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NEWS — ANALYSIS


Agents and operators are hoping for an upturn in summer holiday bookings following England’s World Cup exit. IAN TAYLOR reports


The UK economy may be in a lot better shape than a year ago, but there was little evidence of a feelgood factor in parts of the outbound sector as we passed the middle of June. Travel Weekly reported last


week that a poor April and May had left season-to-date bookings for the summer down on 2013 despite a strong start to the year. Industry analyst GfK put the shortfall in bookings at -1% on a year ago and reported revenue flat year on year to the end of May. The good news was that package sales remained 2% up for the season and all-inclusive and family bookings up 3%. This picture was reflected at


last week’s Abta Travel Matters conference in London.


Market prices Advantage Travel Partnership managing director Julia Lo Bue-Said noted: “It is difficult, but some sectors are better than others.” She described “a slight lack of confidence” in the family market “where it has been resilient up to now” and said: “There are some good deals about.” Monarch Travel Group managing director Phil Boggon agreed, saying: “The pressure is around prices. Media coverage [of the economy] has been upbeat. But the strength of the market can be seen in the short-haul beach market where the numbers are not up.” He added: “There are lots of


strong prices in the market.”


Cup hopes Companies were quick to seize on England’s loss to Uruguay last Thursday as a signal of better things to come. Thomas Cook reported


The pressure is


around prices. In the short-haul


beach market, the numbers are not up


a “strong day of trading” on Saturday, as in-store customers cited England’s early exit from the World Cup as a spur to book a holiday. The company reported online traffic double the level of a week earlier. Yet bargains were not hard to find. Thomas Cook had holidays on offer at £149 and Cosmos was advertising a seven-night package in Crete in July from £129. Underlying the pressure on price is a rise in air capacity. Thomson and Monarch have added capacity this summer, but the real increase is down to easyJet, Ryanair and Norwegian Air Shuttle – the latter growing rapidly. Graham Pickett, lead partner on


travel, hospitality and leisure at Deloitte, warned of overcapacity. He told the Abta Travel Matters conference: “We’re at a crossroads. There is lots of good news. Growth has come back. Business is confident. Consumer confidence is not bad. But there


12 • travelweekly.co.uk — 26 June 2014


are some causes for concern.


“The industry has done very well in capacity


management over the last three years, but I detect a change. Demand is probably down


by 1% to 2%, and capacity is up by 5%.”


Pickett said: “I’m concerned. Though if you think it’s a problem in Europe, go to Asia-Pacific where it’s not sustainable.” Boggon agreed: “Volume is not the issue. As we grow, it is for all of us to add capacity sustainably.”


Disposable income Allied to the extra capacity is the fact that the UK’s improving economy is not feeding into people’s purses and wallets. Pickett pointed out UK household debt is rising from an already record level. A TNS poll this week confirmed the problem. It found a marked improvement in how people perceive the UK economy but reported: “A majority (58%) report no change in their ability to meet the household budget – up nine percen- tage points on June 2013. “Most people in work


(59%) think their pay will


Abta Travel Matters panellists, from left: Richard Downs, Iglu; Phil


Boggon, Monarch; Julia Lo Bue-Said, Advantage; and Mark Tanzer, Abta


stay the same over the next 12 months [and] there has been little change in the number expecting a pay rise – 25% versus 24% – over the past 12 months.” TNS concluded: “Improved confidence in the economy is not translating into improvements in people’s pay.”


Summer outlook The market appears likely to pick up this week and through July. The question will be by how much? As Travel Weekly went to press it


was too early to tell. However, it’s worth remembering comparisons this year are with a strong 2013. Office for National Statistics


figures, published last month, confirm an increase in overseas holidays from the UK last year of 1.4 million – up 4% on 2012. Spending on holidays abroad rose at double this rate (+8%). Holiday numbers to Europe rose 7% and trips to North America increased for the first time since 2008. So a summer 2014 that ends flat


year on year would be no disaster. ❯ Abta Travel Matters, page 62


ANALYSIS


What chance a World Cup bounce?


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