Deals publisher Travelzoo is expecting a more positive start to 2020 than the sector saw this year following last week’s General Election result.
James Clarke, UK general manager, said he expects there to be greater certainty among customers which will release pent up demand caused by the protracted row over Brexit.
Clarke said the immediate reaction in the markets to the election result was positive with the pound strengthening against both the euro and the US dollar.
Referencing GfK industry data that showed the travel sector did not really recover from missing the original March Brexit deadline, Clarke said:
“Knowing that Brexit is going to happen and that he [Boris Johnson] gets to that decision by the thirty first of Jan, I can see January being much better for the market.
“I definitely think we will see a far better performance in Q1 this year [2020] than we did last year.”
Clarke said with unemployment at a 48-year low, earnings rising higher than inflation and financial stability in the UK, demand to spend money on things like holidays has been building up.
“It is going to be bit of a ketchup bottle scenario, in the sense that it has been building up. As long as Boris and the politics don’t come up with anything from left field I think people will start spending.
“And that won’t just be a benefit to the travel industry but to retail, which is linked to the travel industry generally with respect to disposable income, and it’s been tough on the high street.”
The sharply rising value of the pound against the euro and the US dollar in the immediate aftermath of the election is a big positive, Clarke added.
He said once the exchange rate starts hitting $1.40 to $1.45 consumers start seeing the US as good value for shopping trips.
Long-haul is expected to continue to benefit over short-haul, but Clarke said with capacity coming back to the likes of Tunisia and Sharm El-Sheikh other Med destinations will have to cut prices.
“The biggest trend we saw this year was people choosing to do long-haul over short-haul and mid-haul.
“So, I think long-haul will still show good value for money, especially if the pound becomes stronger.
“When you see those £699 and £799 Thailand breaks start appearing people will think that’s great value for money.
“But I think Europe will see a bounce. There will be destinations that definitely see numbers come back.
“If Egypt and Tunisia see capacity return, we’ll see price reductions in Spain, the Canaries and Greece because for the past couple of years they have put prices up because they didn’t have competition.
“If Sharm opens up and people start putting capacity into there that as they did Tunisia I think it will become a buyers’ market rather than an operators market.
“And if hotels are smart enough and bring their prices down then I think people will come back to Spain, and Portugal as well.
“The problem is they have been spoilt the last couple of years because they could charge more. Charging less is always painful.”
Clarke welcomed easyJet’s decision to resume Tunisia flights saying it was a clear sign that the budget carrier believes it can make the destination work commercially.
He said the biggest question for the UK tourism sector revolved around whether inbound travel recovers after a retraction this year despite the low value of the pound.
“VisitBritain has been quite transparent with the numbers. Inbound travel has gone down and it was about how we were viewed in Europe.
“Markets like Poland, Germany France were down but numbers from the US were up,” he said.
Cruise will see more capacity added in 2020, including the launch of Virgin Voyages, after a year that started with a “wobble” but came back and ended flat, said Clarke.
He tipped expedition, river cruise and operators that take people to hard to reach places like the Galapagos and the Arctic and Antarctic to do well this year.
