Navigating Hospitality in the Era of Brexit

After the United Kingdom voted to leave the European Union in late June, the value of the pound decreased to the lowest it has been in years. Since then, studies have shown a shrinking U.K. economy and a decrease in British travelers looking to visit the United States. Much remains uncertain as to what the long-term effects of the Brexit vote will be on both the U.S. and international hospitality industry.

However, Ravneet Bhandari, chief executive officer of LodgIQ, a revenue management company, has some reassuring advice for hoteliers when looking toward the future. “It is more valuable than ever to have a thorough understanding of demand and pricing dynamics; not just at their property, but at an overall market level,” Bhandari says. He advises against taking sudden and drastic measures to safeguard the value of their property. Instead, hotel owners should think strategically and avoid overreacting.

Analytics of traveler demographics, booking activity, and accurate forecasting methodology can all provide an early warning system to hoteliers in the short term, as they anticipate short-term changes and shifts in the market. According to Bhandari, “Relying on technology and machine-learning algorithms can provide significant insight and assistance during times of instability; it’s important to evaluate and invest objectively in a platform that best serves these requirements.”


He cautions hoteliers against the trend of offering deep discounts as a method of attracting more guests during uncertain times. Instead, they should seek out ways to maximize on direct channel bookings, and consider exploring value adds and dynamic packaging. Bhandari also recommends creating or enhancing more personalized offers to their evolving demographics of guests. Hotels should also explore how to leverage relationships with OTAs, instead of pushing away from them. Pushing for listing placement and promotional bundling on these sites can make properties more visible to potential guests.
Based on LodgIQ’s platform insights, the area of the hospitality that will be most affected by the U.K.’s break with the EU is overall corporate business, and meetings and corporate groups. LodgIQ’s data sources and marking forecast algorithms currently estimate a downward trend of somewhere between 3 to 5 percent slowdown in overall corporate business over the next six months.

Not all of Brexit’s effects are predicted to be negatives for the industry. As the pound’s value has decreased, exchange rates have become more attractive, especially to U.S. citizens wishing to travel across the pond. London, in particular, will most likely benefit from having more American and European travelers visit the city. “Overall demand levels should stabilize, although the composition is likely to change, which can present new opportunities to hoteliers,” Bhandari explains. “We also believe that alternative accommodations, like Airbnb and HomeAway, will see increased activity. All of this is likely to result in a reduction in prices and overall ADR.”

Although long-term effects and trends of Brexit remain murky, the hospitality industry is currently holding strong in the after-effects of this major economic shift. Smart hoteliers with a good head on their shoulders will succeed in navigating the market ahead. Analysis of demand analytics and using technology data will assist hotel owners in making smart decisions as the long-term effects of Brexit continue to unfold.