Rising inflation must prompt a rethink in travel brands’ messaging, says Digital Drums chief executive Steve Dunne
I grew up in the 1970s, when holidays were a luxury. I only knew of one family on my council estate that had been to Spain and, among my parents and their friends, that family were seen as showbiz celebrities.
Tales of exotic foreign languages and weird currencies, weather reaching temperatures unheard of at home and stories of not being able to drink the water but alcoholic drinks being incredibly cheap, made the heads of my parents and us kids spin with incredulity.
But for my family, and the vast majority of my community, overseas holidays were out of the question. And this was not because we were particularly poor, it was just that holidays were expensive.
Quite simply, for the vast majority of people, overseas holidays in the 1970s were seen as a luxury.
Thankfully, by the 1990s, when I had my own young family, holidays were no longer classed as a luxury, but as a necessity. For many people it wasn’t about where to go for their annual holiday, but where to go for the two or possibly even three holidays they took each year.
And, despite Gulf Wars, credit crunches, recessions and global terrorism, travel remained a necessity for many demographic groups right throughout the 2000s.
When something has the status of a necessity it is relatively easy to market and promote brands, products and services that provide it.
Right now, the travel media is full, quite rightly, of stories of agents, operators and cruise lines talking about record bookings and sales. The general feel is that travel is back and the public are raring to get back into the swing of things.
But this disguises a far more worrying development that, once the euphoria of being able to travel again settles down, will present the industry with challenges that most travel sector executives have never faced before.
Overseas travel, of all kinds, is set to be a luxury again for many, if not all. And that means the sector needs to change its marketing, sales and PR approach to promoting holidays. And the reason for that is simple: the landscape has changed.
Inflation is back. For the first time since the 1980s everyone is seeing a month-on-month increase in food prices, energy prices are increasing at genuinely eye-watering rates, and wages are at best able to only to numb parts of the rising household expenses.
Interest rates remain low meaning that the groups the sector habitually looked to for keeping travel going, the over-60s, are seeing their savings, pensions and spending power shrinking. And some of those precious funds may have to be diverted towards helping family members pay essential bills rather than to indulge on holidays.
Unlike the challenges of the early 2000s, this is different. This impacts our pocket, how we live in our homes and it cannot be offset by overdrafts, credit cards, loans or simply working harder.
It is now, not later, that the industry needs to start gearing up for the new marketplace that it will face in 2023 and beyond. A marketplace that will have, for many, holidays earmarked increasingly as a luxury rather than a necessity.
Messaging, strategies, tactics, pricing and marketing alliances will need to be revisited and revised by agent and operator alike.
The highlighting and emphasising of value for money will obviously be key, but new products will need to be developed too, products that will resonate with perceptions and motivations and address increasingly cautious attitudes.
Above all, the trade needs to work together. Every segment of the sector will need to work to a common goal – to keep overseas holidays from being seen as a luxury that cannot be afforded anymore.