Opinion: Travel is helping the economy to turn the corner

Opinion: Travel is helping the economy to turn the corner

By Mike Saul, Barclays head of hospitality and leisure

The long-awaited British summer has finally arrived, and it has done so in style.

While the mercury rises and the country basks in sunshine, it’s easy to forget the challenging time that operators, both inbound and outbound, have had managing the headwinds.

So, halfway through 2013, where are we?

There is a distinctly upbeat feeling coming through – something that is echoed not only in the ONS data as well as broader economic data, but also importantly from among our clients. 

After the washout that was last summer, January got off to a flying start with many operators reporting higher than expected sales volumes; indeed the sub-zero temperatures encouraged outbound travel to rise by 6%.

As the year progressed this strong start petered out with travel numbers stagnating on a year-on-year basis.

This was fuelled by consumers, conscious of managing their spend, opting to hold out for a break until the summer months when they could get guaranteed sunshine just a short flight away.

Indeed the most recent ONS travel and tourism data for May shows a not-insignificant 7% rise in outbound travel, with visits to Europe up 2%, compared with decreases to long haul destinations. 

April’s rise in APD has certainly compounded this.

This is part of a broader trend. UK holidaymakers have become more travel savvy, looking for good deals that ensure their holiday spend goes that much further.

With the mix of sun, sea and sand as well as the varied cultures just a short distance away on the Continent, we’re seeing more travellers heading to countries across the Med for their sunshine injection, rather than going further afield.  

Halfway through the year, consumer confidence appears to be on an upward trend, but this improvement has been gradual, which is perhaps no surprise with inflation riding above the 2% target for 42 consecutive months now and set to rise further in the near term. 

That said, there is clear evidence that the economy is turning a corner - recent data from Barclaycard shows consumer spending up 3.3% for the first six months of the year compared with the same period in 2012.

Indeed, one of the key drivers of this growth is travel spend; June saw a 13.3% increase in airline spend compared with last year as Brits, wary of the unreliable British weather, booked their holidays abroad.

Just this week the IMF raised its expectations for the UK’s GDP growth, confirming the economy is moving from rescue to recovery, and business confidence has risen to its highest point for more than a year.

These are all positive drivers for an industry dependent on discretionary spend.

Indeed it is worries about low discretionary spend that is proving to be the external factor most of our clients are concerned about.

The focus for many operators therefore has been on increasing the quality of their products and offerings and improving customer service standards to ensure they are able to secure that spend when it occurs. 

This focus has taken different formats, from marketing and interacting with customers via social media channels, to ensuring they have the full complement of platforms to allow customers to research and ultimately book their breaks
wherever they are, be that on the high street, on-line, or over the phone.

Last year the UK travel and tourism industry outperformed the economy.

With a continued focus on putting the customer and their needs first, there is no reason why this should not be repeated this year particularly with the economic indicators looking as promising as they do.


This is a community-moderated forum.
All post are the individual views of the respective commenter and are not the expressed views of Travel Weekly.
By posting your comments you agree to accept our Terms & Conditions.

More in News