Just last week, on the very day that we published the last issue of the Inbound Report, the news from the UK was positive—despite any after-effects of the June 23, 2016 “Brexit” vote by UK residents to pull out of the European Union (EU)—with the latest data for July showing that outbound departures by British travelers suffering little and other sources indicating that the market was headed for an all-time high in outbound travel.

Now, with the annual World Travel Market, which is the principal event on the global travel industry calendar for marketing and promoting product to the UK, less than a month away (it convenes Nov. 7-9 in London), tour operators will find themselves in a situation in which USA product is about 20 percent more expensive than it was at last year’s World Travel Market.

What Happened? As the tables below indicate, the pound seemed to be holding its own against the U.S. dollar, after declining nearly 10 percent in the first full week following the Brexit vote, By the end of last month, it had declined only two percentage points more.

Then, something happened as the currency exchange markets went from Oct. 6 to Oct. 7. Within minutes of early morning trading, the pound fell six percent in two minutes.

As reported by The Economist, “The best explanation seems to lie in the world of algorithmic trading—the computer programs that automatically generate transactions. Such programs have been blamed for “flash crashes” in the equity markets, particularly the May 2010 event which saw the Dow plunge nearly 1000 points in minutes before recovering. The problem seems to be that programs feed off each other. Each may have a trigger point which requires the program to sell an asset (currency, bond or share) when it falls below a certain point, in order to limit losses. These sales drive the price down, which triggers the selling points of other program and so on. Eventually, the fall is large enough that other elements of the algorithm generate a buy signal. Hence the whole event can be over very quickly.”

There was also speculation that traders were influenced by the Oct. 6 remarks of French President Francois Hollande who, according to the Financial Times, used unusually blunt language in discussing what he believes the UK must face as a consequence of its Brexit vote: “The U.K. has decided to do a Brexit … Well, then we must go all the way through the U.K.’s willingness to leave the EU. We have to have this firmness,” Hollande said, adding, “”There must be a threat, there must be a risk, there must be a price,” Hollande asserted.

Finally, to view an up-to-date chart displaying the value of the pound vs. the dollar over the past year, visit

http://www.xe.com/currencycharts/?from=GBP&to=USD&view=1Y

In last week’s issue of the Inbound Report, we cited what was the consensus opinion among trade journal editorialists and tour and travel industry experts on the impact of the June 23 vote by citizens of Britain to withdraw from the European Union. The only commonly cited and readily available figure that played into the discussion was the value of the British pound sterling, which dropped by 10 percent against the U.S. dollar in the first week following the vote, but has held steady since then.

But now, thanks to Orlando-based Tourico Holidays and its founder and CEO, Uri Argov, we have some numbers on key tour and travel industry metrics and how they changed among UK travel consumers from the week of the Brexit vote to the final full week of August—eight weeks later. According to Argov, Tourico’s data showed or suggested the following:

—While top lines, bookings and room-nights are substantially up the transaction size, ADR and average stay are the same.

—Lead Time and number of passengers per transaction are slightly higher. These show a certain level of optimism in the future.

—The number of searches is much higher. This usually happens after a major event as potential travelers want to see the impact if any.

—Conversion is lower–this is probably the real number to look at for the coming year: i.e., come 2017, we will most likely see a decline in ability to convert interest in travel due to currency impact and personal uncertainty (the average UK consumer doesn’t know why he was voting right or left but now he needs to deal with the outcome while still having no clue).

The negative impact of the June 23, 2016 vote by British citizens to withdraw from the European Union—a vote known popularly as “Brexit”—has not had any real impact on outbound tourism to the USA this year and will not, receptive tour operators and other senior industry players tell the Inbound Report, have any measurable impact for the rest of the year. They point out that, by the time the Brexit vote took place, nearly all 2016 leisure travel to the USA had been booked and paid for. The latter is one of the reasons that the figures for travel to America by British will register a healthy increase.

Indeed, before June 23rd, available data indicate that UK visits to the USA were on track to set a record. In the first quarter of 2016, UK arrivals were up 10 percent, year-on-year, over the same period last year. We won’t really know for sure if Brexit had an impact until Q3 figures are released by the U.S. Department of Commerce’s National Travel and Tourism Office (NTTO), which probably won’t take place until late this year.

 

 

 

It is also unclear that the decline of the British pound sterling against the U.S. dollar immediately following the Brexit vote will have that much of an impact. Despite the fears generated by the immediate, post-Brexit decline in the value of the by 10 percent in the week following Brexit, the exchange rate quickly stabilized at a level of $1.30, more or less, and has remained there.

 

Value of the Pound vs. the U.S. Dollar

Since June 23, 2016 Brexit Vote

In the meantime, tour and travel industry observers and business analysts in the UK seem to believe that the outlook for 2017, while not strong or robust, is sound, with overseas business volume likely to increase in the mid-single digit percentages. We’ll probably have a better idea on this two months from now, when the World Travel Market convenes in London. The Inbound Report will be there.

Experience Kissimmee has signed a three-year partnership with England’s West Ham United Football Club, a Premier League team with a long and storied history in England. The agreement between the team and Kissimmee includes high-profile marketing placement at the team’s new stadium—Olympic Stadium at Queen Elizabeth Olympic Park in Stratford, East London—which is one of the most high-visibility sports venues in the world. Experience Kissimmee, which promotes Osceola County, Fla. and is adjacent to Orlando/Orange County, is now West Ham’s official destination partner.

DT Minich, Experience Kissimmee’s president and CEO, said that the timing of the agreement “couldn’t be better,” citing the team’s move to Olympic Stadium at the beginning of the current 2016-17 season.

The partnership, the first of its kind between a U.S. destination and a Premier League team, he explained, will give Kissimmee a large global audience because of the international draw of the team and its players.

In the U.S., Experience Kissimmee is already the official tourism partner for the Orlando City Soccer Club, which competes in the Eastern Conference of Major League Soccer (MLS).

“This agreement will put the Experience Kissimmee brand in front of sold-out crowds in the heart of one of our most important travel markets,” said Minich, who pointed out that the Experience Kissimmee logo will be on buses used by visiting teams and will be displayed on large LED screens outside the stadium.

“Following this summer’s successful U.S. tour, we are delighted to have forged another significant relationship in the States,” said Karren Brady, West Ham United’s vice chairman. “Particularly one that will benefit our supporters.”

Kissimmee’s plans include also call for bringing West Ham players and their families over to Kissimmee to have their holiday experience featured in popular U.K.-based publications.