Travel bucks trend for consumer spend Juliet Dennis


Hopes of a strong summer season have risen further as the first signs emerge of a reversal in the late-booking trend, while travel was revealed to be one of the few sectors to report improved consumer spending. The forecast comes against a


backdrop of an overall fall in retail sales and weakening growth in spending, with inflation predicted to reach 10% by the end of the year and interest rates forecast by Barclays to rise twice more this year. Speaking at the Barclays Travel


Forum on Tuesday, Travel Trade Consultancy director Martin Alcock said there were the “first indications


of optimism” for the sector, with luxury travel companies reporting a longer booking window and clients starting to book further out. “The booking window has started


to lengthen in the last couple of weeks,” Alcock said. “We are starting to see the later-booking trend reverse.” Flight Centre UK chief financial


officer Adam Murray told delegates clients were currently not put off by increased prices for the summer but admitted: “I think after that it’s going to be harder with the cost-of-living challenge.” Writing in this week’s Travel


Weekly, Miles Morgan Travel chairman Miles Morgan also gave an upbeat report of business “returning to normal levels”, but said future


Insurers return but ‘capacity may not meet the demand’


Ian Taylor and Juliet Dennis


Demand for outbound holidays risks outstripping the insurance and bonding available to financially protect customer money despite signs of insurers returning to the sector. Leading industry accountant


Chris Photi, head of travel and leisure at White Hart Associates, noted the bond insurance market had “drastically reduced” during the pandemic with two of the five major players exiting the sector, forcing some travel firms to scale back


4 12 MAY 2022


their non-mandatory bonding. Photi told the Barclays Travel


Forum in London on Tuesday: “Some had to set aside bonding single components such as accommodation- only and change their terms and conditions. Some resigned from Abta to go to trust accounts [as a result].” Yet speaking at an Abta Travel


Law conference in London the same day, Abta director of membership and financial protection Rachel Jordan reported the most recent renewal “was 100% the best I’ve experienced” and said: “There is a willingness among bond obligors [issuers] to help members.”


The booking


window has started to lengthen. We are starting to see the later booking trend reverse


challenges kept confidence in check. Speaking at the forum, Advantage


Travel Partnership chief executive Julia Lo Bue-Said cautioned that while the industry was in “a good place”, there remained a “long road to recovery”. Alcock dismissed the likelihood


of late-summer discounting this year, with demand expected to continue, but noted strong pricing was not being reflected


in margins due to increased costs. Looking further ahead, Barclays


UK economics research analyst Abbas Khan forecast a reduction of about 2% in real household incomes as a result of rising costs but said a fall in inflation in 2023 could provide a “tailwind”. The positive sales outlook for


the sector was backed up by new figures from Barclaycard, based on nearly half the UK’s credit and debit card transactions. Consumer spend in April through agents and airlines improved to their best levels since the start of the Covid pandemic. This was despite an overall


slowdown in consumer spend, largely attributed to the impact of the cost-of-living crisis.


New insurers are tipped to enter travel’s financial protection market


Travel Trade Consultancy director


Martin Alcock told the Barclays Travel Forum: “There are early signs of insurers coming back into the market. For the last two years, they’ve not been willing to write new bonds, [but] we’ll see a new insurer this summer.” He suggested there is a “cohort”


of new entrants among merchant acquirers “willing to take on new business” and invest in the sector. Alcock said: “We’re seeing investors


willing to come into travel. It feels like the recovery has started to take hold.” Yet he also warned: “Demand


is coming back faster than insurers’ appetite.” Alcock told the Abta


conference: “[Insurance] capacity is not coming back fast enough to cover the [amount of] cash [requiring financial protection].” Insurance specialist Iain Bird,


head of bonds and credit at Great American International Insurance, told the Abta event: “We continue to support the market. We supported many clients with increased bonds.” But asked if the sector would


see more insurers return, he said: “Some companies will come in but there have been large losses in travel and that will put some people off. Whether the market can provide enough capacity, I don’t know.”


travelweekly.co.uk


PICTURE: Shutterstock/PopTika


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