The UK economy will not recover to pre-recession levels until 2016, a Euromonitor report for the WTM Vision Conference held in London today has predicted.
Caroline Bremner, head of travel and tourism research, told the half day conference that although much of Europe has slipped back into recession the UK is expected to avoid a technical double dip.
She told delegates that despite some positive news on unemployment this week the number of people out of work is expected to creep up to 8.8 million this year.
Bremner said a significant issue was the high level of youth unemployment. “There is a big risk we will have a lost generation. For the travel and tourism industry that’s a big threat – how to get these youngsters engaged with the industry.”
She warned firms in the mass market that trading could be made tougher by the fact that the rich are getting richer while the poor are getting poorer, leaving those in the middle feeling the pinch.
“Customers have become extremely cautious and confidence has declined,” she said. “We are at rock bottom confidence levels so it can only get better.”
The financial chaos caused by the Great Recession will continue to make forecasting an imprecise art, Bremner said, and that uncertainty would be a constant theme as economies recalibrate.
Globally, tourism growth is expected to be driven by the emerging markets including China, India and Brazil, taking the number of travellers worldwide to 1.2 billion.
However, a lot of that growth will come from inter-Asian travel and this was putting downward pressure on average spending on travel.
Asia Pacific will grow in terms of number of arrivals by 6.7% while North America arrivals will also increase by 4% due to new initiatives put in place by Barack Obama and the new Brand USA.
The disarray in european markets will suppress visitor arrival growth to around 1%, down from 4% in 2011, although spending will be under pressure as customers look for a bargain.
However, in a survey of travellers, quality emerged over price as the most important factor when making a booking, with 80% of respondents rating it “important”.
Bremner said: “Customers may be looking for a discount but quality is still the primary driver for a purchase.
“There are concerns about some of the new business models such as flash sales and group buying, but we are seeing companies in the travel industry are quite keen to try these.
“There is a lot of creativity and innovation in the marketplace thanks to the online segment in particular.”
The Euromonitor league table of global cities sees Hong Kong and Singapore leading the way in terms of arrivals ahead of London in third.
Overall arrivals into Britain during the Olympic and Royal Jubilee year will be 4% up to 29.4 million, Euromonitor predicted, although domestic visitors will be critical to the games.
Two Turkish cities feature in the top ten; Antalya and Istanbul as they benefit from increased arrivals from both the east and the west.