Domestic Demand still close to recent highs
G
rowth in domestic holidays, which led the media to coin the term ‘staycation’ in 2009, may have passed its
peak – at least for now. UK domestic overnight trips were down
5% year on year in July 2014 and holidays through the first half of the year down by 2%. This followed a 1% fall in domestic holidays in 2013 to 57 million, but still represented more of a plateau than a plunge from 58 million in 2011 and the 2009 high point of 59 million (an 18% surge on 2008 as outbound travel figures fell amid financial crisis and recession). The growth has principally been in short breaks (one to three nights) which increased by almost five million during 2006-14. Despite this year’s overall fall, domestic
seaside overnight trips rose 3% in the first half of 2014 – not insignificant given the volume of such breaks (25 million in 2012). TNS research for this report suggested
57% of UK adults are ‘likely’ to take a domestic holiday in 2015 – five points down on a year ago, but with many of those with
The Deloitte view
General trends in domestic travel have been positive recently. VisitEngland’s three-year Growing Tourism Locally campaign, underpinned by a £20 million Regional Growth Fund grant matched by the private sector, had delivered more than £500 million in additional tourism spend as it neared the end of its second year and created 9,500 additional jobs. London hotels continued to perform
strongly, with good levels of occupancy and average daily rates holding up. And the regional market, which has had a tough few years, has seen occupancy
and average daily rates nudge up more recently.
The story in the self-catering market is
more complex. After several years of good growth, the cottage-rental market has entered a tougher period, partly driven by new competitors such as Airbnb. Lodges and caravan parks have shown a stronger performance. The sector is following a pattern we have seen elsewhere, with operators at the luxury end (lodges) and budget end (caravan parks) outstripping the performance of businesses in the centre ground (cottages).
What of the more immediate future?
Investment, private sector hiring and wage growth are key to delivering a sustainable recovery. At the time of writing (October 2014) investment and private-sector hiring are strong but wage growth has not come through. Consensus forecasts are that we should start to see wage growth from Q1 2015. That should make consumers feel more confident and have a positive effect on domestic travel – though there is a risk the trend could be destabilised by issues in the European economy.
The domestic market remains on a high despite growth stalling
%
UK DOMESTIC HOLIDAYS 2013 % change in volume by month on 2012
12 10%
-15 -12 -9 -6 -3 0 3 6 9
11% 3% 1% 3% 2% -2% -5% -7% -12% -14% Source: GB Tourism Survey
children (38%) planning to do so in July or August. More-affluent households appear most likely to plan a domestic holiday – 72% of respondents in social classes AB being likely to do so and 47% ‘very likely’. In line with this, UK holidaymakers spend an average 33% more per night on domestic trips than overseas.
-11% -13% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013
58 | Travel Weekly Insight Annual Report 2014
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