Market outlook consumer confidence faces twin pressures
Political uncertainty hung over everything in 2019, heightened by more than one Brexit withdrawal date and multiple seemingly critical moments. The sector was trebly hit by the impact on business and consumer confidence and by the uncertainty about travel arrangements. It could be considered remarkable, therefore, that the market held up so well. The collapse of Thomas Cook in September barely countered that view since Cook was not brought down solely by events in 2019. The UK will have a new government in 2020. The December general election appeared likely to produce either a government led by Boris Johnson that would lead Britain out of the EU on January 31 or a hung parliament and maybe a second referendum. A no-deal departure remained a theoretical possibility after Johnson insisted a government led by him would stick to December 2020 as the Brexit transition deadline. Former Abta chairman Noel Josephides
warned a January leave date would be “problematic” for the sector. But an
50 42.9m 40 38.7m
36.7m 3.4%
30 -0.3%
*12 months to June 2019 **Six months to June 2019
Source: ONS -4.2% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* Travel Weekly Insight Report 2019-20 9 3% 2.3% 3.3% 2.4% 3.2% 2.8% 2.4% 1.9% 1.5% 1.5% 39.9m 41.2m 38.5m 36.4m 36.8m 36.2m 37.2m 2.1% 38.5m 2.6% 2.4% 1.9% 1.9% 1.4% 0.4%**
-5 -4 -3 -2 -1 0 1 2 3 4
Political
uncertainty and an economic slowdown could test UK holidaymakers’ resilience in 2020
agreed withdrawal should at least avoid the risks outlined in leaked cabinet office papers in August of fuel, food and medicine shortages and “a three-month meltdown at ports”. Industry leaders attending Abta’s
Travel Convention in October were warned by Peter Foster, Europe editor of the Daily Telegraph, to expect “grinding uncertainty” to continue as the “long-term impacts of Brexit have yet to emerge”. The uncertainty had an undoubted
OUTBOUND holiday numbers hit a record in 2018 and appeared on course to match those numbers in 2019 despite a relatively slow first few months of the year for
bookings (Figure 5). Note the link to GDP growth and the lengthy period of stagnation in numbers between 2009 and 2014, coinciding with
the years of post-financial crisis austerity, before a recovery and then a relative plateau since 2016
impact on the outbound booking cycle as explored elsewhere in this report (page 16). Deloitte UK lead partner for travel and aviation Alistair Pritchard agreed with Foster’s assessment, saying: “If the Withdrawal Agreement is ratified, it only deals with the exit terms. We’ll move into a new period of extended uncertainty about what a future relationship with the EU will look like.” He also warned: “I’m not sure [a ratified deal] would have an immediate positive impact [on] bookings. It might take longer for confidence to come back. In March 2019, people thought bookings would come in once we got a Brexit delay. We’ve seen assurances
44.2m
FIGURE 5: UK HOLIDAYS ABROAD, 2000-19 Annual holidays and GDP growth 45.4m
45.3m 45.5m 42.2m
46.6m 45m
47m
46.7m*
GDP growth
Holiday trips (million)
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