Confidence is a strange commodity, especially in today’s volatile environment, but it’s the one prerequisite the travel industry is going to need if we are to encourage people to spend their hard-earned money on a holiday abroad.
If consumers lack confidence in the state of the economy or their personal finances, they may opt for a more cautious wait-and-see approach before booking their holidays abroad.
That said, the industry has held up well so far. We have already heard from analysts that overseas bookings made in the autumn are showing a healthy upturn – rather than the drop predicted after the Brexit vote. Bookings should also see a boost as operators unveil new incentives and discounts for the year ahead to encourage even more people to make that commitment to book.
Holiday confidence
But, whether or not they will do so all depends on how confident they feel about their finances in January after the festive season. The challenge lies not with those Britons for whom holidaying abroad remains an intrinsic part of their life, but with those who may feel that travelling abroad no longer represents good value for money.
Our latest Holiday Confidence Index, conducted in September, showed that over half (53%) of the 5,000‑plus people surveyed are planning to travel abroad and 45% of them have already booked their first holiday for the coming year. It also found that holidaying abroad is ‘important’ for almost two-thirds of that group, while more than four in five of those who travelled abroad in the past 12 months are going to do so again in the next year.
So far, so good. But the survey also revealed that there has been an increase in the proportion of people who have decided not to travel abroad – 28% compared with 26% a year ago. That leaves around 19% of ‘potential’ holidaymakers who are sitting on the fence and need convincing that taking a holiday abroad is a good idea for them.
Yet confidence is a strange thing. At a time when you might be forgiven for expecting a dip in confidence about the UK economy, personal finances and job security, the Holiday Confidence Index revealed a sharp rise in expectation about economic prospects and stability. Consumers felt better about their jobs and finances than they did a year ago.
More recently, there have been some signs that consumer confidence may be wavering slightly, but perhaps the truth is that consumers are keeping their fingers crossed and hoping for the best economic outcome while remaining cautious about what lies ahead.
Value for money
Committing to paying for a holiday now may seem like a brave step, with the prime minister planning to invoke Article 50 in the spring and fears that this could bring a fall in the pound. But that is all the more reason to have the confidence to book early. Yes, that holiday may cost a bit more than hoped, once the exchange rate is factored in, but the prices on offer may not be available for late bookers.
There is much to play for in the next few weeks. The key will be convincing customers they can be confident that the holidays on offer now represent great value for money, and that locking down the fixed costs sooner rather than later will help protect them from any drop in the pound in the months ahead.