p12 abta oct10 8/10/08 22:46 Page 12
news conference report
ttglive.com
The Travel Convention 2008 • The economy
FORECAST.
Bosses learn from 1991
Prices increase
despite downturn
LEISURE travel spend will grow over the next
two years but the number of trips taken will
decline, according to business analysts at
PricewaterhouseCoopers.
The accountancy firm’s head of travel, Malcolm
Preston, told the Travel Convention that declining
consumer confidence, particularly among older
generations, would hit the travel industry.
A poll in April found 13% of consumers thought
they would have less disposable income in the
Lucy Huxley.
The travel industry was told it would benefit coming 12 months compared with the previous
THIRTEEN of the industry’s key decision-makers from understanding “why ‘value’ operators fared year. A later poll in June found that figure had
looked at lessons the trade could learn from how so well when economic conditions were really rocketed to 41% – and it is expected to have risen
big retail brands fared in the 1991 recession. tough, and also why they continued to outper- again this autumn.
The experiences of New Look and Matalan, as form the pack when the market improved”. Preston said market figures produced by
well as examples from the grocery and restaurant “My sense is that the travel industry knows its Ascent MI showed travel prices were up between
sectors, were presented to travel bosses during own sector but rarely looks over the fence to see 5% and 10% and volumes were also holding up.
the convention by PricewaterhouseCoopers. what’s going on elsewhere,” Preston added. For this winter prices are also up 10% and
Arranged by PwC head of travel Malcolm volumes down between 2% and 3%.
Preston and Abta chief executive Mark Tanzer, the For summer 2009, for which 12% of capacity
session was described as a “two-hour MBA” in
Lessons from 1991 recession
is already sold, prices are again up 10%.
retailing. Attendees included Tui Travel’s Dermot Preston said there was “quite a significant”
Blastland, Co-operative Travel’s Mike Greenacre, ■ “Value” operators grew massively during shift towards all-inclusive bookings, and high
lastminute.com’s John Bevan, Hays Travel’s John and after the recession street retailers were seeing a revival.
Hays, Royal Caribbean’s Robin Shaw, Carnival UK’s ■ People traded down and realised cheaper
Peter Shanks and All Leisure Group’s Roger Allard. options could be perfectly adequate
Preston said the research showed how
PRICING.
■ Retailers should not aim to be cheap but
customers behaved during downturns and why to provide value
some firms were winners and others losers.
Trade urged to
‘hold price nerve’
‘Public to feel pinch until 2010’
PRICES will hold up during the downturn if
agents and operators hold their nerve, the boss
of Hays Travel believes.
CONSUMER CONFIDENCE.
“Overall, the economy is very much treading “In situations like this it would be very easy
THERE will no upturn in consumer confidence on the edge,” Pragnell said, adding that state to assume that every client will want the
until next summer at the earliest even with state intervention was the key to breaking the cycle in cheapest option; that would be a very dangerous
action to bolster the economy. which the drying up of credit slowed the economy. assumption to make,” said Hays Travel managing
Martin Pragnell, managing director of “Decisive action is needed by the authorities director John Hays.
the Centre for Economics and Business and coordinated across the world. The only “There will still be people with disposable
Research, told the Travel Convention the hope we have got is it takes time for that income and we’ve got to hold the line.”
UK economy was facing 16 months of vicious circle to establish,” he added. Thomas Cook executive director Ian Derbyshire
“going nowhere”. He said consumers had £11 a week less insisted the mergers of the big four and further
He predicted oil prices would to spend on “things that make them happy”, consolidation had led to better controls on
stabilise between $80 and $90 such as holidays, than a year ago. capacity and had left the industry in a relatively
next year, the euro exchange About one-third of recent growth in the strong situation.
rate would remain strong at UK economy had been based on housing, “Looking at all the evidence, as an industry we
about €1.25 but the pound but that was now wiped out, he added. should be optimistic,” he said. “In terms of ca-
would fall against the dollar pacity, our industry is well positioned to weather
to about $1.65. Pragnell: “People have £11 a week less” any of the problems of the next 12 months.”
12 10.10.2008
e Dunlop
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