onarch), Champa Magesh (Amadeus) and Colin McKinlay (Tui UK) assess Brexit and more
Terrorist attacks: ‘Clients’ attitudes are changing’
Terrorist attacks continue to pose a threat everywhere, a fact highlighted by the atrocity in Berlin, bombs in Turkey and killing of tourists in Jordan before Christmas.
Thomas Cook joined Monarch in pulling out of Sharm el-Sheikh in December, as the Foreign Office showed no sign of lifting its advice against flights to the airport. Monarch Group chief executive
Andrew Swaffield said: “It’s not helpful to have a story every few weeks about Sharm el-Sheikh [so] we decided to take it out of the schedule completely. It just reminds everyone about terrorism. “Hopefully that will be the
last time there is a story about Monarch and Sharm until the airport reopens.” Swaffield added: “If a market is closed to us again, we would probably approach it differently – just remove it and focus on something else. You have assets in an airline that are expensive and
“If a market is closed to us again, we would remove it and focus on something else” Andrew Swaffield
you have to plan their deployment.” He said: “The impact of terror
has been quite direct for us. We lost Tunisia. We lost Sharm – where we flew 18 times a week, [taking] £70 million a year in revenue. “We saw Turkey down 65%,
although it’s starting to recover. We’ve also had event impacts – Paris affected confidence for a while, Brussels the same. “However, we’ve been surveying
customer attitudes to terror since last October and the impact is reducing. Partly there have been fewer events and partly people are growing used to it. There is an inbuilt resilience. People adapt.” Colin McKinlay, finance director for Tui UK and Ireland and the
MCKINLAY: ‘We need flexibility in our programmes’
group’s northern region, said: “These things are in the news, [but] it’s not stopping people booking overseas travel. “Looking at where we moved capacity, we’ve seen strong demand to mainland Spain, the Canaries, the Balearics. Cape Verde has grown significantly. But we’re still seeing demand to Turkey. As a tour operator, we need flexibility in our programmes.” A coroner’s inquest into the massacre in Sousse in 2015, in which 38 people died, will begin this month. McKinlay said: “The 30 UK nationals [who died] were our customers. Our focus is to ensure we cooperate fully [with the inquest] and understand the events that led up to the incident.”
Consumers: ‘Finances don’t dictate travel’
Amadeus UK managing director Champa Magesh said she “vehemently disagreed” there is a link between sterling, discretionary income and volume of travel. She said: “The seismic shift we’re seeing politically and economically around the world is because people are taking decisions counter to their economic interest. To assume economics is driving these decisions is pre-Brexit, pre-Trump thinking.” Magesh told the audience: “One thing we can learn
from all the uncertainty is a redefinition of trends. If you look at why people travel, there is a fundamental shift. “Historically, you would segment customers on the
basis of demographics. You can’t do that anymore. It’s contextual, it’s personal. You can’t stereotype. People take different types of breaks for different reasons.” Magesh conceded lower incomes among young
adults “will have an impact on the quantity of spending”. But she said: “What they spend on is changing. Where their parents were spending money on stuff, research suggests millennials want to spend on experiences. You might have less, but you spend a greater proportion of that with our industry, which is an experience industry. “That is an opportunity for the travel industry.”
Geopolitics: Strain on global economy ‘is threat to travel’
Brexit is not the only threat to spending on travel, with the global economy “under strain”. Deloitte lead partner for travel and hospitality Graham Pickett said: “Every forecast of global growth throughout 2016 and for 2017 has softened. Brexit aside, the global economy is under strain. “Commodity prices are going to
begin to rise. The oil price is going to rise – you’re looking at least at $55-$60 a barrel by this time next year – quite a sizeable increase. And if you’re not [trading] in dollars and sterling weakens further, it’s a double whammy. “The political scenario in Italy
could create a euro crisis. The banking sector has something like €360 billion of sour debt. Overlay on that the French election, Dutch election and German election.” But he said: “The most alarming
thing is the US position with China. If there is a trade war between China and the US, it will impact everyone, and it looks like quite a possibility. That would make Brexit look minor.” Pickett warned of a possible impact on investment interest in the sector, saying: “M&A [merger and acquisition] activity could soften because of the sheer uncertainty.”
MAGESH: ‘What young people spend money on is changing’
5 January 2017
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