It would be “irresponsible” to not be prepared for a downturn in travel, the former UK chief of Der Touristik has warned.
Speaking in a panel discussion at the Travel Weekly Business Breakfast at Abta’s Travel Convention, Derek Jones told delegates the travel industry needs to be realistic with a “difficult two years” ahead.
“Given the state of the economy and the war in Ukraine, it would be inconceivable that demand won’t be suppressed overall,” he said.
Noting that that many travel brands were saying they are now performing ahead of 2019 levels, Jones added: “There’s a difference between revenue and yield performance. And with so much pressure on the sector, while revenues might be higher, our costs are getting greater.
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“I think there’s a storm ahead. The next six months are going to be very difficult for us. Higher fuel bills haven’t landed yet; war in Ukraine is escalating, fuel prices will be impacting. I don’t want to be the prophet of doom but things aren’t looking great.”
Jones continued: “It would be irresponsible to not be ready for a downturn in travel.
“You’ve probably just done a September campaign that collided, sadly, with the death of the Queen. Now all attention is on January and how much money you’re going to commit. But it’s just a very difficult year to predict future demand.
“I think it’s going to be a very difficult year; in fact a difficult two years.”
Ben Bouldin, vice-president EMEA for Royal Caribbean, said: “There are a lot of unknowns with mortgages and interest rates going up which will impact the family market particularly.”
But he noted that the issues were confined to Europe and the UK especially while the US economy and value of the dollar were strong.
“We need to see how October, November and December play out but there are headwinds,” he said.
“What the sourcing ends up being for our business from Europe is the issue because of all the unknowns. I’m nervous about higher airfares to the US for our UK guests going on cruises to the Caribbean, but US demand for [cruising in] Europe is really strong.
“It’s a Europe/UK challenge at the moment, certainly in our sector, so we’re fortunate that there is a big wide world out there to compensate.”
Zina Bencheikh, managing director EMEA for Intrepid Travel, added: “In times of recession, we tend to do better because our product is all packaged. We did really well during the global finance crisis. So far, we haven’t seen an impact from the cost of living crisis.
“Our US product might not be as attractive but we operate in seven continents and we offer trips from Premium to Basic, so I anticipate a shift in holiday type and in destination – but the length of time people are going for is not changing.”
Jacqueline Dobson, president of Barrhead Travel, said she remained “cautiously optimistic” for 2023, but added: “I do foresee there will be a definite impact from the rising cost of airfares.
“There’s also less capacity from regional airports – we have no flights anymore from Glasgow to the US and Caribbean.”