Association of Independent Tour Operators members remain mostly bullish that their businesses will survive the economic downturn forecast to last until 2010 at the least.
Speaking at this year’s AITO conference which started in Marrakesh today, BestInvest Consultants chief investment officer Graham Frost had painted a fairly gloomy picture about why the global economy has gone into meltdown and what its effects would be.
He predicted in the best-case scenario, the British economy would begin to see a recovery in late 2010, adding in the meantime the travel trade would suffer.
He said: “A cut down in consumer spending is going to be dramatic. It is a confidence issue since unemployment is rising and your main asset, your house, is falling (in value).
“(In which case) the little kitty you want in case you become redundant is going to need to grow, (as a result) discretionary spends (like holidays) are going to be cut.”
AITO social member Richard Atkinson agreed the economy will have a knock on effect on the trade, predicting cancellations will become more prevalent, short lead times on bookings will become more commonplace while there is also a strong possibility that domestic breaks will grow in popularity.
However, he added: “Quality companies with good quality balance sheets should survive so it is not all doom and gloom.”
Sunvil Holidays managing director Noel Josephides said businesses must fight the temptation to use the downturn as an excuse to cut back on their own marketing spends, adding Sunvil will increase its marketing spend by 50% next year.
He said: “Tourism will continue, demand is still there and we have to be more flexible and fight for every booking. If you don’t and you cut back then you won’t be there when we come out of it.”
Anatolian Sky Holidays managing director Akin Koc recommended building stronger bridges with travel agents as an effective way of beating the economic downturn.
He said the operator’s sales through travel agents had increased by more than 30% this year, leaving the trade to account for nearly two-thirds of the operator’s sales as opposed to 50% this time last year.
He said: “We had our best year this year as travel agents are far more cost-effective for your marketing spend.”
However, Martin Randall Travel managing director Martin Randall predicted operators will suffer heavily over the coming year no matter how they try to beat the downturn.
He said: “What we’re talking about is slashing (sales in) the holiday market by two thirds. By the end of next year 15% of AITO members will no longer be in business, it may even be 20%.”