IT’S a little bit late to wish you a happy New Year and, in any case, if you are in almost any sector of the travel industry, it has not been too happy a one so far.
We went into Christmas broadly ahead of last year, but since then bookings have been particularly disappointing for almost all operators and agents.
At the present rate of sale, we will get to the end of January less well sold than at the same time last year, and possibly at lower margins too.
So why? And should we be worried about it?
First a little comfort. We are, of course, comparing current 1999 season trading with what was, in 1998, an exceptionally good year, especially by the end of January. And although it went pear-shaped in May and June, it recovered very well and sales, margins and profits were very good.
Also, January 1998 was a very big promotional month for a number of companies, especially for Carlson Worldchoice with its big TV and press campaign to launch its rebrand; for Inspirations, which prospered on its coat-tails; and for the Thomson/Lunn Poly group too.
That level of activity is not there this year and those two groups are, typically, thought to be doing less well year on year.
That’s the comfort. Less comfortable, perhaps, is the gloomy sounding economic news. Everyone is talking recession and lack of consumer confidence.
Last week, for instance, the British Retail Consortium, which adds up high-street sales across all types of product, said that sales in the three months before Christmas had shown negative growth year-on-year, and it quoted many high-street retailers as saying that Christmas itself was the worst in living memory.
It is said that in the current climate, significantly fewer people will want to buy. Well, I wonder. We have been here before.
There is gloom in the media certainly, but, I have to say, not among those who really count, and that is those people who are actually in a job.
And at the moment, there are more people in a job than at the same time last year, and annual salary rises have been, if only marginally, ahead of inflation.
That is not to say that there isn’t nervousness, but nobody is really expecting a sharp increase in unemployment this year.
Interest rates, and in particular mortgage rates, are falling – a vital factor in holiday buying decisions in the past. And those rates are likely to continue falling throughout the year.
The product remains a priority buy for the public. Our customers like and want what we offer, at the prices we offer it at.
But this is one of those years when the customer will be cautious and book later – but in my view, book they will.
Of course, if experience tells us anything, a waiting consumer will cause operators to drop their prices, driven as much by market-share issues as by any real need to bribe those ultimately willing customers to book.
So, I predict an overall final market not much smaller, if at all, than a record 1998, although at possibly lower margins; but not a disaster, unless some new macho kid on the block wants to prove something and increase capacity – as happened in 1995.
But I am afraid to say not everyone will benefit equally. The bigger companies will continue to squeeze the smaller ones.
One thing not clear to me, however, is whether the much vaunted new integrated trading strategies of the big four, in all their various levels of development, are actually creating more business, more share or indeed are actually working.