The momentous decision by the UK(United Kingdom) referendum to either staying the eventually leave the EU(Economic Union) could have profound effects on the MICE (Meetings, Incentives, Conference and Events) industry across Europe. Almost overnight, the currency fluctuations of the Pound against international currencies was dramatic and the pound has fallen to its lowest level in 30 years after the UK reversed market expectations and voted to Leave the European Union.
In a dramatic turnaround, some suspect that the gains from London Olympics could be reversed where the event industry factor in value and experience. While experience is a major decision maker, this goes hand in hand with the need for value.
In a comment by economic and market analyst Namik Immelback, he stated “Basically the main impact on the MICE industry is a gyration in finance towards continental Europe so this is how the Business Travel and Event sector that will be affected.” When asked what that would mean long term, he responded – “Well business investment towards UK and London will shrink and favor Paris and Frankfurt specially in finance, so over coming years business and related events will gyrate towards these centers.”
While the process of unraveling the UK membership could take over two years, the immediate impact is dramatic. Unless properly “hedged”, Event Planners will see dramatic affects overnight on profit margins. With regard to forward planning of the event industry across Europe, Event Planners will have an overnight change in where they could place their business.
Perversely, in the short term, the UK may attract incentives or meetings from USA as the Dollar has gained against the Pound. U.S. tourists traveling to the UK will be able to enjoy greater value and is likely to attract business as travelers take advantage of the strong dollar. The shorter term gains in local UK retail business, travel and tourism is likely to be offset by the medium term outlook for business investment is likely to shrink.
The longer term affect over short term incoming tourists is more likely to be driven by business decisions. However, as the ease of doing business between UK and EU becomes difficult or costly, the focus may change to EU-centric cities.
How does the Brexit affect tourism?
Buying goods and services from America becomes more expensive for UK tourists and for event planners thinking of taking UK Meetings and Conferences to the USA. That loss in the pound may also be enough to discourage British tourists to travel to the US.
There are also strong travel and tourism flows between the UK and EU (76% of UK holidays abroad are in EU countries and 63% of inbound visitors are from EU countries) and the increased cost of travel may be sufficient to disrupt this flow. The travel and tourism sector is, by nature, an international business. Payments by tourists and business travelers overseas will involve foreign currencies, these value fluctuations expose business to economic uncertainties and making it difficult to protect projected profit margins.
What does the Pounds currency change mean?
(on Friday 23rd June 2016)
Pound to US dollar exchange rate today is 9.8% down at 1.3415
Pound to Swiss Franc exchange rate today 8.57% down at 1.3050
Pound to Yen exchange rate today 13.77% down at 1.3628