A recovery in travel bookings this summer is explained in depth in the 2013 Travel Weekly Annual Insight Report. Here, Ian Taylor gives a snapshot of the report.
The UK outbound market continues to be shaped by the aftermath of the financial crisis and a series of long-term challenges.
These include the squeeze on the income of most UK households, the price of oil – reflected in long-haul air fares – and the unfavourable exchange rate of the pound against the dollar and, to a lesser extent, the euro.
The sector has also had to contend with the impact on destinations of the eurozone crisis and the Arab Spring of 2011.
Recovery from the recession of 2008-09 in the UK has been painfully slow. The economy remains smaller than five years ago and outbound tourism largely reflects this. The market has displayed remarkable resilience, but there has been no return to the previous level.
UK household income continues to fall relative to inflation. Indeed, disposable income per head in the first three months of 2013 was its lowest since 2003.
Winter 2012-13 broadly reflected the cycle of recent years, with the fourth and first quarters proving tough for departures – a fact reflected in the capacity of the big two groups. Tui Travel held UK mainstream capacity flat for the winter while Thomas Cook cut back 18% year on year. Industry analyst GfK reported passenger bookings down 8% for the season but average selling prices up 5%, suggesting capacity was about right.
That said, summer 2013 bookings got off to a flier in January and departure figures in July and August were the best in five years.
ONS statistics are based on a rolling survey of outbound passengers and revised as more information becomes available. Figures over three months provide a clearer guide, but monthly figures can indicate a trend over a period.
The ONS supplies figures for all trips – business and visiting friends and relatives (VFR) as well as holidays.
Departure figures for the year to August were the best since 2008. Holiday numbers were 3% up year on year to August and 2% up between June and August despite a comparison with a particularly strong June 2012 (when departures were up 6%).
The London Olympics was an obvious factor here. ONS figures show departures in 2012 up year on year in June and September, but down in the peak months of July and August when the Games were taking place. It suggests a clear displacement.
A year ago, the 2012 report noted the recent ONS figures “suggest the long fall in the market since 2008 may have bottomed out”. That appears to have been right.
Year-to-date 2013 holiday departures remain on a par with 2011 and 20% down on five years ago. North America, and the US in particular, remains the big loser, with trips down 34% since 2008. The industry may blame UK APD, but the fact that trips to destinations beyond Europe and North America are down by only 10% over the period suggests otherwise.
The figures for July and August 2013 are even more revealing. Holiday departures were 4% up on 2012 – albeit we must allow for the 2012 Olympics leading some holidaymakers to avoid travel in these months – and only 15% down on 2008. Medium and long-haul departures other than to North America were just 1% down on five years ago. This is beginning to look like a recovery.