It is true that the referendum held on 23rd June was not binding. However, it is complicated to ignore the result politically. More than 18 million people supported Brexit, 51.9% of voters and in terms of participation, 71.8% the highest participation rate since the 1992 elections. With these figures and a campaign which some, those who voted to stay, accuse as lacking information, it was a complete “shock”. Trusting European citizens saw in dismay how a country was leaving. The moment feared by European authorities more than by general citizenship, has arrived. Since then, there are all kinds of opinions explaining the real consequences of Brexit. For the moment, the Prime Minister Theresa May, has promised to apply for article 50 officially next year. This will mean tha
In Golf Circus, as our readers can imagine, we are especially interested in how this will affect the tourism industry, so we have asked those who know. Glencor Golf, a company from The United Kingdom, a specialized Golf tour operator and Jacobo Cestino, General Manager of La Zagaleta Group in Spain, state their views.
The Impact Of Brexit On Golf Tour Operators
The uncertainty that gripped the nation following the UK’s decision to exit the European Union should not be underestimated. Financial markets, local businesses and manufacturing giants braced themselves for a sizeable impact as this historic outcome was confirmed and the UK outlined the required steps to become independent once again.
Through all of this, apprehensive golf enthusiasts and concerned tour operators expressed trepidation over the future of the travel industry and the effect it would have on those hoping to head abroad and tee off in the summer.
Nearly three months on – what has actually changed in the world of golf tour operators?
The volatility of the pound initially damaged customer confidence as the number of bookings within the industry plummeted and fewer British golf travellers experiencing the magnificent golfing splendour across the continent.
These short-term effects were analysed by Glencor Golf Holidays’ Director Glen Renton who highlighted that “shortly before and after the Brexit referendum we saw a drop in the number of bookings despite the number of enquiries from consumers still being strong.”
Amidst the ambiguity, many individuals and families reassessed their finances and resisted the temptation to expend their income on non-essential spending, therefore ruling out any expense on such indulgence as leisure travel.
With the majority of golf holiday sales booked in groups, the chief organiser of each troupe simply extended the lead time from enquiry to putting pen to paper, thus allowing them to oversee the current exchange rate and golf-travel landscape.
However, Renton has confirmed that these past few months had seen this initial probing turn into bookings, signifying that customer confidence is gradually beginning to return to a degree of normality.
Away from the monetary insecurity, is there potential for a divide to spread across the rest of Europe? Despite the united front they exhibit contesting the Ryder Cup; it is difficult to know the perception that golfers in France, Germany and other continental European countries have on the current political climate in Great Britain.
The UK is blessed with a plethora of magnificent golf courses such as St Andrews (“The Home Of Golf”) or the spectacular Royal Birkdale nestled amid Southport’s spectacular sand dunes. The subsequent hit on the economy was of great benefit to the UK’s own tourism sector as a weaker pound made Britain a cheaper destination for overseas visitors.
Whilst faith and calmness amongst UK consumers continues to elevate, many questions still remain. Will a border checkpoint be implemented between the popular daily-double hotspots of Northern Ireland and the Republic of Ireland? Will British golf tourists be forced to spend more time in other European airports clearing customs?
One thing is for sure – the industry is not as damaged as many predicted.
Residential and Golf Tourism facing the effects of Brexit
As for the majority of business owners in the UK, the fact that the British have decided to leave the European Union by means of a referendum is a constant source of increasing worry, also for the traditional Spanish residential and tourism sector.
Whereas Spain, regarding the negative effect of Brexit is in general terms under average within the countries of the Union; it is true that due to the distinctive features in the issue market of golfers on one hand and that related to residential/tourism property on the other, the negative effect can be enormous.
The United Kingdom has been the main issue market of foreign house buyers in Spain historically. In this sense, figures provided by United Nations and the British Government show that approximately eight hundred thousand British people live in Spain. Half of them live permanently (expats) and the same amount do occasionally, that is, in short periods of time or on holiday; in one word, in regular periods that allow them to have a property in Spain. Likewise, from a golf tourist point of view, the supremacy of the British market is undeniable. In the last three years The UK has led again the ranking of foreign nationality house buyers, at least in Andalucía, following a historical tendency. Therefore, the connection between the recovery of the property market, especially upmarket houses, and the British buyer is a well-proven fact.
The recovery of the residential housing market in Spain has consolidated in figures and prices in the last year, although in a slower pace. In that sense, the residential product on the top range of the curve, luxury houses, have resisted in good shape over the recession years in contrast to other kind of houses. It is true that external factors have helped, such as tax and mortgage law reforms carried out in competitor countries. As a report by Christies Real Estate pointed out a few years ago “the market of luxury houses is not affected by money flows or political changes, as there is less change that these worries determine the decision of UHNW (Ultra high-net-worth Individual) around the world to buy a house-trophy”.
Today, there are more millionaires that before the 2008 global crisis and they have increased more than 55% in number since 2000”. In the document published by the IMF, “Managing Real Estate Booms and Bust” in August 2012, the Organization pronounced on the relative importance of the Real Estate sector in world economy in contrast to other forms of investment and saving, stating “Real Estate is an important, if not the most important, storage of wealth in the economy. Additionally, the majority of households tend to hold wealth in their homes rather than in equities”.
As shown by the latest data from the tourism sector, traditional markets (British, German and Scandinavian) are going to lead demand. It seems obvious to deduce that the “Brexit” will have detrimental consequences for a sector which still finds difficulty in domestic policies to be competitive. In this sense, some obstacles found by possible middle-top of the range house buyers when they invest in Spain, such as legal insecurity caused by a deficient law on money laundering, difficulties in official procedures to get the NIE document, residence permits, and other local procedures related to Urban Planning and Building Works as well as new tax duties for foreign residents could be considered minor in comparison to the new scenario that we face when the United Kingdom leaves the EU.
Un exaggerated depreciation of the Pound against the Euro as we have seen these days, as well as the need of bilateral agreements concerning certain benefits and existing social services, mainly health services; In my opinion, will force many of these “expats” to change their place of residence or even go back to the United Kingdom. This would have a multiplied effect regarding the increase of supply and a dividing effect regarding the prices on the secondary market. The less influence of residents on the small and medium size local businesses is a fact that cannot be omitted; even if they stay in the country but with a depreciated currency.
Concerning the traditional tourist market and those who come to play golf in Spain in particular, I believe that only those business owners who can improve their competitiveness in costs could tackle the necessary price reduction with certain guarantees. This is caused by the loss of British purchasing power and the excessive dependence on this market.
Finally, I think I need to mention the consequences of “Brexit” for Gibraltar as it influences Sotogrande, which is a strategic area for residential, family, sport and upmarket tourism.
The limitation or even the no concession of residence permits as well as restrictions on working and professional activities of Gibraltarian citizens in Spain will have a negative effect on all those people who pretend to live in Gibraltar but live and/or work in the Gibraltar Field or in luxurious complexes in Sotogrande.
In light of this new situation, the Spanish Government will take the initiative. However, more than could be done by governments to reduce the obstacles, it will be up to business owners to plan the relationship between their “resort” and the present and future scenario from a strategic point of view.
I think there are essential actions to be taken in the next decade. Investing in exploring and consolidating other markets, especially Germany and Scandinavian countries, revising the structure of costs thoroughly, analyzing quality levels and customer service, programming an improvement plan and modernizing golf courses design to make them more competitive over competitors destinations and finally, improving communication and market penetration policies and access to the final customer of XXI century.
For now and for two years, British rulers still have the last word about the way to disconnect from us.
*Source: Global Council
Jacobo Cestino (General Manager of La Zagaleta Group in Spain).