Freed from pandemic restrictions, travel companies have finally seen the worst. But when industry leaders flocked to Marrakesh’s “survivors festival” this week, fresh storm clouds were gathering.
With their customers facing the highest cost of living in crisis in a generation, two articles of faith support the UK tourism industry. First, the holiday remains sacred. Second, no economic turmoil can be as bad as Covid-19.
Despite widespread disruptions at airports, it was a relatively record-breaking year. According to the tourist association Abta, the number of trips in 2021 was twice as high, which means that the number of people going on overseas holidays back to the level of 70% from 2019, and cash registers are calling for completed reservations, not refunds or credit notes .
Following the return of Morocco’s annual Abta convention after a three-year hiatus from virtual or hybrid meetings, its CEO Mark Tanzer said companies were facing “double oppression.” Higher interest rates and a weak pound raised costs, while consumers slashed and firms in debt during the pandemic could not borrow more.
There is both optimism and uncertainty in the sector. Few want to talk about their own perspectives – a quick poll of delegates at the convention suggested most still expect higher revenues in 2023 than in 2022. Dame Irene Hays, president of Hays Travel, said that “people kept flocking” to her the company’s high street stores, while others spoke of a buoyant market – at least for now.
“The last two years have been terrible,” said Tanzer. Between 30 and 40 of the approximately 1,000 companies he represented went bankrupt, “tragic, but numerically I thought more would fight.
“So I think there is definitely a feeling of not only being relieved but almost honoring the survivor that we went through it and it won’t destroy you.”
However, the anger at the government after the disastrous mini-budget was palpable in an industry that was still at risk of being neglected during the pandemic, and the UK traffic light system, where weekly changes to authorized destinations and borders suddenly closed and reopened, played a special role. havoc.
According to Giles Hawke, chief executive of Cosmos Tours, the sector has been “screwed up” politically. “There is no trust in the government from the travel leaders,” he said. “We live in uncertainty.”
Rory Stewart, former Tory minister who hosted Marrakesh, gently explained to delegates why they should not expect much help from the “professional bluffers” in the government, not just from “Jacob Rees-Mogg, who unfortunately is now in charge of your industry” as secretary commercial.
Chris Wright, managing director of the Greek specialist Sunvil Group, said that while their clients were mostly elderly people with savings and no mortgages, “we are still concerned that due to the uncertainty surrounding people will huddle.”
Consumer confidence is at its lowest level since the 2008 financial crisis, with full economic impact typically delayed by around six months, according to Eleanor Scott, director of UK travel and leisure strategy firm Strategy & amp; PricewaterhouseCoopers. She added that while inflation may have less of an impact on higher-income groups and a large minority of holidaymakers who were still going to flee, “I expected consumer sentiment to penetrate.”
The beginning of January is the peak season for reservations for the annual vacation – and companies are holding their breath. Garry Wilson, CEO of easyJet holidays, said bookings for 2023 have yet to diminish – but that may be because customers who usually book then have now locked the price of next year’s travel while they could still afford it . All inclusive holidays were in great demand by people who were concerned about how much sterling would be worth.
Cruise vacations have come to life after ships were initially trapped by the coronavirus. But Ben Bouldin, Royal Caribbean’s vice president for Europe, Middle East and Africa, said he doubted cruise lines could continue to sell in the UK as rising mortgage rates drain disposable income. “The mortgage situation worries me a lot,” he added.
He said people with a £ 300,000 mortgage renewal face a £ 600 monthly repayment increase, “which makes for a pretty decent family vacation. We are dealing with a real problem. “
The collapsing pound and the strong dollar mean his company can adapt as it can help inbound tourism, he said: “US customers will fill our ships. But if you rely on tourists going to the US, it will be quite a challenge. “
Choosing a destination with even more rampant inflation was another option with Turkey’s rate of 83%. “Right now, Turkey accounts for 30% of all bookings for the next year. It’s huge – the pound still has some value there, ”said Richard Singer, CEO of Ice Travel Group, which includes the TravelSupermarket price comparison engine. The average booking value the group saw fell by 40% over the year, he said, from £ 3,500 to £ 2,000, after initial rush from people desperate to travel in 2022.
Airlines, including British Airways owner IAG, as well as Ryanair and easyJet, say bookings and revenues remain surprisingly high. The mantra repeated by Hays, Wilson and many others was that Britons who can afford it will continue to prioritize their holidays. While 35% of people expect to cut their holidays for next year, according to Abt’s research, this compares well with other discretionary spending such as new clothes, leisure or eating out, with 40-55% predicting the reduction.
Alistair Rowland, president of Abta and CEO of Blue Bay Travel, a specialist in luxury long-distance travel, described his situation as “okay but painful.” It would normally sell by 2024 for those who book well in advance of their arrival, but any company reserving inventory and fixing a price for a vacation after next summer would be at risk. “I would have to add £ 200 a flight to be safe, and that wouldn’t look like a value,” he said.
People will still travel, but the financial turmoil has made many pause.
