There’s uncertainty in the air but it’s not all doom and gloom, says Simon Altham, chief portfolio officer at Awaze UK
Anyone outside of our industry would think it’s easy to sell holidays, after all it’s something everyone wants to buy. If only this was the case. We know how hard we have to work to inspire and convince customers to commit to what for many will be their largest purchase of the year. Yet despite this, year after year, UK domestic and overseas holiday businesses deliver outstanding experiences for their customers. But 2019, in my view, has been particularly challenging.
For much of the first part of the year we had Brexit uncertainty. This led to difficulty in the overseas market, as consumers weren’t sure how easy it would be to travel within the EU and operators had no choice but to react with discounting. Then Brexit was postponed, and the bookings began to pick up. On the face of it this should be good news, but as recent announcements from airlines and tour operators highlight, what’s great news for the consumer is much tougher for an industry that works on such tight margins.
But it’s not just Brexit. Global politics, economic uncertainty and a raft of other factors have also played a role. Last week the Resolution Foundation announced findings showing that the idea of Millennial excess was a myth – demonstrating that 18-29 year olds are spending less on travel in real terms than those who were the same age in 2001.
When you combine a general feeling of uncertainty with a reduction in discretionary spend it creates a very challenging environment for domestic and overseas travel companies to operate in. If you were a ‘glass half full person’ you could be excused for feeling a bit depressed about 2019. But as an optimist I prefer to look at this as a short-term challenge, not a long-term issue.
If you look back over the last 10 years there has been a series of events which have created challenges for the sector, yet in our own business we’ve grown massively – doubling the number of customers and Hoseasons holidays we sell during this period – and we aren’t alone. In the domestic sector we’ve seen significant product innovation, a big increase in the overall quality of the offer; a result of substantial investment. In the holiday parks, hotel and cottage sectors we’ve seen a big rise in activity from pension funds and private equity companies as investors see the long-term opportunity in the UK marketplace.
Part of this has come about from many rediscovering UK holidays and the ‘staycation’ phenomenon of 2009 was a gear shift for the sector. Innovation and access to customers has been the real game changer. If you take social media, we all know this causes challenges sometimes; it’s not always positive feedback. But never have we had real-time access to customers in this way. Review scores, through the likes of TripAdvisor and Reevoo, have become a drug on which we all feed. Property owners in our cottages.com portfolio are hooked on their reviews and look at their scores on a weekly basis. They use that feedback to adjust their product to improve customer experiences – and benefit enormously when they get it right.
The cruise sector is a fine example of where innovation is booming. The latest ships are light years ahead of those launched just 10 years ago and the industry has succeeded in attracting brand new customers as well as balancing luxury, affordability and sustainability. Innovation has also revolutionised the UK self-catering space. We’ve now added treehouses, glamping pods, big party houses, eco retreats – all offering something different and catering for new audiences. We are seeing a raft of new hosts coming to us who recognise the long-term investment opportunity in UK holidays and are building boutique shepherd huts in their back gardens and renting them out for two and three nights; and our customers love them.
We’ve ‘grand-designed’ UK holidays over the last five years – pushing what’s possible further to captivate the imagination of today’s traveller. In the next few years we know customers are going to want even more value, even more innovation and even more inspiration – it’s our job to respond to this need, whether you operate at home, Europe or further afield.
The smart and savvy brands will continue to adapt what they sell and how they sell it, creating products that capture today’s and future consumers’ needs. The ones who don’t and hang on to the past will no doubt struggle.
So, it’s not all doom and gloom for the UK travel industry. We are a resilient bunch, who’ve weathered worse and come out on top. The key, as always, is to see 2019 as an opportunity not a threat.
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