The big news of the past fortnight has been the outcome of the historic Brexit referendum that has cast huge uncertainty over economics, trade and politics.
Certainly tourism to the French Riviera will have a bumpy ride as the Brexit result settles and the great unknown becomes the known.
Whilst the public are happy to voice their opinion on social media, the referendum has split loyalties amongst friends, families and co-workers with many refusing to detail their vote and many small to medium businesses staying tight lipped with their comments on the result to avoid business backlash.
I have written this post to provide information and it is skewed toward UK tourists who visit this region; whether you supported the ‘Remain’ or ‘Leave’ campaigns I hope this post gives food for thought beyond tabloid media and political opinion.
Currency fluctuations were always on the cards regardless of the referendum outcome as any major global event will cause the markets to change.
Niall Bates, Managing Director of Chic Gites – Stylish Apartment Rentals in the Heart of Cannes commented that, “The currency effect was felt immediately – euro denominated holidays are now around 10% more expensive to holiday makers than they were a week ago.”
In the days following the result, major British banks including Barclays stopped accepting stop loss orders confirming their fear at the similar chaos created by last year’s Swiss franc upheaval. Global foreign exchange providers including Travelex, Travel Money and Commonwealth Bank put a cap or stop on buying pounds stirling to prevent exchange mayhem.
The pound stirling has experienced a rough ride pre-Brexit over the past few years with industrial and manufacturing sectors in decline, uncertainty on financial markets because of China and the prospect of an interest rate hike setting the value on a decline since the lows at the end of 2014. The zero or reduced rate for certain goods and services could therefore change. There could be an expansion in the extent of zero-rating currently denied by the EU. Or there could even be a removal of reliefs.
European luxury brands have also taken a knock due to the depreciation of the stirling; the flagship luxury French Riviera stores located in Cannes, St Tropez and Monaco will be competing with the UK stores who are experiencing a surge in customers.
Brexit is likely to create a real headache for UK-based airlines particularly the low-cost carriers such as Easyjet, Ryanair, Monarch, and Jet2 that service Nice Côte d’Azur Airport.
The EU is made of individual member states/countries however it is treated as one customs area, treating members as a single state in the interests of free trade. This allows for airlines and operators based in EU-member nations to freely conduct business in and out of neighbouring EU-member countries without being subject to VAT (Value-Added Tax) which is fixed between 15%-25%.
Easyjet’s CEO Carolyn McCall stated that ‘Leaving the EU would have a material adverse effect on Easyjet’s financial conditions and results of operations’. For your Average Joe who plans to travel from the UK to France, this translates in the media to ‘higher airfares’ and ‘the end of cheap flights’.
What the airlines have omitted to tell passengers is the rulings that govern compensation if their flight is cancelled or delayed 3 hours+ (dependent on circumstances), fall under EU Passenger Regulations (EC Regulation 261/ 2004). With Brexit this will mean this law will no longer apply to UK travellers or will need to be renegotiated. Therefore, British parliament will be acting on behalf of travellers; ideally they would want to retain the same level of compensation or actually improve it so in the meantime the price of flights is dependent not only on aviation fuel costs plus the current EU legislation covering (anticipated) compensation claims.
Likewise, private jet charter companies will see some flow-on – it is too soon to tell whether private flights between the regions may be subject to additional fees. Brexit has thrown uncertainty over whether or not UK-based aircraft operators will still be considered private use, along with questions of cabotage rights.
For those not familiar with cabotage rights, essentially they are open-skies deals that allow for an airline based in an EU-member nation to transport passengers within other EU nations for domestic air travel, typically short haul flights which are vital for business travel.
To provide some data, the growth in global demand for air travel has varied between 5.2% and 6.5% for the past 5 years (stat: IATA Economics) with European passenger volume sitting around 5% growth. Much has been bandied around in the media about the Single European Sky (SES) initiative and if the UK leaves the EU how they will be shut out of the EU aviation market and airfare prices will skyrocket for UK-EU flights.
The Single European Sky initiative was implemented by the EU to manage increasing air traffic and minimise costs of air traffic service provision; European air traffic management handles approximately 26,000 flights daily. The SES breaks down national boundaries of 67 airspace blocks into just nine – making it easier for air traffic controllers to guide aircraft.
By re-entering a single aviation market this will increase overheads for UK airlines as negotiations take place however to get around any restrictions, I expect EasyJet would seek an EU-based Air Operators Certificate (AOC) for its continental European operations, while the others could set up a UK-based AOC.
It should be noted, that EU membership is not a prerequisite for belonging to the Single European Sky initiative as many people have been led to believe. Norway, Switzerland, Tunisia, Albania and Egypt all observe this. For a comparison case study, consumers can look to Norwegian Air for some insight of a business model operating as a low-cost carrier servicing the EU from a country outside the EU – they are the third largest low-cost airline in the European zone and rank above Easyjet, Ryanair and WizzAir for on-time performance.
The effect of currency fluctuations will see UK travellers increase their efforts to seek accommodation discounts and specials on the French Riviera as the value of the stirling drops so it presents an opportunity for French Riviera-based travel companies to push deals to UK tourists, especially outside peak season. Look for more aggressive marketing on sites such as Booking.com, TripAdvisor, Lastminute.com, Expedia and Promovacances.
The instability with the stirling will work in reverse for the UK immediately following the vote with U.S and Chinese travellers seeking out UK holidays.
Ctrip, China’s biggest OTA, has announced that the Brexit result has seen a 200% search increase on their app for UK holidays, so this is the perfect chance for off-spin marketing to capture these tourists who may then choose to extend their UK stay by heading over to French shores.
The UK, especially London, won’t fade as a top-ranking destination; in 2015 London was the top global city destination by international visitors and London Heathrow is the top foreign airport by U.S. passenger traffic (stat: Office of Travel & Tourism Industries)
Niall Bates, Managing Director of Chic Gites in Cannes continues with some insights, “ In the medium to longer term there is more uncertainty over the fate of the UK economy. If the UK does experience the predicted recession in coming years, we could experience a similar slowdown in conference attendance figures in Cannes as we did post the Credit Crunch in 2008. Although this would affect non-UK clients significantly less than in 2008, UK companies continue to represent a significant proportion of conference attendees in Cannes. However, as we experienced post 2008, the reduced expenses budgets resulted in increased demand for apartment rentals as companies looked to save money by choosing self-catering over hotel stays. So for our apartment rental business I would expect little if any affect in the short to medium term.”
This echoes my predictions as I expect to see a rise in the sharing economy due to self-catering potential as this means UK tourists will have less £ to spend on meals when on holiday here. Airbnb (who ranks Paris then London as the 2 cities with biggest listings outside of the U.S) and Homestay should expect continual enquiries. For disabled travellers, HandySwap will provide excellent options to cut travel costs with home exchanges.
Package holidays & Cruises
Brexit will influence the UK consumer’s decision to travel with destinations such as Cyprus, Malta and Ireland that rely greatly on UK tourism expecting to suffer a downturn in visitors.
On the upside, destinations closer to the UK such as Belgium, Spain and France can expect to increase marketing of package holidays and all-inclusive getaways to reduce the variable expenses at destination such as meals and fuel.
The U.S and U.K markets are dominant in cruise demand with the Mediterranean being the second most deployed destination after the Caribbean (stat: CLIA). Aside from potential changes to port and customs regulations, Brexit will influence cruise pricing for P & O and Cunard as well as Royal Caribbean Cruises Limited and Norwegian Cruise Lines Holdings including provisioning costs for food and drinks on board that may filter through to the consumer.
How will Brexit affect Eurostar? The most popular sectors between London and Paris, Lille and Brussels may be affected by new regulations for border control and fare prices are likely to fluctuate in the initial uncertainty.
- If you are travelling from London itself to Paris or Brussels, book online at http://www.eurostar.com for the best deals. Friday and Sunday are peak times (and peak prices!). For spontaneous Eurostar passengers who don’t care what train they travel on between London and Paris/Brussels, Eurostar has special fares with a 7-day advance purchase (£25 instead of £45 oneway) on a new website live since May 2016. You can access the site signing in with Facebook: https://snap.eurostar
If you are based in the UK and intend to travel on the Eurostar to Paris, then onwards via train to the French Riviera there are a number of travel tips you can facilitate to reduce your total train fare:
- If you are travelling from outside London to a western European destination including French Riviera stations and starting your journey at one of the 130+ UK train stations, www.loco2.com is a great starting point for booking all-in-one tickets that combine the domestic UK train sector with the continental train sector. Note: Eurostar bookings open 180 days ahead of travel while most domestic continental trains typically open 92 or up to 120 days ahead so bear this mind when trying to confirm trains.
I highly recommend you check current Eurostar tips online at The Man in Seat 61, he has in-depth and invaluable advice about booking Eurostar tickets and global train routes including the rest of Europe. Top Tip: His best tip in the web link above concerns booking online for ‘London International CIV’ and ‘London Eurostar CIV’ which are well-kept secrets for discounted fares between over 130+ UK stations and a special online destination that automatically adds a cheaper UK sector to Eurostar fares.
The Auto industry, Self-drives & France
The UK Automotive industry supports 800,000 UK jobs from vehicle manufacturers to parts suppliers with Toyota, Land Rover and Nissan having plants based there. Aside from the manufacturing implications, with the Brexit decision and many UK tourists choosing to self-drive to France, this option is likely to reduce as crude oil is priced in dollars so as at today, the low stirling means UK petrol and diesel prices will increase at least in the short term. Ride-sharing services such as BlaBlaCar should capitalise on tourists looking to reduce travel costs.
Medical insurance while on the French Riviera
The UK’s inclusion in the EU means UK nationals can receive public medical treatment in the EU for reduced or no cost using their European Health Insurance Card under a reciprocal arrangement with the NHS. This replaced the old E111 forms as from January 2006.
With Brexit, this agreement must be renegotiated or all travellers will need to take out full private insurance to cover them in the event of any medical assistance being needed during their visit to the French Riviera.
Much has already been debated about the possibility of tourist visas for UK nationals to enter European Economic Area countries.
Many citizens of EU nations also enjoy the ability to cross borders without presenting a passport when travelling throughout Europe; because the United Kingdom is not part of the Schengen Agreement, UK nationals still require a passport when entering France but enjoy the right to free movement throughout the rest of the European Economic Area once they enter.
For Brits already living within France, it is unlikely that your residency will be affected. Asking existing residents and property owners to move or sell would be in breach of existing conventions, such as The European Convention on Human Rights (not to mention the colossal paperwork involved).
What will remain unchanged for UK tourists to the French Riviera?
The Brexit vote is not legally binding yet, the vote was just a referendum, one the UK government can simply ignore (granted this would be upsetting over half of the voters who opted to leave the EU). Until the government takes action to invoke Acticle 50, which will not be within two years, it does not mean the UK have officially left the EU.
If you are travelling to the French Riviera in 2016 and 2017, things will remain mostly unchanged:
– There will be no changes to passports as UK tourists will be free to move between the UK and EU as before the vote. This means you queue in your usual passport line at airports and you will not require visas.
– Your European Health Insurance Card (EHIC) is still valid until the UK officially leaves the EU.
– You will still be covered under EU law for compensation for flight delays and cancellations until the UK officially leaves the EU.
– You can still take cheap alcohol back to the UK from France so grab that bottle of French wine you love now.
The fact remains that the UK tourism market is vital to the economy of multiple EU countries, not just France. Countries outside of the EU such as Switzerland and Norway have been able to reach economic agreements with the EU in an effort to establish cooperative partnerships, and the UK will be aiming to negotiate similar terms as the Brexit debate settles as it will be beneficial to many to keep the tourism status quo.