knock-on effect of more road trips would be greater spending in pubs, bars and restaurants across the country, particularly those in traditional tourist hotspots.
The challenge now for those within the sector will be clearly distinguishing their offering from the competition to fully benefit from a potentially lucrative opportunity.
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