Duty-free sector suffering from Brexit blues

There is further evidence that the fall in the value of the British currency since the vote in June by Britons to leave the European Union, with the duty-free sector taking a direct hit.

With the majority of its clientele coming from the United Kingdom, one of the island’s leading watch and jewellery dealers, The Royal Shop, has seen the difference since the Brexit vote.

Owner and Managing Director Hiranand Thani told Barbados TODAY due to the sharp fall in the exchange rate – from BDS$3.20 before the June 23 vote to $2.48 at present – British visitors no longer spent as much as they did in the past.

Owner and Managing Director of The Royal Shop Hiranand Thani says British visitors no longer spend as much as they once did.

Thani’s disclosure was consistent with an announcement last week by outgoing Chief Executive Officer of the Barbados Hotel & Tourism Association Sue Springer that despite a 2.2 per cent rise in stayover tourist arrivals from the United Kingdom (UK) up until the end of November, when compared to the same period last year, visitors from Barbados’ primary market were spending less here.

It was just last month, at the tourism trade show World Travel Market in London that Minister of Tourism Richard Sealy predicted that tourists from the UK would spent less when they visit here for holidays.

“The one obvious impact of Brexit so far has been the currency, as the pound has plummeted. Now, while visitor spend in Barbados is certainly up [overall], we still have to keep an eagle eye on that situation. If the exchange rate is not favourable, visitors may still come but they may adjust their spend to suit, and clearly that is something that we have to monitor,” Sealy said at the time.

In making the announcement last week, Springer did not quantify the loss, and neither did Thani during his interview with Barbados TODAY.

However, the local businessman pointed to a troubling trend of a decline in spending by visitors from other markets, mainly the United States, which recorded an 11.5 per cent increase in visitors to Barbados up until the end of November this year, and Canada, which was flat.

The Barbados-based Caribbean Tourism Organization recently reported a 3.7 per cent drop in arrivals from Canada to the region, attributing the decline to the depreciation of the Canadian dollar with respect to the US dollar.

Thani told Barbados TODAY for the duty-free sector to truly thrive Barbados must manage all aspects of the tourism industry carefully.

At the same time, he said, with duty-free prices throughout the Caribbean approximately the same, customer service and the visitors’ overall experience in a particular destination would determine where they made duty-free purchases.

The business executive recommended another Duty-Free Shopping Day similar to the one held by some Bridgetown business in 2011, during which Barbadians would get the opportunity to buy items at duty-free prices.

“If they can work out the logistics of the foreign exchange element of it, for example allowing Barbadians to use the annual amount of foreign exchange they can travel with and paying in the foreign currency, it could be a welcome move,” he said.

Thani added that until there was a better idea of what was happening with the British and European markets, especially as the different aspects of Brexit worked themselves out in the New Year, it was hard to predict the outlook for 2017.

6 Responses to Duty-free sector suffering from Brexit blues

  1. Peter December 15, 2016 at 8:51 am

    Not unexpected. Lots of wealthy companies and individuals have began to move their financial assets to banks outside of the UK. Reflective of course of a falling exchange rate of the pound. One way to do it is to buy out offshore businesses. This will surely affect their trade. Items bought by outside countries will be paid for in banks outside of the UK. Perhaps Barbados can take advantage of these moves and register more British owned entities. It’s a form of protection. And hey Our Min. of Tourism projects a bumper arrival for the season. Who lie?

    Reply
  2. Michael Potter December 15, 2016 at 10:21 am

    This growing problem is not just due to Britain’s decision to leave the EU. No one has raised the other source of this problem – that
    Barbados is hanging on to a 2:1 fixed exchange rate to the US Dollar. It is this that is making Barbados expensive for tourists and not just British tourists.

    Reply
  3. Thomas December 15, 2016 at 1:48 pm

    Interesting… the shops in London have been heaving in the run up to Christmas especially at the higher end. I guess Brexit is always an easy excuse.

    Reply
  4. J. Payne December 15, 2016 at 8:02 pm

    “Brexit” isn’t even negotiated even in the U.K. yet. Funny how Barbados wants to place that as its next whipping boy. Last time it was British Passenger Duty tax. Now Brexit which hasn’t even started yet.

    Reply
    • Richard Johnston December 18, 2016 at 8:52 am

      The value of the British pound compared to the US dollar has dropped 17% since the vote on June 23. That means every item or service priced in US dollars or a proxy like the Barbados dollar costs Brits 17% more. Shall I explain that further?

      Reply
  5. J. Payne December 15, 2016 at 8:03 pm

    I’m surprised Barbados isn’t blaming the 1955 Hurricane Janet for anything at this time.

    Reply

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