INNOVATION REPORT 2015
TECH SPEND TIPPED TO TOP £1.25BN
INDUSTRY INVESTMENT REACHES NEW HIGH DESPITE GROWTH RATE SLOWING TO 5%
T
he headline finding in this year’s Travolution Innovation Report is that the UK travel industry’s investment in technology will surpass £1.25 billion (£1.257 billion) in 2015. The 5% growth predicted for next
year (page 21) is two percentage points lower than in 2014, but represents the fourth year of consecutive growth. The last time spend on technology
in travel failed to grow was in 2011 when it was flat on the previous year at just over £1 billion. In the two years prior to that,
Travolution Innovation Reports revealed that technology spend contracted by 5% in both 2009 and 2010. This trend suggests a strong link
between travel firms’ performance and confidence in the market and their investment in technology. If we take 2008 as the start of the last recession, spending on technology in travel took five years to recover, matching the pre-recession figure of £1.12 billion in 2013. The return to
“THE PICTURE FOR TECH SPENDINGIS MIXEDACROSS THE TRAVEL SECTORS”
growth of investment in such a critical area for travel firms indicates a return of confidence in the travel industry from 2011. However, the predicted slowing of growth in 2015 suggests firms are taking a more cautious outlook for the 12 months ahead. Although the UK travel industry
started 2014 high on confidence after an encouraging start, the remainder of the year suffered with overcapacity and heavy discounting. A consumer tracker produced by
accountancy firm Deloitte showed net holiday spend was in positive in the third quarter 2014 for the first time since it was began in Q3 2011 (Travel Weekly Insight Annual Report 2014). Although incomes remained
stretched, consumer sentiment on disposable income – a key factor for the travel sector – was up by seven points as lower oil prices and inflation kept prices low. Latest official industry data by UK
analyst GfK for summer 2015 bookings to date showed a 3% increase in booked passenger numbers to January 31. While the overall picture in travel
might point to returning confidence in technology investment, the picture is mixed within the five travel sectors this report looks at. In 2014, the air transport industry
was still the heaviest investor in technology, accounting for 35% of the industry total, ahead of the travel agent and hotel sectors. However, the projected increase in 2015 of 4% is the lowest for five years, having hit a peak of 14% in 2013. Firms in the water transport sector
spend the least, representing just 4% of the industry total. Since 2010 this sector has seen unspectacular growth. Hotels are predicted to see 8%
growth in technology spend in 2015, the biggest of the five industry sectors.
18 — FEBRUARY 2015 —
TRAVOLUTION.CO.UK
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