The Implications of Brexit on the Irish Hospitality and Tourism Industry

Introduction: background, purpose and objectivesThis paper will discuss how the phenomena of volatility, exposure and resilience have shaped the hospitality and tourism industry and how the industry in turn has adjusted to... [ view full abstract ]

Introduction: background, purpose and objectives

This paper will discuss how the phenomena of volatility, exposure and resilience have shaped the hospitality and tourism industry and how the industry in turn has adjusted to cope with these various factors thrust upon it. The impact of Brexit on the Irish hospitality industry will be used as a case study in this respect. The key output of the study will be to gain new insights into good practice in preparing for an anticipated economic shock of the potential magnitude of Brexit. The model will have practical implications in the future should the hospitality industry in Ireland or another nation face an economic shock from an exogenous force such as Brexit.

The 21^st century has witnessed a plethora of ‘shocks’ and crises that have forced the hospitality and tourism profession to adapt and respond or else face uncertainty and potential ruin. The paper uses examples from a range of existing literature (Ritchie, 2008; Tyrrell and Johnston, 2007; Faulkner, 2000) to argue that these components are interlinked and essential in order to understand the external forces on tourism. The tourism industry by its nature is an unpredictable entity and, as such, is highly exposed to both exogenous and endogenous threats. However, when endangered, tourism has shown itself to be extremely resilient to shocks (Sabatino, 2015).

Objectives:

• To investigate the hospitality industry’s understanding of the threats and opportunities posed by an economic shock.
• To analyse the hospitality industry’s preparation for an anticipated economic shock, in this instance Brexit.

These objectives were achieved by interviewing senior managers in four star hotels as well as leaders from industry and policy bodies about their knowledge of Brexit and how, or if, they inform themselves of the issues. The rationale is to reveal what practical steps the industry were taking to mitigate potential negative impacts and to capitalise on potential positive benefits.

Research Purpose/Gap

When Britain took the official steps to leave the European Union (EU) on 29^th March 2017 it demonstrated for the first time in history, that a sovereign state had opted to leave a political union and trading bloc of this enormity. Combine this with the fact that Britain is by far and away Ireland’s biggest generator of overseas tourists; 3.6 million Britons visited Ireland in 2016 representing 45% of Ireland’s total overseas visitors (Failte Ireland, 2016). This decision to leave the EU had an immediate impression on the Irish tourism industry with almost 300,000 fewer British tourists visiting Ireland than in the previous year, largely attributed to the weaker sterling currency.

The uniqueness of the analysis, therefore, is prodigious. There is currently a gap in the area exploring the subject simply because of its contemporary nature. Although there has been considerable prose relating to crisis management, preparedness, prevention and planning little has been addressed to anticipated economic shocks (de Sausmarez, 2007; Paraskevas, 2013; Hall, 2010; Laws and Prideaux, 2008). There are currently no studies in the Irish context. Researching the topic, as it evolves is challenging with many uncertainties surrounding the subject, but this hardly detracts from the worthiness of the study. Indeed, given that the United Kingdom (UK) is Ireland’s largest trading partner and its closest neighbouring state, there will be a range of legislative, cultural and mobility impacts.

The concepts of exposure, resilience and volatility have been borrowed from climate science, where they have been used to great effect to understand the impact of an external force (climate) on a societal function (e.g. farming, housing, coastal tourism, migration etc). These concepts are useful to the study of tourism as it is an industry which repeatedly has to negotiate global forces beyond its control.

Ireland has shown itself to be repeatedly resilient to outside forces, especially with regards to tourism as this contributes hugely to the Irish economy; nevertheless we do not know to what extent managers in the industry influence its ability to respond. By contextualising the research through the themes of volatility and vulnerability caused by exogenous economic shocks within the hospitality industry it helps us to understand more completely what measures need to be put in place in order to limit the impact on the country, thereby reducing vulnerability.

Methodology

This study is ongoing and is inductive, exploratory and qualitative in nature. A case study strategy, underpinned by a pragmatism philosophy is adopted for the research in order to facilitate the collection of data from a small sample and to acknowledge the complex and rich nature of the phenomena of an anticipated shock. Because this is a contemporary issue eclipsing media and hospitality discourse, a pragmatic approach focussed on practical solutions and outcomes for the problems was identified. Given the fluidity of Brexit, the politics involved and the uncertainty surrounding what may or may not happen, the project’s focus is on how the Irish hospitality industry is informing itself, preparing itself and what could be learned from the issues which might be applicable to similar future economic shocks.

The research involved close collaboration with the industry bodies, who expressed interest in assisting. The initial stages of the research involved a literature review of how major shocks can impact on the hospitality industry from an international perspective. These ranged from the impact of the late 2000s global recession, the Severe Acute Respiratory Syndrome (SARS) epidemic, Sterling/Euro Currency volatility as well as the foot and mouth epidemic and the Eurozone crisis in Greece and Portugal.

The primary research used semi structured interviews to gather data from senior hospitality managers nationally. Two target groups were nominated; Firstly, a purposive sample of senior managers, drawn from Ireland’s four star hotels nationwide (Source: CSO, 2014) was selectively chosen. Supplementary to this were other leaders in four star resorts and attractions in order to supplement the data. A second purposive sample comprised of policy makers and industry bodies. It was felt important to be selective and broad throughout Ireland. A hotel at Dublin Airport would have different concerns to that of one in Donegal or Clare. An essential part of the research was to draw on a range of perspectives rather than clusters of actors with corresponding beliefs.

Study Limitations

• Brexit is a fluid situation and, as such, is constantly evolving. What is happening now may alter as the study progresses. The primary aim is designed to focus on hospitality managers’ preparations for an anticipated shock. It is more about the processes involved than the end result; however, one may befit the other.
• The study is product focussed only. It will not gather primary consumer demand data. While this would be an added boon to the study, it was not feasible due to the time frame or resources required. In this sense the paper is exploratory and does not intend to offer final or definitive solutions but rather to give us a better understanding of the issue.
• Access to some of the desired bodies was limited due to rejections or other reasons. Numbers of interview participants were achieved although some cold calling arose. This was not a major issue however it meant not all desired candidates were approached.

Conclusion

The research paper is extremely important for the understanding of anticipated economic shocks and especially in the context of Brexit as it is a new unknown. By utilising the concepts of resilience, volatility and exposure, and placing them within the milieu of this phenomenon it helps to give a greater appreciation of decision making for industry bodies within the tourism and hospitality sector. The core element in this study is about future processes, influenced by what has happened and what is currently happening. By analysing the effects of Brexit and realising the potentials as well as the pitfalls through a similar scenario this is ultimately the primary aim of the research.

References

Central Statistics Office (CSO), 2016. Visitors to Ireland and Northern Ireland 2014: A Statistical Profile of Tourism, Cork; Belfast: CSO.

de Sausmarez, N., 2007. Crisis Management, Tourism and Sustainability: The Role of Indicators. Journal of Sustainable Tourism, 15(6), pp. 700-714.

Fáilte Ireland, 2016. Tourism Barometer , Ulster: Millward Brown.

Faulkner, B., 2000. Towards a Framework for Tourism Disaster Management. Tourism Management, Issue 22, pp. 135-147.

Hall, C. M., 2010. Crisis Events in Tourism: Subjects of Crisis in Tourism. Current Issues in Tourism, 13(5), pp. 401-417.

Laws, E. & Prideaux, B., 2005. Crisis Management: A Suggested Typology. Journal of Travel and Tourism Marketing, 19(2), pp. 1-8.

Ritchie, B. W., 2008. Tourism Disaster Planning and Management: From Response and Recovery to Reduction and Readiness. Current Issues in Tourism , 11(4), pp. 315-348.

Paraskevas, A., Altinay, L., McLean, J. & Cooper, C., 2013. Crisis Knowledge in Tourism : Types, Flows and Governance. Annals Of Tourism Research, Issue 41, pp. 130-152.

Sabatino, M., 2015. Economic Crisis and Resilience: Resilient Capacity and Competitiveness of the Enterprises. Journal of Business Research, Issue 69, pp. 1924-1927.

Tyrrell, T. J. & Johnston, R. J., 2008. Tourism Sustainability, Resiliency and Dynamics: Towards a More Comprehensive Perspective. Tourism and Hospitality Research, 8(1), pp. 14-24.