New year is a time to look forward. At least it should be.
Sadly, as we return to our desks after the Christmas break, the three largest issues that will shape the immediate future are achingly familiar.
Brexit will be back at the top of the agenda in January. Yes we’ve all had our fill, but while the UK voted overwhelmingly to “Get Brexit Done”, there’s still plenty of this particular turkey left for sandwiches.
Assuming the latest Withdrawal Agreement Bill is passed and we leave the EU on 31 January, we then begin the long process of haggling with Brussels over trading terms.
Much like how its namesake Brussels sprouts pass through the alimentary canal, it will be slow, painful and is sure to be explosive.
Secondly, Thomas Cook (TC) continues to ruffle feathers. Many in the industry are still struggling to cope with the impact.
In the immediate aftermath, cashflow is the biggest problem as lost commission income and the cost of refunding holidays bite.
It looks like we’ve made it through this phase better than expected, with no further material failures.
More challenges lie ahead though when the true financial impact is disclosed in agents and operators’ annual financial accounts.
They will be scrutinised by the CAA, Abta, Iata, insurers, lenders and credit card companies. Demands for more security will butt up against diminished insurance and lending capacity, resulting in some tough conversations at the March and September licence renewals.
Meanwhile, the UK’s remaining Goliaths will attempt to carve up the 2.5 million former TC passengers.
January has always been a pivotal booking month, accounting for up to 20% of all summer holiday bookings.
Early signs are that all of the lost TC capacity will be replaced as Tui, Jet2 and easyJet pile on new programmes.
These groups are financially healthier than TC has been, so we should see more rational pricing behaviour in 2020, but the summer holiday market is likely to remain over-supplied.
Finally, environmental concerns jumped up the agenda in 2019 and the scrutiny of our industry will only intensify.
While it represents the biggest risk to the travel industry over the next decade, it is also a huge opportunity for the Davids to triumph against those Goliaths.
Increasingly, consumers are seeking brands with purpose. Movements such as the B Corporation – businesses that balance profit with people and planet – are growing in influence, with well-known brands such as Ben & Jerry’s and Danone certified.
Waitrose has even trialled “B Corp Only” aisles in its online store. Whereas traditional capitalism was all about profit and maximising shareholder return, B Corps must demonstrate positive impact in all areas of their business, from governance and workers to environment and community.
I expect many more may apply, as a way to differentiate from the competition. Operating with a clear sense of purpose has commercial benefits. It builds trust and it can help attract and retain talent.
It may even help you attract investment: a number of private equity houses now run “impact funds”, investing exclusively in businesses with environmental or social conscience.
It’s worth thinking about when setting your New Year’s resolutions.
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