What Might Be The Long-Term Impacts Of Brexit On The Online Travel Agencies?
A while back we explored the possible short-term implications of Brexit on the online travel companies. We observed that other than the stock market’s knee jerk reactions and the possibility of the pound losing value, travel might not be majorly impacted in the short run. Let us now explore the long-term implication of Brexit (or Britain’s decision to leave the European Union) on the online travel companies.
The longer term impact on the online travel agency might relate to the market conditions for the hotels, airlines, and the tourism sector.
- The hospitality sector in the UK might be adversely impacted as around 70% of all hospitality workers in London are migrant workers, according to the Association of British Holidaymakers. In the event that the UK breaks off from the EU, these workers would require more compensation in order to work in the UK. This, in turn, could raise the hotel room prices in the UK.
- The airlines in the UK witnessed a dramatic decline in their stock prices following the Brexit announcement. The Open Skies agreement between the US and the EU facilitates low cost carriers such as Ryanair and EasyJet to operate within the EU. If the UK does leave the EU this might no longer be an advantage that these carriers will enjoy. Easyjet’s stock has declined by ~30% since the Brexit announcement and Ryanair’s stock has declined by ~15%.
- Also, due to a declining value of British pounds, though the travel to the UK might be cheaper for travelers from the EU or US, however, the travelers from the UK might find it more expensive to travel to these geographies.
Relevant Articles
Have more questions on Priceline and Expedia? See the links below.
- What Is Priceline’s Fundamental Value On The Basis Of Its Forecasted 2015 Results?
- How Has Priceline’s Revenue And EBITDA Composition Changed Over 2012-2016E?
- What Is Priceline’s Revenue And EBITDA Breakdown?
- Top 3 U.S. OTAs: A Comparison Of Operating Margins
- How Has Priceline’s Stock Performed In The Last Five Years?
- What Drove Priceline’s Revenue And EBITDA Growth Over The Last Five Years?
- Where Can Priceline’s Growth Come From In The Next 5 Years?
- What Is Priceline’s Fundamental Value Based On 2016 Estimated Numbers?
- What Is Expedia’s Fundamental Value On The Basis Of Its Forecasted 2015 Results?
- Top 3 U.S. OTAs: A Comparison Of Operating Margins
- Expedia Year 2015 Review
- Why Might TripAdvisor Be An Attractive Acquisition Target For Priceline?
- What Has Been The Immediate Impact Of The Brexit Decision On The Online Travel Companies?
Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Priceline
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