What the Fall in the Pound Means for Businesses and Corporate Travel
At the beginning of this month, the pound fell to its lowest value against the dollar in 34 years. Over the summer, there was a lot of talk around the alarming consequences this could have for British holidaymakers, as well as the effects it might have on corporate travellers and their employers.
While the cost of travelling abroad for business will definitely be something to consider for companies in the UK, there are some positives to come out of the low pound. Here Sylvia Brune, Co-Founder of AHOY, a flight booking app for business travellers, discusses the current implications of the pound’s value on corporate travelling.
While it will, of course, have financial impact for travel abroad for holidaymakers and businesses. It is worth bearing in mind that the recent fall is less drastic than the drop between May and July of 2016 when the pound dropped in value by 10.2% compared to the dollar and by 8.6% compared to the euro.
In addition, UK businesses can use the fall to capitalise on opportunities abroad, if they can prepare and think creatively to take advantage of the current weakness in the pound.
Cashing in on increased overseas interest
While a lower pound is frustrating to British holidaymakers making trips abroad, foreign visitors are likely to benefit from the drop in the pound, not just tourists, but business travellers as well.
All things equal, it should result in an economic boost from foreign tourism and a rise in the number of inbound corporate travellers – who can use can use the great position of London as a hub, while benefiting from the lower costs of hospitality for meetings and events.
UK businesses selling products and services internationally, should also be able to enjoy a competitive advantage and increasing demand for their products given the relative drop in their prices.
Even though business may need to take a hit on the price of their travel, they can make up for it by acquiring new customers and clients.
Bottom-line increase from repatriated profits
Businesses already operating profitably abroad are likely to feel positive impact from the pound’s devaluation as well. As the low pound means foreign profits translate into higher value back home.
Adapting to change
There are steps businesses and their employees can take to make the pound stretch further abroad.
Take a look at the company’s travel policy when venturing outside of The UK and implement measures that will make it more cost effective. One such example may be adjusting the cap on the cost of a nightly hotel stay for employees.
It may seem obvious, but it’s always important to do your research on exchange rates. Often, the best way to spend abroad doesn’t actually involve exchanging any currency at all. Business travellers can instead use specialist credit cards such as TransferWise and Revolut to get the same rates abroad as the banks, resulting in savings of up to 2% per transaction.
Global businesses can also cut costs elsewhere through planning. Visiting and researching an area first can pay off, as it helps to get a better understanding of the living costs. Otherwise, you can keep close tabs on your spending abroad through apps as a more short-term solution. For example, Expensify can help track your time, your travel, and your business expenses, including a built-in receipt scanner to help reduce any fiddly paperwork. If there is an increase in the company’s travel costs, it is reported instantly, and you will be able to adjust the budget accordingly.
Brexit and a lower pound
Furthermore, the combination of a lowering pound and Brexit need not spell only doom. For example, it likely will result in The UK being a more attractive travel destination for Europeans. As air travel has become more accessible and economic, and with a lower pound and the UK possibly out of the customs union, travellers from the EU will be able to save money on accommodation, food, and shopping products.
It’s even easier than ever to reclaim VAT when leaving a country, with apps like Zapptax and Wevat making it easy to claim the VAT back on any purchases made in the UK. Without having to stand in line at the airport and fill out forms.
For sure, businesses will need to assess any added costs of foreign exchange rates to the bottom line, and make clever decisions about what works best for them and their staff, to minimise the negative impact. It’s important however, not to focus only on the negative effects of the pound’s latest dip and to remember that this recent dip actually pales in comparison to the fall in the value of the pound back in 2008 and 2016. Following this, corporate travel out of the UK dropped significantly but picked up quickly soon after.
It’s a big world, with plenty of opportunities to be seized. Businesses would be smart to not let the negatives overshadow the advantages and opportunities a weaker domestic currency represents.