Debating Brexit's impact on cross-border travel
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E-mail CNTV, June 30, 2016
Will the Brexit shake up the global tourism industry and the UK's higher education sector? Stocks' investors think so, do consumers think the same?
Tourism related stocks dived after Brexit. Hotels, airlines, you name it. But consumers around the world remained relatively calm. That prompted a debate on the the long-term prospects for the global tourism industry.
Many analysts say a plunge in the pound and other market woes are premature reactions to Brexit because the leaving process will likely take the next two years or even longer.
The analysts also doubt that there will be a huge negative impact on consumer sentiment, meaning there will be little change in travel trends to Europe or the UK.
The analysts' biggest uncertainties are over the long-term economic performances of mainland Europe and the UK.
The major worries for hotels are higher labor costs for European employees that will be transferred to consumers. Meanwhile, London is likely to lose its position as a European transit hub.
Meanwhile, don't underestimate a cheaper pound's short-term attractiveness to Chinese consumers.
"80 percent of our UK tours are booked, mostly two-week long tours only in the UK. We have one UK-EU packaged tour, which has never been popular actually. That's why we don't think Brexit would bring us any impact," said Lu Xi, manager of U-Tour.
Analysts say that in the long-run, Chinese consumers may find it harder to shop in both the EU and the UK during one trip due to import controls. That could be a recipe for lower tourist visits and reduced spending from China to both the UK and the EU.
The analysts also noted that higher education in the UK could take a beating too because Britain might no longer be the center of the European market. That would make top business schools and programs in the UK more difficult to recruit students from the EU, the US and Asia.
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