The UK economy is unlikely to see a V-shape recovery and the travel industry rebound could be “elongated”, a senior Deloitte figure has warned.
Alistair Pritchard, Deloitte lead partner for transportation, forecast the economy would not return to 2019’s level by the end of next year and warned rising unemployment could see the recovery in travel “take longer”.
But Pritchard described the outbound sector’s restart as “pretty positive” and insisted underlying demand remains strong.
Speaking on a Travel Weekly Roadmap to Recovery webcast, Pritchard said: “It’s mainly short-haul operations that have restarted. Other parts of travel are not really up and running, but the restart has been reasonably positive.
“You have people who are desperate to get away and those who, for the moment, won’t travel.
“For those who want to get away, the announcements around Spain and the Canary and Balearic Islands [caused] significant additional disruption.
“But we’ve seen die-hard travellers switch to other destinations such as Greece and Turkey, and some announcements of additional capacity.”
He noted: “We need to put that in the context of relatively low numbers and no doubt there will be curveballs come our way as destinations move in or out of restrictions. But overall it has been pretty positive.”
However, Pritchard suggested the economic outlook may not boost demand, saying: “It’s unlikely we’ll get a V-shape [recovery] – it will be more elongated and will vary from sector to sector.
“Second-quarter GDP will have been down something like 20% to 21%. We’re expecting 11% growth in the third quarter, which sounds significant but is not in V-shape territory.
“When you look to the fourth quarter and 2021, you’re talking about more modest growth ranging from 1.5% to 4% per quarter.
“If you look at it annually, we’re thinking around a 12% decline in GDP for 2020, with 8% or 9% [growth] in 2021. That would still mean we’re down at the end of 2021.”
Pritchard said: “For the broader travel sector – tour operators and agents, airlines and hotel groups – it will be a more elongated recovery.”
He warned “furlough unwinding will have a significant impact”, saying: “It has helped many businesses through the period from April. The challenge in our sector is that the recovery is going to take longer.
“I foresee real challenges in September-October as furlough comes to an end and the pace of recovery across travel is slower.
“Clearly, we’ll have a lot more people unemployed and that will have an impact on their ability to travel.
“You’ll have pent-up demand [among] people who want to travel – there will be plenty who have been somewhat protected, are still employed and still have the money to travel.
“But there will be a wider population in a more difficult financial position.”
