Executive summary Global headwinds can’t stop the rise of UK
U
K consumers have not taken much notice of turbulent times in the global economy. The Deloitte Consumer Tracker showed
consumers shrugging off volatility in the stock market in Q3 2015 with consumer confidence improving to a three-year high. It has largely been boosted by a sustained improvement in employment prospects and a long-awaited increase in real income. This, combined with low inflation, particularly in essential categories such as food, utilities and transport, has left consumers feeling more positive about their financial situation as they both have more and get more for their money. Indeed, spending in the core leisure
categories has continued to rise as spending on essentials has declined. However, the recovery we have seen has been an uneven one, with lower-income households less confident and less optimistic about their future spending power. The recent hike in the National Minimum
Wage and the introduction of the National Living Wage in April 2016 will take some pressure off lower-income earners. Conversely, the introduction of the National Living Wage will increase costs for many businesses in the travel market that have a high proportion of staff on low wages, especially in the hotel and leisure sector. One of the keys for the coming year will be whether the property sector holds
4 | Travel Weekly Insight Annual Report 2015
Britons’ sense of financial wellbeing may be uneven but the desire to travel has yet to be tempered by wider industry challenges, say Deloitte’s Graham Pickett (left) and Alistair Pritchard
together as any signs of a decline in the housing market could dent the current enthusiasm of the British consumer. Moreover, any further shocks to the world economy, for instance from China, could impact the UK economy in a more significant way and, in turn, make consumers more cautious.
Record passenger numbers are a sure sign of consumer confidence Although some consumer surveys have shown a slight drop in the number of consumers taking holidays, data from the travel industry shows the positive consumer mood has translated into a good year for the sector. In outbound travel, holiday departures
were up compared with previous years. Many airlines and UK airports have seen record passenger numbers this year and various travel companies reported a strong summer with sales surpassing levels seen in 2014. Most important, travel businesses largely managed to maintain prices, with the markets seeing less significant discounting this year. The difference between the views expressed in some surveys and the experience of the sector highlights how the recovery in real incomes has yet to influence some income groups. The tragic events in Tunisia, recent news
on Egypt and the migrant crisis showed how the world of travel continues to be full of
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