What’s in store for us in 2014? We all went into 2013 worried it would be another very difficult year, yet it turned out to be quite acceptable, with the notable exception of tourism to Egypt.
If the weather in July and August in the UK had been as bad as in previous years, then it would have been a truly exceptional summer too.
There is general optimism for 2014, as early bookings have been on par with this time last year, with Greece selling especially well.
Unfortunately, what always seems to happen when optimism returns after a good year is that extra capacity is poured into the market, meaning we have to discount to shift it all later.
Consumers want security
There is no doubt that last year capacity was tight, which led to very high prices on no-frills carriers during the peak months. Budget prices for summer 2014 also look high; it does not bode well for those creating packages using their services.
However, it’s early days yet and, if there is excess capacity, those rates will no doubt come tumbling down.
Will the package holiday continue to increase in popularity? I believe it will; I have a feeling that customers are increasingly seeking the security that comes with a package. It is not only financial security they are seeking but also organisations that take responsibility for all that they offer.
Are high prices killing DIY?
As the selling price for seats on no-frills carriers has risen – the result of high oil prices – the competitive advantage of dynamic packaging or DIY arrangements has been eroded.
The constant variation in the sterling exchange rate also plays a part in customers wanting to secure a fixed-price package. It will be very interesting to see if this trend continues into 2014.
Fuel prices have remained relatively high yet stable. Sterling has been far less stable and it is difficult to know where it will be once we get to the summer.
Over the last few months the pound had gone from €1.16 to €1.21 and is now falling once more from this peak; this is uncomfortable territory for both tour operators and consumers.
Yes, Britain is moving out of recession but this is no guarantee that sterling will strengthen, although Barclays is forecasting that it will rise to €1.25 in three months’ time and to €1.27 six months from now.
What will 2014 hold?
Of course, the battle to make sense of the new Package Travel Directive from Brussels will continue into 2014.
There will be many ups and downs as Abta battles to make it as acceptable as possible across its very varied membership.
We will have to fight to make sure that there is no cooling-off period for customers’ bookings, and also that agents are not made jointly liable for the performance of a package if it has been booked through an operator. The Abta team will be hard at work.