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What impact will Brexit have on the UK cruise industry and luxury brands?

After the exit voting the UK economy, cruise industry and luxury brands suffer.
by Earl of Cruise 
Brexit - a reflection
If you were looking for a metaphor for the impact of Brexit, a tornado or an earthquake would seem most apt. In any case the destruction is severe.
The consumer confidence sank since after the awakening the morning after to a historic low. The charts show it has its biggest fall in 21 years - post-referendum. The pound is propelled into a rapid downward spiral and now plumbing depths not seen since the mid 1980s. And foreign money ebbs down, but is desperately needed to cover the immense state depts.
The business reaction? Hatches battened down - by freezing recruitment and investment decisions, to ride out the storm. British companies look for future investments on the continent. And the foreign companies hold back any investment in the United Kingdom. Except a very few companies which are from the train industry, as there is a significant need in investments - tracks, coaches and locomotives.

Will this immediate impact, as destructive it is, stay?
Will there be another Great Depression as that from the mid 1870s or the following of 1929?
Will it be short-lived?
And what about Scotland?
What will happen in Northern Ireland, when the border to Eirie is closed again?
The `leave´ campaigners had no ideas what will be after, when their lies fueled campaign will result in the happend `exit´? Especially Farage, who is now luxuriating on his EU parliament income as privateer. The `leave´ campaign had been further fueled by the idiotic `fear causing´ arguments of the `stay´ campaigners. And the new Prime Minister and her gouvernment has no clue how to handle this unheard of `exit´ situation.
privateer Farage - I want my life back
© ETF News and MIRROR
populistic demons
A frightening sight, Farage shared a stage with Donald Trump last month - © Gerald Herbert AP
- Pound Sterling examples 
Luxury marketers need to look beyond this short, sharp, disaster that has beset the United Kingdom's economy. And in that regard, the impact of Brexit is more nuanced, with pros and cons depending on the nature of the luxury business.
Take the weakened state of Sterling: for some businesses it is good news, for others, bad. The luxury travel sector is a prime example. Those luxury hotels and travel businesses relying on well-heeled British holidaymakers traveling overseas would be wise to tighten their belts.
Hedged currency will eventually run out and holiday costs will rise sharply, particularly to those destinations priced in US Dollars which is most of the world outside the European Union and the "hated" EURO. The likelihood is: fewer will travel, and those who do will have less to spend.
Luxury hotel operators in the United Kingdom, however, have no doubt been exchanging high-fives and fist bumps. The weak pound makes Britain an attractive destination for overseas visitors who will have plenty more cash in their pockets.
Domestic tourism will also see a surge as would-be jetsetters survey the reality of the exchange rate boards and decide a "staycation" is the prudent option this year. But it will see too a downward spiral in prices, and in the end lesser income for the operators.
Queen Victoria - Queen Mary 2 - Queen Elizabeth
QUEEN VICTORIA, QUEEN MARY 2 and QUEEN ELIZABETH - Photo courtesy of Cunard Line
- The Cruise Industry
As Britain has voted `leave´ the European Union, cruise travel implications will begin to emerge. Not just for British brands based like CUNARD Line and P&O CRUISES, but larger companies like CARNIVAL Corp., NORWEGIAN CRUISE LINE Holdings Limited and ROYAL CARIBBEAN CRUISES Limited and others.
Even before the Brexit decision was finalized, the initiative was causing not only cruise industry stock prices to weaken among investor concern. Performance numbers have also been affected by reduced European cruise demand in general, according to WELLS FARGO Securities.
Corporately, CARNIVAL, NORWEGIAN and ROYAL CARIBBEAN have all suffered!
The thinking was that United Kingdom remaining in the EU would improve the stocks. Now that is less likely to happen as WELLS FARGO analyst Tim Conder was quoted,
"Economically, a Brexit vote could in the short-term also negatively impact eurozone growth and, to a lesser degree, global growth."
The overall assessment, from a travel perspective, is that the potential downside of leaving the EU cannot be matched by the potential upside.”
Fred. Olsen Cruise Lines does not have a comment regarding Brexit specifically but stresses that the company follows exchange rates, saying,
"The only point that we make to our guests, as we did 4 to 5 years ago, is that we have Sterling prices on board, so when the exchange rate is against us, it does not have the same impact as taking a holiday in Spain, for example, or those cruise lines that price in Dollars on board."
What policy changes will result from Brexit that affect cruise travel more broadly are still to be seen. They could have a massive impact on frequent international sailings based in Southampton, and other ports, among voyages to and from British homeports and destinations, as well as relationships with European source markets.
When asked for comment, Cruise Lines International Association (CLIA) provided the following statement: 
"As with other sectors, the cruise industry relies on stable business frameworks and regulatory certainty to operate efficiently. This is why CLIA hopes that Europe's stability and business environment will not be unduly affected. CLIA will continue to work with authorities to promote stability and ensure that cruising continues to thrive and carries on making a vital contribution to Europe's economic growth." 
P&O CRUISES has announced, that it plans to build a 5,200 lower bed passenger vessel for cruises out of British ports. It will be delivered in 2020, and is then the biggest passenger ship ever built for the UK market.
The LNG (Liquified Natural Gas) powered ship will be about 185,000 GT, and is based on the design for the four new cruise vessels for CARNIVAL CORP. subsidiaries AIDA CRUISES and COSTA CRUISES. These designs have a max capacity of  8,500 passengers aboard. And it is the same with the yet unnamed P&O newbuild.
high densitiy P&O pando new cruise vessel
P&O´s new cruise vessel - Photo courtesy of P&O CRUISES
The new CARNIVAL design is 45,000 GT smaller than ROYAL CARIBBEAN´s OASIS Class vessels with less than the CARNIVAL´s total capacity. 
The new vessel comes handy and covers the trend since BREXIT - paying less, as there is or will be less to spend. And the number of crew is similar to the 3,647 passenger capaicity of BRITANNIA.
See the cruise review about the 141,000 GT BRITANNIA here.
High density gets a new thrill ...
... and "class" and "style" may vanish, when ORIANA, as rumoured, will leave the fleet as the then smallest and oldest vessel of CARNIVAL´s possesion P&O ...
For the luxury brand retailers, fashion, etc., the outlook depends on which markets contribute most to their sales, overseas or domestic. Those with big international profiles and prominent London shops may well benefit, especially the likes of Burberry and Mulberry. The hordes of exchange-rate-enriched tourists that the weak pound brings into Britain will be a welcome boost to their sales. 
But what about the lesser sales to the British customers, which tighten or have to tighten their belts? 
And this pull effect is no theory: it is already manifesting in practice. The demand for holidays from China in Britain has skyrocketed and Chinese consumers are not only the biggest buyers of high-end goods, they prefer to make those purchases overseas, too.
But U.K. retailers who rely on the domestic demand will be punished on two fronts: weak demand from U.K. consumers further exacerbated by price inflation caused by purchasing goods from abroad with a weakened pound.
And then we have the overnight shortage of new employments. 
- Inflation fears 
It is predicted that inflation will return not only to the fashion industry which is much produced and imported from Europe and Asia, with a dampening effect on demand or margin, depending on whether the companies affected pass that inflation on to their customers in higher prices or not. However, for those that produce in the United Kingdom and rely primarily on exports, such as the Scottish whisky industry, reels of joy are in order as they will avoid the escalation of costs and benefit from a reduction in relative price compared to overseas manufactured rivals.
Looking beyond exchange rates, the medium-term effect of Brexit on domestic demand is less clear cut, although the likely impact of all this uncertainty is at least a postponement of big-ticket purchases which will, at best, lead to a slowdown in growth and, at worst, to a recession, or perhaps depression.
But even recession opens up opportunities for luxury brands shrewd enough to recognize them.
Big-ticket items may well be postponed, but the need for consumers to reward themselves with occasional luxury purchases does not go away - it is just that these rewards become more modest in scale. The last recession saw a growth in sales of items such as luxury chocolates - an affordable pleasure - and the recession-proof nature of the luxury lingerie industry no doubt reflects the fact that this sort of luxury treat does not need to break the bank. 
- No dice? 
The cutback in media spend by those tightening their belts can also lead to opportunities to make the same marketing budget deliver a larger share of voice.
Media deflation is an opportunity for all brands, not just those for whom the Brexitdice have fallen favorably. It has been proven that those that increase their relative share of voice in tougher times are the biggest beneficiaries when consumer confidence returns, although marketers´ success in selling this may depend on how enlightened their FD is.
Beyond any medium term slowdown or shallow recession, the impact of Brexit will depend most on the success of the negotiations with the European partners. 
New Prime Minister Theresa May has made it clear that there will be no free movement of labor in any deal with the EU. When this free movement was negotiated, it was Britain which wanted in first place the unrestricted free movement - forgotten and lied about by the `leave´ campaigners. 
German Chancellor Angela Merkel has made it clear, there will be no access to the single market without free movement.
Even non-EU members such as Switzerland, Iceland and Norway have to abide by the free movement principle to retain access to the single market! 
It is likely that Britain will not be able to have its cake and eat it. So there will be penalties for British companies exporting their goods to the EU, although what they are and on which sectors they will fall is impossible to tell.
Needless to say, United Kingdom luxury brands that rely heavily on EU consumers will be wise to explore other potential export markets, including Asia and the US market, over the coming years. But unfortunately they can´t call for the British Navy to open up markets ...
The immediate inmpact of Brexit may well have been a tornado, tearing through, or an earthquake, shaking terribly, the economic, social and political fabric of the British society. The sky is grey and threatening. But for those who are brave and visionairy, those who throw open the hatches, and look up into the sky ... there are tiny gaps in the clouds. They may close, but can tear open ...


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