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Brexit: what could the consequences be for British tourism?

The referendum concerning Britain's membership to the European Union will be held on June 23. A "Yea" for Brexit is likely to have consequences on tourist activity in the country, which just closed its sixth year of growth towards new records.

Following the compromise reached regarding the special status of the United Kingdom in the European Union on February 19, British Prime Minister David Cameron announced that the referendum on the question will be held June 23, 2016. It will be decisive as to the decision whether or not to maintain Great Britain's membership. If there is a "Brexit", coined from British Exit, from the European Union, it could have consequences on its tourism, while the sector has been beating records for six years.

In 2015, some 35.8 million foreign visitors traveled to the United Kingdom, marking new growth by 4% with respect to the previous year's arrivals. Their presence brought some 21.8 billion pounds sterling to the country's economy. With European travelers representing the vast majority of these visitors -close to 60% of the total number of visitors- it seems evident that if the United Kingdom leaves the European Union there will be an impact. But to what extent?

Brexit advocates see it as an opportunity for additional growth for British tourism, which would result from a more advantageous exchange rate for foreign clientele. If the United Kingdom withdraws its membership, the economic situation could be more favorable to the euro than the pound sterling, which would lose value against the single currency. A weaker pound would lake the country more attractive to potential visitors.

Inversely, the exit's detractors anticipate an increase in custom's fees for merchandise, and costs, or at least additional obligations, in terms of entry and exit from British soil, these factors would have negative repercussions on travel and tourism industries and transportation companies. Thus, procedures for entering British territory could toughen for tourists from countries that are members of the European Union who currently enjoy simplified procedures. Passports and visas may once again be required for certain nationalities. Moreover, in an article in the Daily Express, the director of the low-cost airline easyJet reminds us that Europe had made it possible to democratize tourism among the working classes by making it more affordable. Finally, and above all, the impact of a Brexit on the outward appeal of the British economy (resulting particularly from the drop in the pound, as well as more difficult access to the European economy and risks that would weigh upon certain activities in the City) would probably have an impact on demand from business traveler's, particularly in the capital.

British hotel activity was on a growth curve in 2015, according to HotelCompset data. On the whole of the year, the 0.4 point increase in occupancy rate at properties and 4.1% increase in average daily rate enabled 4.6% growth in Revenue per available room (RevPAR). While the country's authorities and forecasts 2016 point towards further improvement in tourism indicators at the destination in 2016, the impact of an eventual Brexit on the sector remains a risk that will surely put pressure on European actors until the referendum.

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