Hoteliers must prepare for a hard Brexit when the country leaves the European Union in March 2019, delegates at Hospace 2017 were warned.
Speaking on a panel addressing the consequences of leaving the EU, KPMG public policy director Mark Essex said that the effects of Brexit were likely to be severe.
He said: “The cliff edge will be worse than people think. Prepare for a hard Brexit.
“I think we ought to really assume we’re going to have Brexit and it’s prudent to have a plan for it being quite bad.”
With wages and input cost rising, Essex said those businesses that weren’t in good shape would struggle to survive.
He added: “I often say to clients that their aren’t many certainties around Brexit, but one thing you can almost take to the bank is the cost of employing people on minimum or low wages is going up. I don’t see any downward pressure on wages in the short term.
“So if your business model is fragile and relies on wages not going up I suggest you look pretty carefully at your business plan.”
Fellow panellist Jeremy Robinson, partner at Watson Farley Williams, asked the audience at the newly refurbished Royal Lancaster hotel to consider what new levels of employment and immigration bureaucracy might be introduced as a result of separating the country from EU law.
“Immigration is obviously a fundamental question to resolve in terms of being able to staff hotels and other hospitality businesses. But also the possibility of bringing visitors into the country from the EU is something you have to think about rather than it being automatic,” he said.
“Time is now running too short for public opinion to change and reverse the process, but that doesn’t mean to say that after Brexit public opinion won’t continue to change when they see the consequence of a hard Brexit. That will in itself colour the decisions politicians will make about how far to move British law away from the European model.”
Meanwhile, delegates heard that though the image and reputation of Britain was holding up well, boosted by a favourable exchange rate for visitors, the nation’s standing may slip.
Martine Ainsworth Wells, head of destination engagement at the European Tourism Association, said: “I’m not sure our reputation is holding up as well as we think. The exchange rate is most definitely playing in our favour. We’re definitely a more value destination. But exchange rates don’t last forever, it will just become the norm.
“The slight problem is Britain has never ranked well in terms of its welcome, but I’ve started to hear reports of particularly Germans – generation X and above – starting to feel a little more wary about visiting the UK. I think smart businesses will pay attention to reputation.”
Essex urged to focus on retention and productivity, and consider more automation in their business, to compensate for any effects of Brexit.
He said: “Rather than the first point of call being mitigating – lobbying government and so on – which I think has a mixed likelihood of success, I’d first look at what I could do contingently and unilaterally in my business to improve my resilience.”
Though he did have some cause for optimism, in that the country could become more agile and able to better react to economical and technological change.
Essex said: “I think our paths [the EU and UK] are divergent rather than convergent over time. This depends on your view of technological change but if things continue to move as quickly as they are, moving yourself from a block of 28 to a block of one should make you more agile. If you wanted to sell an upside for Brexit, that’s what I’d say, you’re one step nearer the consumer.”
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