The Conservatives’ failure to secure an overall majority in last week’s general election has left some with a sense of uncertainty over the prospects for the travel trade. Gary Noakes reports.
Elections are always disruptive to the travel industry and the prospect of another this year has dismayed many in the sector, despite a general mood of optimism.
The hung parliament outcome of last week’s general election in the UK could mean months of potential economic and political uncertainty, and there is reportedly talk in Westminster of another general election being called in the near future – as happened in 1974.
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The Conservatives’ failure to secure an overall majority in last week’s general election has left some with a sense of uncertainty over the prospects for the travel trade. Gary Noakes reports.
Elections are always disruptive to the travel industry and the prospect of another this year has dismayed many in the sector, despite a general mood of optimism.
The hung parliament outcome of last week’s general election in the UK could mean months of potential economic and political uncertainty, and there is reportedly talk in Westminster of another general election being called in the near future – as happened in 1974.
Miles Morgan, founder of Miles Morgan Travel, said: “[The outcome of a hung parliament and the prospect of another general election] is bad news for business. Forget political persuasions – it’s never good news for confidence, and therefore never good for business.”
Derek Jones, chief executive UK of Der Touristik Group, added: “More uncertainty is an inevitable consequence that is inevitably damaging… It depends on how the talks progress – that will define the outcome of economic uncertainty.”
Kate Kenward, Aito executive director, said consumer behaviour could go either way.
“Elections instil a wait-and-see attitude among consumers, but with so many referendums [and elections] of late, many could just continue making travel plans, come what may,” she said. “This is all new territory.”
She continued: “In general, Aito members are cautious business owners who are small and flexible enough to adapt to many business environments. However, currency fluctuations will have an impact on pricing and yield forecasting.”
The industry can take some comfort from oil prices remaining low – at below $50 a barrel, less than half the price of three years ago. This will help to offset any unfavourable shift in exchange rates.
Another comfort should be that Theresa May’s government will likely soften its “hard Brexit” stance in negotiations with the EU following a firm message from the electorate. May will also face pressure from Northern Ireland’s Democratic Unionist Party (DUP), which is expected to prop up her minority government, as the DUP is in favour of a soft Brexit and has the power to demand this from the prime minister in return for its cooperation.
UKinbound is likely to get its wish for a review of the new government’s approach to the upcoming Brexit negotiations. Deirdre Wells, chief executive of the organisation, said: “The general election result clearly shows that the electorate is against a hard Brexit, and so is the UK’s inbound tourism industry.
“Our members are calling for a continued strong relationship with the EU and the implementation of a sector deal that addresses issues such as the Customs Union, open skies agreement and residency rights for EU workers. For inbound tourism to prosper long term, we need the Conservatives and DUP to champion our industry.”
Kenward said it was a case of “wait and see” with regards to how the government’s bargaining power has been affected, while Abta said it “remains to be seen” how the Conservatives and DUP would work together. The DUP also stated in its manifesto that it supports the abolition of Air Passenger Duty.
An Abta spokesperson said: “We look forward to engaging with Theresa May’s new ministers and the newly elected MPs from all parties to encourage support for the industry’s priorities, including for the Brexit negotiations.
“In particular, we will be looking to Mrs May to deliver on certain policies set out in the Conservative election manifesto, including support for airport expansion in the south-east and the party’s promise to consider a ban on companies cold-calling people, encouraging them to make false personal injury claims. This will help tackle the rise in holiday sickness claims.”
Issues like this are not likely to be top of the minority government’s agenda, however, and the travel industry will need to wait and see how the political infighting plays out.
Morgan said the industry could take comfort from the fact that it sells a desirable commodity.
Andy Stark, managing director, The Global Travel Group, added: “The wider economy has been in a state of uncertainty for a while now, but as an industry we have a history of bucking any downturn and tackling the unexpected.”
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