Andy Cooper, director-general of Federation of Tour Operators and ABTA Head of Development
The economic downturn effectively started at the tail end of the summer 2008 season, and we will not really be able to form an opinion on the impacts of summer 2009 until after the January peak. It is likely that the economic situation will affect different market segments in different ways.
Looking at the UK outbound market, there are three distinct groupings: traditional holidays, short breaks and Visiting Friends and Relatives (VFR). It is likely that the short break and VFR markets will be more immediately impacted by economic difficulties, as many of these breaks can be sacrificed, at least in the short term. It is likely that the impacts will be felt for the whole of 2009.
We believe that most customers will still take their main annual holiday, as this has become a social norm. They may choose to downgrade, by booking a lower standard of accommodation or by staying for shorter periods and they may well book significantly later but they will still travel.
Consumers will be looking for value for money and British consumers will also be impacted by the weakness of Sterling, particularly against the Euro. It could well mean that the January booking period is not as strong as previous years, but customers may well recognise the offers that are available, and take advantage of these to book now.
The skill will therefore be to match the customer with the product that best suits their needs. Customers also need to recognise that as a result of capacity reductions, it is unlikely that there will be peak season bargains available by booking late.
Derek Moore, chairman, Association of Independent Tour Operators
Next year looks like we will see a reduction in capacity by the big two operators, which might, at a time when many other factors would suggest a drop in prices, mean prices go up.
Prices will be up anyway in the eurozone as, realistically, we will be looking at one euro to the pound. Holiday prices will reflect this cost increase if your tour operator has not hedged well in advance. Even if they have, the cost of living once in resort will put many people off. Either way prices of holidays in the eurozone will go up.
Destinations surrounding the eurozone – Turkey to the east, Morocco and Tunisia to the south, for example – will become more popular as their non-euro currencies will make them sound more attractive in terms of costs in resort.
Holiday costs in these destinations, however, are often contracted in euros, so for operators the euro factor will still affect prices anyway – and the rise in demand will probably force prices up in these areas too.
Up, up, and up. Any good news?
Cruising is increasingly popular and some cruise industry bosses are saying that with the increase in product available and the possible drop in oil costs, cruise industry prices will fall.
We may also see lower flight prices in Europe if aviation fuel costs continue to drop and low-cost carriers are forced to cut prices to counter the cost of holidaying in the eurozone.
The rich may exchange longer trips for shorter ones, but they will continue to travel; the damage wil be felt most at the lower end of the market. Those on tight incomes may opt for holidays here in the UK as a way of avoiding foreign exchange problems. So an opportunity for UK domestic operators.
In all 2009 will be a tough year. Some operators are pulling in the drawbridge and keeping tight and lean, others are increasing their marketing budget by 50% to catch consumers who are looking for every inch of value. When several operators have gone down those who survive will be stronger, as the saying goes. Tragedy or opportunity – views vary.
One thing is certain – after the XL debacle, and with the state of both their own finances and those of the business world in mind, consumers will want to be certain that when they book a holiday it will be with an operator who offers 100% financial protection.
Graham Balmforth, chairman, Truly Independent Professional Travel Organisation
In December, weathermen said we had the coldest start to winter for 30 years. The travel industry thought the same.
Many of us will have as much difficulty as meteorologists in making a long-term forecast. But it is certainly going to remain chilly for a while and there may be outbreaks of stormy conditions.
While it’s clearly going to be a late-booking market, there are a number of factors that will influence whether clients ultimately take the plunge and commit.
Job security will be crucial. This month, large swathes of the working population will be saying: “I’m lucky I still have a job, but what are my prospects for the next three months?” If those prospects are reasonable, then we should see a good proportion of them booking – although spending less than they did last year.
On the plus side, we are seeing inflation come down. Petrol is so much cheaper than it was a few months ago and with low interest rates and VAT reduced – although the effect of that is more psychological than practical – people may be encouraged to loosen the purse strings.
And don’t forget the strength of the ‘sod it’ factor. People get so fed up with the doom and gloom, they have to give themselves something to look forward to.
But clients are going to be shopping around for the best value, so there is going to be pressure on independent operators and retailers to offer flexibility and added extras to appeal to a hesitant market.
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