By Alistair Rennie, head of business decisions at First Rate
Confidence – the feeling or belief that one can have faith in or rely on someone or something – is an important factor in shaping our behaviour.
So at what point do consumers have enough faith or belief that they can rely enough on the economy, their job security and their personal finances to splash out on an overseas holiday?
And when they do, how can travel agents and operators capitalise?
Occasional wavering and spooks aside, consumer confidence showed a healthy increase during 2013.
The economy began to stabilise, job security improved and eventually consumers began to feel a little better about their personal finances.
When YouGov surveyed 5,000 UK adults for the Winter 2013 edition of First Rate’s Holiday Confidence Index (HCI), it showed the belief that the economy would improve had doubled from 13% to 26% between March and September 2013.
Despite the positive trend, the report also revealed that during the same period the proportion of UK adults planning an overseas holiday had actually fallen slightly.
Consumers’ faith and belief had clearly improved, yet for many UK adults the overall level of confidence was not sufficient to book an overseas holiday.
The data suggested the existence of a threshold for ‘holiday confidence’ that had not yet been reached – a threshold that cannot be isolated within the standard measures of consumer confidence.
Since publication of the Winter 2013 Holiday Confidence Index, the UK economic recovery has continued and its impact on consumer sentiment is increasingly reflected in a number of consumer surveys.
The Spring 2014 edition of First Rate’s Holiday Confidence Index also showed a marked improvement in confidence.
It found 31% expected the economy to improve, up 5% since winter 2013, 38% believed their job is secure – a slight improvement from previous figures – and 24% believed their personal financial situation would improve, up 3% since winter 2013.
More important, the Spring 2014 Index results showed a corresponding shift in intent to take an overseas holiday.
The overall Holiday Confidence Index measure had risen two points to 44, indicating growth in the outbound travel market.
The primary driver of this increase was a 3% rise in the proportion of UK adults intending to travel abroad – a clear indication that more consumers have reached the threshold of confidence required to book an overseas holiday.
However, it is not all plain sailing.
The report also highlighted that, although the level of ‘holiday intent’ and overall HCI measure had increased, the associated spending indices – which include the cost of booking a holiday – all showed a one-point fall since the previous survey.
At the same time, despite an 11% increase in the number of ‘first trip’ bookings among those who intend to travel, 49% had not yet booked.
So while consumers’ faith and belief may have reached a threshold, cost may prove the determining factor for the undecided.
Hence, there could be a substantial prize for operators who recognise the potential and capitalise on the desire to travel among those still to book.
The Summer 2014 Holiday Confidence Index and report will be published in mid-July and it can be obtained by emailing HolidayConfidenceIndex@firstrate.co.uk
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