The impact leaving the european union will have on the british tourist industry

Northern Powerhouse Developments Limited, K3, K Mill, Dean Clough Mills, Halifax, HX3 5AX
Company Number: 09940469
Compiled by Helen Bickerton
Head of Compliance
JUNE 2016
A REPORT ONTHE IMPACT
LEAVINGTHE
EUROPEAN UNION
WILL HAVE ONTHE
BRITISHTOURIST INDUSTRY

It will go down as the day Britain woke up to a new dawn; a new beginning and the
realisation that independence was upon us.
June 24th 2016 was the day that saw Britain vote to leave the EU and while it is a
decision that has sent the financial analysts into a frenzy of uncertainty, it could well
turn out to be the best possible result for the BritishTourism industry.
While many from the ‘remain’ side continue to speculate on the negatives the
result brings, the decision to quit the shackles of EU legislation will both, in the short
and long term, be a positive move for British tourism and those looking to invest in
lucrative hotel and leisure opportunities.
While concern over our withdrawal from the EU and how it might affect tourism
is understandable, it is totally misdirected and any negative effects on tourism we
believe will be far outweighed by the advantages.
Reasons leaving the EU will NOT affect UK tourism:
• The number of foreign visitors to the UK will increase due to the weakening
of the pound.
• More Brits will opt to ‘stay at home’ for their holidays to get more for their
money.
• As property prices are set to dip, it is the perfect opportunity for foreign and
UK investors to buy into UK hotel and leisure market.
• Tourists coming to Britain routinely cite Britain’s unique history and culture as
a prime reason to choose Britain as a destination.
• Holidaymakers from both within and outside the EU recognise that Britain is
different than the rest of the EU.
• Britain does not share the Euro currency, Schengen agreement or other
features of the EU that impact most on tourists, so withdrawal will have no
significant impact on the tourism experience. .
• Leaving the European Union might actually make Britain a more attractive
tourist destination.
Why leaving the European Union
will further boost British tourism

It is worth remembering the UK has endured sharp devaluations in sterling before,
notably following the ejection of the pound from the European Exchange Rate
mechanism and in the aftermath of the banking crisis.While painful at the time, both
were followed by periods of economic expansion and we believe that this will again be
the case when the dust on our exit settles.
With the pound set to slump against the euro in the short term, the number of
foreign visitors to the UK is expected to soar with Britain now seen as a very attractive
financial option for holidaymakers to visit.
If the economy, as predicted, does stutter and the pound falls, then overseas travel
will also become much less affordable for many Brits and there is expected to be an
increase in the number of ‘stay at home’ British holidaymakers as the cost of travelling
abroad rises.
From an investment point of view, it will also be the perfect time to invest in the UK
hotel and leisure market.
With a predicted short-term property slump of between 8 and 10 % over the next
two year, it is lucrative opportunity for savvy investors to buy into the British hotel and
leisure market at a very attractive price.
Likewise for those British investors contemplating adding to their property portfolio
it could also be the time to take advantage of the lower UK prices with an eye on the
long-term gains when the country finds its feet again.
Add the theoretical possibility that British nationals may require a visa to use a
property in Europe, then investment in the UK is seen by many as a far safer option in
the short-term while questions are answered and negotiations take place.
The table below shows the drop in exchange rates and what savings could have
been made in the past 24 hours for foreign investors on a typical £85,000 unit.
Currency Yesterday’s Rate Today’s Rate
Euro 1.3091 1.23841
US Dollar 1.4893 1.37783
ChineseYuan 9.7956 9.10347
Russian Ruble 95.3837 89.8162
Emirati Dirham 5.4658 5.0714
JapaneseYen 158.0672 142.29188
Singapore Dollar 1.9962 1.87230
Taiwanese Dollar 48.016 44.983
Currency Cost atYesterday’s Rate Cost atToday’s Rate % Saving
Euro 111,273.50 105,264.85 5%
US Dollar 126,590.50 117,115.55 7%
ChineseYuan 832,626.00 773,794.95 7%
Russian Ruble 8,107,614.50 7,634,377.00 6%
Emirati Dirham 464,593.00 431,069.00 7%
JapaneseYen 13,435,712.00 12,094,809.80 10%
Singapore Dollar 169,677.00 159,145.50 6%
Taiwanese Dollar 4,081,360.00 3,823,555.00 6%
Currency Exchange Rates per one Great British Pound
Savings on an £85,000 unit over the last 24 hours
Data compiled from www.xe.com and www.exchangerate.org.uk
Today’s exchange rates were valid at 09:00 on the 24th June 2016
Savings based on one unit bought at a price of £85,000

WHAT THE LEAVEVOTE MEANS FOR INVESTMENTS
While the UK’s vote to leave the European Union may well whip up storms in
financial markets in the short term, experts believe that the long-term investment
outlook remains positive.
In response to our exit, Coutts Head of Financial Advice and Investment Solutions,
Mohammad Syed, said:“Yesterday the British people decided to exit the European
Union in a landmark political decision.We believe that this will continue to impact
global markets in the short term, but don’t believe it will have a major effect in the
long term.”
Our historical analysis suggests that while big political events can generate a lot
of controversy and media coverage, they generally have only a minimal effect on
long-term market performance as Coutts Head of Investment StrategyTerence Moll
explains:“Big moves in markets are driven by major economic and financial events.
We believe that while the vote to leave the European Union is a significant political
decision, it will have relatively little effect on long-term investment returns.”
Michelle McGrade, chief investment officer atTD Direct Investing, said:‘I urge
investors not to panic by the initial shock and focus on the longer term because it’s
never been right to sell at bottom of markets.
‘The world isn’t ending, it’s changing with new challenges and opportunities – let’s
today not forget the opportunities. Markets are forward looking, the dust will settle
and investor confidence will return.’
Adrian Lowcock, head of investing at AXA Wealth, said:‘Times of uncertainty will
knock investor confidence as they see falling share prices and panicked experts
predict doom and gloom.This leads to making quick and often irrational decisions,
such as selling after the market has fallen.
“Companies will adjust and the British economy will adapt. Investors need to look
through all the noise and remain focused on their personal goals.Any sell-off will
produce opportunities for prudent investors looking at the big picture and focused
on the longer term.
“A weaker sterling will help the UK become more competitive and could boost
the earnings of many of UK’s large companies where the bulk of profits are made
overseas.”

SO WHY WILL PEOPLE CONTINUE TOVISIT BRITAIN?
While the question is valid and some of those working in the tourist industry see
it as a genuine concern, there is a false idea being implanted in the minds of British
citizens that Britain will become the Black sheep of Europe now we have left the EU.
The fact is Britain is already ‘separate’ and has been for some time, the divide existed
long ago, Britain routinely downplayed its part in the EU and there is an argument
that now we have left it might even make it more attractive to tourists.
Britain like every other state in the EU has its own culture which is unique to itself.
We have always been seen as drastically different from most other European
countries and our appeal comes from having our own unique culture, history and
attractions.
That will not change now we have left the EU and if anything will make us an even
more attractive place to visit.
Certainly those coming to Britain from the Commonwealth will not be put off.
Many people in the Commonwealth – Australia, Canada, New Zealand, India and
Pakistan in particular – have family in the UK and when paying a visit they routinely
stay for a while to visit different parts of the UK.
Inbound travel from Commonwealth and former-Commonwealth countries is
predicted to remain high, as are numbers from the USA, meaning demand will remain
strong for hotels beds throughout the UK.The UK’sTreasury recently predicted that
sterling could lose 12% of its current value in the wake of the leave vote, which
would make holidaying more affordable for foreign nationals.
People came to Britain before we joined the European Union and will continue to
come now we have left and if anything our new found independence will be seen as
a huge appeal for more people to come and visit.

UK ECONOMY CONTINUES TO
SHOW SIGNS OF SUSTAINED RECOVERY
Global uncertainty may currently prevail, with the EU continuing to face economic
challenges and the ongoing tension caused by the Ukraine-Russia conflict and the
Greek crisis. Despite this rather gloomy scenario, there is still plenty of light at the
end of the tunnel, with the US economy forecast to grow over 3% in 2016, in turn
providing fresh impetus for the expanding UK economy.
The UK market has continued to recover in its own right and has steadily grown
over recent years, driven by low inflation, strong consumer spending and its
traditionally vibrant services sector, remaining one of the most robust economies in
the developed world and providing real opportunities for smart investors.
Falls in global oil prices have kept inflation at record lows, hugely enhancing both
consumer and business confidence.A welcome knock-on effect has been lower air
fares, creating a welcome boost to the tourism industry and an increase in visitor
numbers to all parts of the UK, particularly outside of London.
The hotel sector faces a number of challenges but major industry players remain
confident in its ability to adapt and succeed, as overall prosperity increases in the
wake of the banking crisis. Room occupancy rates in the UK regions are predicted to
rise to record highs in 2016, following unprecedented increases over the previous five
years, when the UK’s regional hotels actually experienced a higher overall growth rate
than those in London.
UK HOTELS EXPECTED TO
BENEFIT FROM PREDICTED ECONOMIC UPTURN IN 2016/17
London, predictably, continues to lead UK recovery in 2016 with economic growth
of up to 3% projected by many economists, but other regions in England, Scotland
and Wales are close behind with expected rises of up to 2.3% per annum, as various
investment schemes improve local infrastructure and tourism facilities.
Overall consumer spending is forecast at a healthy 3% per annum and the UK sits
in a creditable 2nd place in a table of growth rates among G7 countries, while the
UK unemployment rate is at a 10-year low. Combine these figures with expected
inflation of 0.5% and you have genuine cause for business optimism.
• The British Chambers of Commerce (BCC) has upgraded its UK GDP growth
forecast for 2017 to 2.6%.The upgrade mainly reflects stronger than expected
growth in household consumption and services.
• UK business investment is predicted to grow 7.2% in 2016 and 7.4% in 2017.
• Exports are expected to increase to 2.6% in 2016 and 2017.
Many of the signs are there that the UK is in an increasingly strong position, making
it fertile ground for those looking to invest in the hotel and leisure industries.

BREXIT UNLIKLEY TO NEGATIVELY IMPACT
UKVISITOR NUMBERS FROM EU MEMBER STATES
Because the UK has always remained outside the border-free Schengen Area and
opted to retain strict passport control at airports and seaports, inbound travelers
are unlikely to experience much change in processing on arrival in the country. It is
certainly not considered to have any significant impact on visitor numbers.
Due to its proximity to mainland Europe, the UK will remain a supremely attractive
destination, due to relatively short journey times and the availability of budget flights
across the region. It is also possible that sterling could be weakened by the vote
to leave the EU, thus making Britain a more affordable destination for Europeans.
Numbers of travellers visiting friends and family will remain high, due to historic links
and immigration between many European countries and the UK.
The draw of Britain’s outstanding visitor attractions remains.The National Parks,
historical sites and cultural attractions remain popular with visitors from not just
Europe but all over the world.
BRITISH TOURISM ALREADY PERFORMING STRONGLY IN 2016
2016 has already witnessed major growth in inbound tourism compared to 2015,
which has had a hugely positive impact on the UK hotel trade. Inbound UK visits in
the first quarter of 2016 were 6% up on the first three months of 2015, setting a
new record for this period of over 7 million visits. Growth is also a feature over the
rolling 12 months to March 2016 – at 36.5 million visits this is the highest yearly result
since records began.
Overall UK visitor figures for the first quarter 2016 stood at 2.2 million, which
represents a substantial increase of 2% over the first quarter of 2015. Europe remains
the main market for inbound tourism.
Holiday visits to the UK also saw a healthy increase of 2% in March 2016 compared
to March 2015. Over the first three months of 2016 there were 2.26 million
inbound visits – 5% up on the same period last year and representing a record start
to a calendar year. There was also a rolling 12-month record of almost 14 million
holiday visits in the twelve months to March 2016.
UK HOTEL OCCUPANCY SET TO BREAK FURTHER RECORDS
The positive travel trade background continues to drive hotel demand and create
genuine optimism in the hotel industry, particularly in the regions, many of which had
suffered in the severe floods of 2015.
Revenue per available room (RevPAR) is expected to rise markedly across the UK
with a particularly encouraging 4.2% increase predicted for the provinces, which is
almost 2% higher than the prediction for London.
Hotel room occupancy outside the capital is forecast at 77% which is up 0.6%
and represents the highest level ever, as hoteliers in rural areas of England, Scotland
and Wales enjoy a welcome resurgence in visitor numbers. Higher occupancy rates
also mean that hotels are able to leverage their room rates and reap extra financial
benefits.

WELSH TOURISM CONTINUES TO GROW
2015 saw Wales continue to build on 2014, which was a record-breaking year
in terms of hotel occupancy for this scenic part of the UK. Its combination of
spectacular coastlines and mountain ranges, including the Pembrokeshire Coast and
Snowdonia National Park, plus numerous castles and other historic sites, ensure many
repeat visitors.
Beaches such asTenby, Rhossili and Barafundle are regularly voted Britain’s best.The
870-mile Welsh Coastal Path was declared the world’s first uninterrupted example
when it opened in 2012.A coastal tourism strategy has been developed under the
‘Wales Spatial Plan’ and identified a clear way forward in realising the economic
potential of this unique area and improving visitor experience.
ATrip Advisor piece recently singled out Llandudno, on the north coast, as the
third best place to visit in the UK, just behind London and Edinburgh. Its combination
of immaculate seafront and proximity to Snowdonia make it a year-round resort.
Nearby Conwy is a World HeritageTown. Both Llandudno and Colwyn Bay match
the environmental gold standard as Blue Flag beaches.
Up to June 2015 Welsh hotels reported occupancy rates of 74%, up 2% on the
previous year. South-East Wales enjoys the highest occupancy rate but figures have
gradually risen throughout the country, giving real cause for optimism among owners
and investors.
The top four markets for inbound Welsh tourism are the Republic of Ireland, France,
Germany and the USA.


SCOTLAND WELL POSITIONED
FOR CONTINUED DEVELOPMENT
It is too early to assess the impact of the exit vote on Scottish tourism, although the
prospect of Scotland rejoining the EU in the wake of the rest of the UK’s departure
has already been discussed by politicians and remains an option further down the
line.A surge of nationalism could serve to make the country an even more attractive
holiday destination in future.
Scotland has carved out its own niche at the luxury end of the hotel market, thanks
largely to its incomparable scenery and availability of high-end country pursuits such
as salmon fishing and game shooting, often outperforming many of the world’s more
established tourist centres.
The cities of Edinburgh and Glasgow also draw huge numbers of tourists, thanks
to a combination of fascinating history, world-class entertainment and dynamic arts
scenes.The Edinburgh Festival Fringe attracts visitors from across the globe and
hotels run at full capacity throughout the event. Glasgow has benefited greatly from
being nominated Cultural Capital of Europe in 1990 and maintains a proud legacy in
its sponsorship of the arts.
First quarter reports for 2016 suggested that its hotel sector continues to thrive
and remains an active area for investment. Since 2010 Scottish hotels have returned
an average 9.5% year-on-year, comfortably outstripping other European markets, with
the exception of other areas of the UK. In 2015 there was a healthy rise in visitor
numbers to over 15 million, which is a 10% increase over the previous 12 months.
• Visitor spending — estimated at over £5 billion for the year
• US visitors — spending grew by 16 percent to £488 million
• European visitors — 6% growth in numbers, and seven per cent spending
growth
• n 2015 Both Glasgow and Edinburgh airports recorded their busiest ever
years with a 13% increase
Scottish Development International has been proactive in helping potential investors
to access funding and other support, and in 2014 Scotland was the top-ranked UK
region for direct foreign investment.This was also its third consecutive record year for
FDI.

UK HOTEL ACQUISITIONS ENJOY
EXPANSION DESPITE THE LEAVEVOTE
Optimism in the UK tourism industry prior to the EU referendum led to total
deal volume in the hotel trade exceeding £5.5 billion in 2014, which far outweighed
expectations. 2015 continued the upward trend with regional transactions the most
prevalent.Total transaction volumes in 2015 eventually reached £8.1 billion, the
highest level since the £8.3 billion record set in 2006.
Investors continue to seek good investment opportunities in prime regional
locations outside of London and the South-East.The reduction in UK inflation meant
that owners enjoyed reduced operating costs and increased profitability, a trend set
to continue in 2016/17.With the operating landscape in the UK’s regional markets
continuing to improve and a significant amount of equity looking to deploy into the
sector, 2016 is expected to be another strong year for investment into the UK hotel
market. Many estate agents are still experiencing growth in demand for regional
assets from investors seeking higher returns, plus they report a marked increase in
private equity clients coming into the market.

Activities Visits which involved activity
Nights
spent in
UK*
Amount
spent in
UK*
No. of
visits
(000)
% of all
visits
% of
holiday
visits
No. of
nights
(000)
£(m)
Visited museums or art
galleries
8,299 27% 43% 86,146 £6,255
Went to theatre /
musical / opera / ballet
2,796 9% 14% 33,838 £2,748
Visited castles or historic
houses
8,874 29% 48% 91,245 £6,506
Visited religious buildings 6,738 22% 35% 74,920 £4,948
Visited parks or gardens 11,081 36% 54% 114,312 £7,826
Went to countryside or
villages
5,336 18% 22% 72,418 £4,205
Went to the coast or
beaches
3,582 12% 15% 54,292 £2,853
Went shopping 17,668 58% 71% 162,275 £12,092
Went to the pub 13,886 46% 50% 122,645 £9,393
Went to bars or
nightclubs
3,842 13% 14% 42,495 £3,412
Attended a festival (e.g.
music, food, arts)
949 3% 4% 16,810 £1,003
Went to a live sport
event (e.g. at stadium)
1,325 3% 4% 14,673 £1,128
Took part in sports
activities
707 2% 3% 10,989 £730
ACTIVITIES UNDERTAKEN IN BRITAIN
International visitors participate in a number of activities whilst they are in Britain.
Visits across the country very commonly include activities such as eating out,
shopping and cultural attractions.
Destinations offering rural locations or outdoor activities appeal to particular groups
of visitors as do those where it is possible to watch football or other live sport.Those
visiting Britain on holiday are often particularly likely to include activities such as
visiting castles, museums or to explore the countryside or coast. In 2011,Visit Brirtain
sponsored specific questions in the International Passenger Survey (IPS) to find out
how many visitors from overseas undertook particular activities whilst in Britain.
The results were as follows:
Activities undertaken by visitors to Britain
Source: International Passenger Survey, 2011. * By those whose visit included the activity. Nights and spend are not
specifically whilst under-taking activity but throughout visit to UK

Activity All SW SE LON EE WM EM YKS NW NE WL SC
Shopping 69% 69% 72% 81% 68% 69% 72% 69% 71% 62% 75% 74%
Shopping clothes or
accessories
66% 64% 60% 70% 53% 51% 52% 63% 60% 60% 47% 70%
Shopping for souvenirs 58% 54% 57% 60% 42% 49% 45% 55% 43% 66% 57% 68%
Dining in restaurants 79% 71% 59% 83% 69% 58% 80% 70% 68% 79% 78% 89%
Going to pubs 48% 53% 42% 53% 45% 55% 61% 56% 66% 77% 58% 70%
Socialising with the locals 38% 54% 47% 30% 47% 59% 57% 39% 61% 38% 62% 56%
Going to bars/nightclubs 15% 7% 6% 17% 8% 15% 11% 23% 30% 36% 12% 25%
Famous monuments or
buildings
64% 55% 57% 70% 48% 45% 38% 44% 36% 41% 46% 73%
Parks or gardens 52% 59% 52% 64% 48% 37% 46% 38% 25% 23% 35% 56%
Castles 34% 38% 42% 30% 24% 21% 17% 36% 8% 30% 37% 67%
Religious buildings 33% 38% 37% 40% 35% 18% 20% 35% 20% 16% 22% 41%
Historic houses 29% 36% 34% 30% 28% 23% 18% 28% 15% 12% 14% 35%
Museums 48% 32% 42% 55% 39% 26% 16% 37% 28% 14% 23% 45%
Art galleries 26% 11% 15% 32% 11% 14% 3% 15% 14% 7% 9% 23%
Theatres 18% 7% 6% 24% 8% 9% 4% 3% 9% 4% 2% 5%
Live music 11% 8% 6% 11% 7% 7% 9% 9% 19% 14% 12% 14%
Festivals 4% 5% 4% 3% 6% 6% 6% 5% 9% 2% 1% 11%
Locations (e.g. literary,
film)
3% 4% 2% 3% 4% 2% 2% 6% 2% 1% 1% 3%
ACTIVITIES IN UK NATIONS AND REGIONS
Shopping, going out to eat, drink or socialise
British shops, restaurants and pubs are major draws for international visitors and are included in most
holiday visits.
Visiting heritage/culture attractions
London and other urban areas attract many overseas visitors with the most popular holiday activities
including visiting famous buildings, parks, gardens, and museums.
Source: International Passenger Survey 2006-2011

Countryside 20% 51% 38% 9% 31% 25% 34% 55% 22% 24% 49% 52%
Villages 19% 55% 39% 9% 32% 26% 20% 44% 16% 28% 42% 42%
Coast / beaches 11% 48% 37% 3% 16% 9% 14% 22% 14% 31% 53% 35%
National parks 7% 26% 11% 4% 4% 8% 8% 26% 9% 16% 30% 25%
Walk in countryside 24% 58% 45% 12% 27% 33% 32% 37% 24% 26% 50% 52%
Walking by coast 8% 37% 25% 2% 9% 4% 4% 15% 8% 35% 38% 29%
Playing golf 2% 3% 4% 0% 3% 3% 3% 5% 1% 0% 3% 7%
Going cycling 1% 7% 2% 1% 3% 2% 2% 2% 0% 4% 1% 2%
Going on a tour 25% 23% 23% 26% 14% 13% 19% 18% 19% 8% 19% 36%
Learning activities 9% 20% 17% 8% 6% 3% 4% 4% 10% 12% 8% 8%
Zoos, aquarium, other
wildlife
7% 9% 7% 8% 5% 5% 8% 11% 7% 1% 4% 6%
Visiting a spa / beauty
centre
3% 6% 2% 2% 3% 3% 4% 5% 4% 1% 1% 4%
Researching ancestry 2% 1% 3% 2% 1% 2% 1% 4% 0% 3% 5% 4%
Going to watch live
football (at a stadium)
2% 1% 1% 2% 3% 3% 3% 2% 8% 19% 0% 0%
Visits to rural/coastal locations & participating in outdoor activities/sports
In more rural areas such as Scotland and the South West holidays are very likely to include visiting castles,
villages and walking in the countryside.
Our report on inbound tourism to Britain’s nations and regions (PDF, 2.47MB) covers the profile of
international visitors in different areas of Britain and the activities they do there.
Other activities/attractions
Football, nightlife, contemporary culture and shopping are especially popular in Northern cities which often
attract short breaks.

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