UK discretionary spending may be down, but holiday demand remains high. Ian Taylor reports
The UK outbound holiday market continues to defy all forecasts of a downturn, with bookings for all three seasons currently on sale showing substantial year-on-year growth.
Industry analyst GfK reports bookings for this summer in July up 7% on last year, with season-todate bookings up 8% and revenue to date up 13% – an impressive result given the pressures on household spending. UK retail sales figures for July showed consumers spent 4.1% more year on year in the month, but sales in all sectors bar food and household goods declined.
Most economists forecast declines in spending to come. However, GfK reported “increased demand through out the seasoneven in the lates market”.
In its latest monthly travelmonitor, GfK notes sales for summer 2018 have also started strongly, with July bookings up 3% year on year and seasonto- date bookings up 10% at this early stage. GfK concludes: “It is a pleasing start given the challenging economic, political and consumer backdrop.”
Bookings for this winter are also well up on a year ago, with bookings in July up 9% year on year following an 8% surge in June and now 10% up for the season to date. Season-to-date revenue for winter 2017-18 is up 14%.
Office for National Statistics data confirms the still-growing market. Outbound holiday departures rose 3% year on year in the three months to June and were 4% up in the year to date.
Yet the positive figures fly in the face of most economic indicators, including consumer confidence and spending figures.
GfK’s consumer confidence index for June was at -10%, five points down on May and its lowest since July 2016 immediately following the Brexit referendum. It has not been lower since 2013.
Inflation eased a little in July with the consumer price index falling to 2.6% from 2.9% in June. However, that compares to average inflation throughout last year of 0.7%. At the same time, average wage increases continue to lag price rises as they have since January – falling a further 0.5 percentage point behind last month.
Business services firm Deloitte noted the pressure on household income in its latest Consumer Tracker, noting: “Consumer confidence has fallen for a third quarter in a row.” It warned: “A squeeze on living standards is definitely starting to dent consumer’s spirits.” Yet GfK confirmed: “There is still decent demand – holidays are high on consumers’ priority lists.”
It reported family bookings account for 71% of this summer’s growth, and sevennight durations made up more than half (56%) in July. Spain’s Balearic Islands showed the highest growth in July, despite the strength of demand to Spain throughout the booking period. However, Turkey was number two for growth last month.
GfK also reported strong demand for Turkey next summer with “passenger numbers triple where they were last season”. Echoing Travel Weekly’s report of a return to Turkey (August 10), GfK forecast: “Turkey will be one of the top growth destinations for the [summer 2018] season.”
Inbound holiday arrivals to Britain rose 20% year on year in the three months to June.