The biggest jump in interest rates in more than 30 years has failed to materially hit agents’ sales but some fear the real impact of the crisis will not be felt until early next year.
Travel firms are closely monitoring sales as the financial crisis deepens but admitted it was “difficult to predict” if and when bookings would be hit.
Last week the Bank of England raised interest rates by 0.75% to 3%, the largest hike in 33 years, and said the UK was facing its worst recession since records began, predicted to last until 2024.
Consortia acknowledged the rise would impact consumer spend, but The Travel Network Group chief executive Gary Lewis said: “What should reassure those in our outbound sector is the data showing households’ willingness to travel, prioritising travel and desire for experiences over material goods. We also know customers will make choices that fit their budgets.”
Advantage Travel Partnership chief commercial officer Kelly Cookes said: “Ultimately, any increase in interest rates for UK consumers means a decrease in discretionary spend which could impact sales. That said, we are yet to see any impact.”
The consortium reported a “slight” bookings dip in the last week versus the prior week but sales remained 2% up.
Hays North West also traded down last week, which managing director Don Bircham admitted was “a bit of a shock” after “such a good run”.
He said: “It’s so difficult to predict. We have rising interest rates, inflation and a recession, and yet we have full employment, a pent-up demand for travel and folks with money under their bed.
“I’m not sure the industry has ever faced that mix before. An increase in interest rates is of course one man’s meat and another man’s poison.”
The Holiday Village managing director Paula Nuttall reported that package sales to Turkey continued to sells strongly in the current market and added that the constantly changing headlines could “play into the hands of travel agents”.
“People don’t know what to believe any more,” she said, adding the diversity of the group’s businesses had “never been more important”.
She stressed: “Our tour operator partners will have a big role to play in driving positive messages from now through to peaks.”
Deben Travel owner Lee Hunt agreed agents could benefit as clients turned to professionals for advice. “It’s up to us offer alternatives to their usual holiday,” he said.
He predicted the sales impact may only be clear in January. “January will be the telling time; that’s when we take a lot of family bookings,” he added.
Some firms, including Oceania Cruises, have reported more affluent clients using extra interest earned on savings to book.
C The World director Carolyn Park said clients were likely to react in different ways accordingly to their own financial situation. She said: “Some people are smiling because they are finally getting interest on their savings while others are tearing their hair out because mortgages are going up.”
She added: “We are fairly chipper at the moment: forward bookings for next year look pretty good. There is a good chunk of enquiries. We are not sat here tidying our desks by any means.”