Travel Question time

07 February 2012

The UK has endured some eye watering increases in air passenger duty (APD) but there was a mood of resignation amongst the panel at the CIMTIG event last week that it was an easy target and was not going to go away as it rises again by 10% in April 2012. The evening was expertly chaired by Richard Carrick, Chairman of Private Fly who leapt around the room managing some pretty lively debate.

The UK government has always had an issue with the UK balance of payments from travel as there is still a huge gap (over £13 billion)[1] between outbound tourism spend which is considerably greater than spend by inbound visitors. Even the Olympics this year are unlikely to redress the balance.
It was an interesting event with the great and good of the UK travel industry speculating on what 2012 might bring and how the industry has been bearing up against everything that has been thrown at it over the last couple of years, such as tsunamis, typhoons, ash clouds, floods and strikes.
Airline winners and losers
This week was a particularly poignant one for the airline industry. There were clearly some winners and losers as Barcelona based Spanair[2] ceased operations due to Spain’s current economic woes and Ryanair[3] declared it was back in the black, posting a 15million euro profit for Q4 2011.

Gloom vs Enthusiasm for Olympics
You would have imagined that the UK industry would be in high spirits given the large number of events to attract our overseas visitors such as the Queen’s Diamond Jubilee and the Olympics. However Tom Jenkins of ETOA reckoned the Olympics “will be a blip and nothing more” and was decidedly gloomy about the games. ETOA[4]  have just done research on the Beijing and Athens Olympics hotel demand so Tom had some facts to back him up. There were some on the panel such as Hugh Taylor OBE of Michels & Taylor reminding us that we should be grateful for the avoidance of a bed tax in the UK. However no sooner had this been said  and I click to the latest news to read that the EU has started to think about imposing an EU bed tax to raise more monies for the EU coffers!

Richard Tams from BA was significantly more upbeat about the Olympics and as a Tier 1 sponsor showed more unbridled enthusiasm, claiming strong inbound bookings. Discussion followed about the travel spike that you typically see in travel demand before and after major events that we saw during the last World Cup Football event.  There were some on the panel such as Hugh Taylor OBE of

London beds on offer
London hoteliers now have a considerable number of extra hotel beds (120,000) to sell which have just been returned to them from the Olympics Committee[5]. From some of the stories we heard about 3 star hotels more than 6 miles from the city, trying to charge £600 per night it’s clear that some hotels have been greedy and might be left “holding the baby” if they don’t shift their prices in line with demand.

Get in at the dream stage
John Wimbleton from TUI made a good point which was also reiterated at last year’s Eye for Travel conference in Amsterdam. You have to get in at the dream stage of the customer’s travel buying cycle to be successful and those that don’t often lose out on the sale if they try and wait for the browse and book stage of the customer journey.
Delivering excellent customer service was a key theme and differentiator in John’s mind and key to repeat bookings and high average spend as he reflected on the strength of relationship between the TUI staff and those having just spent £65,000 with the company to sail around the world.  
Although disposable income has shrunk for many households there are many customers who chose not to spend in 2008, perhaps feeling a tad guilty about spending too much but these customers are back spending considerable money on high value travel products.  John conceded that service ruled over product and was a key differentiator. The panel agreed that you still need to invest in marketing in a downturn to stay ahead.
How optimistic are you for 2012?  
Are you seeing some of the trends that the travel panel witnessed?
Are you spending more or less on marketing this year?

[1] International Passenger Survey Deficit of £13 billion for 12 months to end November 2012
[2] Source: Travelmole “Thousands stranded after Spanair shuts down” 30 January 2012
[3] Source: (30 January 2012)
[4] Source: ETOA New statistics from 2004 and 2008 Olympics and their impact on hotel demand
[5]Source: www.examiner.comLondon Olympics promises additional tickets and hotel rooms” January 29, 2012
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