Home / Opinion / Brexit’s made Britain a whole lot cheaper for tourists
Back

London: If you’re a tourist, welcome to Britain.

With the fall in the pound, it’s massively cheaper to visit the UK. So looking beyond today’s stock market shakeout, that could prove to be a boost for the leisure industry, some hotels and luxury brands.

Take Merlin Entertainments, which owns attractions such as Madame Tussauds and the London Eye. It had a difficult year in 2015, after a roller coaster crash at its big Alton Towers theme park. A surge of new visitors would be welcome.

And then there’s Premier Inn, owned by Whitbread. Chief executive Alison Brittain recently bemoaned the downturn in the London hotel market, that pushed revenue per available room down 6% in the capital in the three months to 2 June.

The hotel chain’s struggle is down to a combination of tourists staying away following the terrorist attacks in Paris and Brussels, and a glut of rooms. A weak pound could help to turn the tide for trips to the capital and help fill up those empty beds.

On the luxury front, Burberry could be one of the main beneficiaries from higher visitor numbers.

It obtains about 40% of its retail sales from Chinese consumers, including those travelling abroad, so it has been hit hard by their reluctance to travel after the terrorist attacks. A cheaper pound may boost footfall to London stores, and could flatter the bottom line—John Guy, analyst at Mainfirst, estimates that a 10% drop in sterling could increase earnings before interest and tax by £90 million pounds ($122.8 million).

Of course, there are a lot of complications to wade through following Brexit. It’s no small matter that there’s potential for a recession, a broad consumer slowdown, and a big falloff in confidence.

Whitbread is a case in point. Even if it wins from London holiday makers, it also has exposure to the business travel market. That is already slowing, and a further downturn might offset some of the Brexit bounce.

And losers? Those companies selling overseas holidays, such as Thomas Cook and Tui. For just as the falling pound makes London cheap for visitors, it makes travelling outside the UK more expensive for Britons.

Expect a return of the ‘staycation’ the trend during the recession for Britons to stay at home and have days out, or holiday in the UK. Bloomberg

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout