Post-Brexit Plunging Pound has EU Worried About Decline in British Tourists
June 25 2016 - 6:57AM
Dow Jones News
By Ellen Emmerentze Jervell
FRANKFURT--Britain won't officially leave the European Union for
at least two years, but European tourism officials already fear a
British exit this summer.
The reason: A fall of roughly 6.6% in the value of the British
pound against the euro Friday, after Britons voted to leave the EU.
Currency traders, who were surprised by the referendum's outcome,
dumped sterling on fear of looming U.K. economic troubles.
International Consolidated Airlines SA, the parent company of
British Airways and Spain's Iberia quickly issued a profit warning,
blaming market volatility. A big question businesses face now is
whether the pound will remain depressed, upending economic
relations between Britain and its trading partners.
At the front lines of those relations are international tourists
paying for hotels, meals and taxis in foreign currencies. EU
destinations accounted for more than two thirds of British foreign
travel, according to Euromonitor International. Spain, France,
Italy and Germany are among the most visited countries.
Merrion Charles, a British woman who runs her own high-end
Italian travel consultancy from Tuscany, said British tourists are
a key source of income for her business. She feared the
consequences of the U.K. exiting the EU could be "huge" for her
business.
"A weakened pound, inevitable complications regarding ease of
travel, economic impact and the concerns of a lot of Brits will, I
believe, lead to a significant downfall in clients from the U.K.,"
she said, adding, "I hope and pray I am wrong."
According to Italian tourism association Federturismo, about 12
million British tourists take a vacation in Italy every year,
making them one of the largest groups of holidaymakers in the
country.
Federturismo Chairman Renzo Iorio said Friday that "everyone was
sure that the Remain would have won," and that Italian tour
operators thus hadn't yet considered any special action to promote
tourism in the coming few months.
"We'll compensate with other nationalities or by throwing into
niche markets," he said Friday.
The consequences of a British departure, in particular a
devaluation of the sterling, could reach far across Italy's
borders. Britons for instance represented 22% of total visitors to
Spain between January and April of this year, according to the most
recent figures from Spain's statistics agency.
Teneo Intelligence, an advisory firm in New York, said the Greek
economy would be particularly vulnerable to the economic impact
from a British exit from the EU. More than 2 million British
tourists visited the country last year, contributing around EUR2
billion to the country's tourism sector, they said.
Not all tourist operators were worried yet. Dimitris
Giannakopoulos, managing director at the Athens-based villa rentals
company White Key Villas, said the villa market in Greece "greatly"
depended on British tourists but his clients were in the "very
high-end segment."
If the pound remains depressed, Britons may prefer to stay at
home for their vacations, said Wouter Geerts, travel analyst at
Euromonitor. And even British tourists who venture abroad could
spend less while traveling if the pound buys less. "U.K. residents
will be more aware of their budgets," he said.
In the German capital of Berlin, Burkhart Kieker, chief
executive of tourist organization VisitBerlin, said he was only
"slightly worried" about the consequences of Friday's referendum.
He predicted resilient tourism because "Berlin has a very positive
image in the U.K."
Britons are the biggest tourist group in Berlin. For now, Mr.
Kieker said he was "breathing deeply, observing, and hoping."
At Germany's DER Touristik Group, CEO Soeren Hartmann said it
was "safe to say" that a British exit from the bloc would not be
positive for travelers in Europe.
He said officials in London and at the EU in Brussels should
ensure that pan-European travel remained as uncomplicated as
possible, adding, "new administrative barriers would spell disaster
for the travel market."
Manuela Mesco in Milan and Jeannette Neumann in Madrid
Write to Ellen Emmerentze Jervell at ellen.jervell@wsj.com
(END) Dow Jones Newswires
June 25, 2016 06:42 ET (10:42 GMT)
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