Alistair Rennie, head of innovation and insight at First Rate Exchange Services, lays out what the data suggests may happen in the year ahead
The ancient Chinese philosopher, Lao Tzu, once wrote “those who have knowledge don’t predict; those who predict don’t have knowledge”.
Whether you agree or disagree, there is an interesting debate to be had about this ancient wisdom.
However, it is unlikely to serve as a satisfactory response for those looking for answers about travel growth in a recovering economy.
Rest assured, I will neither be imparting personal knowledge nor predicting things to come.
Instead, I will share robust data, from a survey of 5,000 UK adults, which could shed light on what may happen in the holiday market in the coming months.
Consumer confidence
The consensus of a variety of independent sources is that perceptions of job security and personal finances have improved over the past year, contributing to a healthy long-term upward trend in overall consumer confidence.
The winter 2014 edition of First Rate’s industry-specific index mirrors these findings and hones in on the impact of that upward trend on consumer holiday confidence.
It shows that each of the six measures that make up the Holiday Confidence Index have increased over the past year. Positive movements have been recorded in planned frequency, duration and all three spending indices. Crucially, the overall proportion of people intending to travel has risen from 54% to 57%.
The data suggests that while improving perceptions of macroeconomics and personal finances have tapered off, an uninterrupted improvement in perceived job security correlates with the rising intention to travel which has been the primary driver of a two-point rise in the overall index compared to the winter 2013 report.
Holiday intentions
In summary, more UK adults are now planning to take more holidays, stay away for longer and spend more money over the next 12 months than they were at the same time last year – a clear indication of likely growth for the outbound travel market over the coming 12 months.
However, it is important to note the recovery in overall consumer confidence still continues to outperform the specific measure of holiday confidence.
The report also highlights the first signs of concern among consumers that rising interest rates will impede their holiday plans, with 27% of respondents saying they were less likely to travel abroad when interest rates rise.
So is Lao’s wisdom outdated? Two-and-a-half millennia later there’s no doubt that making predictions is still a tricky business.
That said, if Lao had access to a panel of 5,000 adults, perhaps he might think differently. His view might now be “those who have knowledge don’t predict, but data helps those that do”.