Travel industry’s confidence at rock bottom, says study

Travel has become the least optimistic sector of British industry as companies struggle with the high oil price, the credit crunch and a forecast fall in retail spending.

Research among heads of small and medium-sized companies (SMEs) found 62% in travel and leisure feel “positive” about the outlook for their firm and barely 47% positive about the industry – the lowest rates of any sector.

The survey results suggest travel is hardest hit by the oil price, with 60% of the sector’s respondents saying energy prices are hurting their business – almost double the rate in other industries.

The study was commissioned by private equity firm Bowmark, which notes: “The mood of SMEs has become distinctly gloomy [amid] growing unease about a consumer downturn.”

The Bowmark Entrepreneurs’ Index also suggests the credit crunch is biting. More than one in four firms said the availability and terms of bank debt have worsened in the last six months.

Only publishing and media companies showed a greater fall in confidence than travel, but these remained more optimistic about the outlook.

The rate of job losses in travel may be ahead that of other industries. A third of travel SMEs have hired no staff in the past year – compared with 29% in other sectors – and nine out of 10 expect no significant rise in staff in the next year.

This is despite two-thirds of travel firms saying they suffer a skills shortage – up from 45% six months ago.

Profits in the sector have also been hit. A third of travel firms report profits falling or static in the past 12 months and just 17% expect a significant rise over the next year, the smallest proportion of any sector.

Bowmark managing partner Charles Ind said: “These are entrepreneurial firms that tend to be bullish, especially about their own companies. The results were worse than expected and show how dramatically sentiment has fallen.

“The outlook is uncertain and consumer-facing businesses face the greatest challenge.”

The survey also found 80% of travel and leisure firms believe government regulation is damaging their business, up from 68% six months ago, and the same proportion see tax as a burden – the highest of any sector.

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