I have had several casual conversations recently with a few of my clients on the possibility of the Brexit and the impact it could have on their businesses. There is no surprise that many of them fear that leaving the European Union (EU) could negatively influence their trade and the entire hospitality sector as a whole. With Britain expected to place a vote on 23 June 2016, I decided that now would be a good time to discuss the implications for the sector if we were to face a Brexit.
Undeniably, employment is one of the most discussed areas for the sector. A major worry is the impact a Brexit could have on the UK’s diverse workers. With over 60% of non-British people working in the industry originating from countries in the EU, placing an ‘out’ vote could very much change the dynamics of their workforce. Businesses with chefs are said to be amongst one of the worst to suffer and with this, directors may need to budget for working permits/visas in order to keep some of their most valued staff in their business. Though this is a concern, a Brexit would however increase job opportunities and prospects, and reduce the unemployment rates amongst British citizens.
Travel and Tourism
Tourism contributes massively towards revenue, especially for hospitality and retail businesses based in large, hectic cities. Where this is the case, restaurants and bars may be some of the most affected industries and may see a significant fall in sales. Contrary to this, there is the possibility that there will be a surge in domestic travel, which could lead to an increase in income for local business.
Business and Financials
When weighing up the benefits of a Brexit, the burden of having to comply with EU legislation is definitely a plus. Although there are disadvantages, businesses who trade abroad will benefit from less administration as they will only have to abide by UK legislation. However, this becomes more complicated where your business has trade in parts of Europe. When looking at VAT and Tax, the UK may benefit from more tax flexibility as the EU determines the VAT paid. Furthermore, the daily spend of £55m on memberships fees could go towards the improvement of sectors such as hospitality.
One of the greatest scares for hospitality companies are the contracts they have in place with suppliers. With the single market introduced to help removing barriers and red tape associated with overseas trading, a Brexit could harm businesses that trade in the EU and reduce negotiation powers. What is more, the UK will be forced to re-establish new relationships with the EU, which may weaken the current supplier relationships built, leaving commercial contracts massively at stake. For hospitality businesses, other EU countries may stop sourcing products, such as beer, from the UK as it will be a lot more expensive, time consuming and require new EU-UK relationships to be formed.
There is still time until the Brexit which is why I strongly advice that all hospitality businesses with EU alliances consider measures in case the UK leave the EU. If you are interested in discussing your personal case or would like advice on the steps you can take, please do contact me – Adam Moody – at email@example.com.