Is it all doom and gloom? That’s what we asked at the recent Barclays Travel Forum. The verdict – it’s certainly a mixed picture but there are still reasons to be cheerful.
Despite the squeeze on disposable income, travel customers say that people will still prioritise travel spend – their annual holiday in particular – which should help travel providers achieve a positive 2018.
Niche and experiential providers are trading well, capitalising on the demand for social media-friendly activities people can share online and the interest in transformational experiences on holiday.
However, it’s naive to think everything will be plain sailing.
There are a number of challenges that repeatedly arise during our travel customer discussions.
Short term, GDPR rules have been front of mind for many, with access to labour a medium-term worry. Uncertainty over Brexit and the ability of UK businesses to continue to employ EU workers persists, so it was good to hear so many of our customers are assessing how to react to a range of outcomes to ensure their businesses continue to thrive.
We explored the impact of the new Package Travel Regulations (PTRs) at the Travel Forum. The introduction date of July 1 has proved difficult for many, so CAA chief executive Richard Moriarty’s commitment to take a proportional stance to implementing the regulations for an additional two to three months is good news for providers, especially as there are concerns that more regulation will lead to increased costs that may, at least in part, have to be passed on to the public through higher prices.
There is always a nagging fear that we’re all kidding ourselves and looking on the bright side when examining our prospects. Does the data bear out this cautious optimism? Looking at recent Barclaycard data, I’d say yes.
Latest numbers showed travel spending had increased by 10.3% year-on-year – the highest growth since June 2015. This was driven by improved performance from airlines (+9.9%) and travel agents (+16.1%). Hotel spend was more stable at 2.5%, with the ever-growing importance of online and mobile bookings and payments evident. Online purchases were up by more than a quarter (27.4%) compared with April 2017.
Of course, none of us has a crystal ball, and it is very tough out there for parts of our industry, but I still think travel has got what it takes to succeed this year. And many private equity companies agree, with the sale of TMC Hillgate Travel to PE-owned rival Reed and Mackay and Vitruvian Partners’ purchase of Travel Counsellors two of the latest deals. There are a number of other high-profile transactions in the pipeline too.
Chris Lee is director, head of travel and professional sports, corporate banking at Barclays
