Over the past year the credit crunch has seen the nation tighten its belt and feel the squeeze. The prosperous era of ‘splashing out’ has come to an abrupt end and given way to feelings of thrift and frugality that have led us all to keep a beady eye on the balance sheet.
The finer things in life are therefore being cut out as we all endeavour to weather this storm as painlessly as possible. This has had a huge impact on the UK travel industry which is expected to contract by 8.9% this year. As Carroll Rheem, Director of PhoCusWright, has stated: ‘British travellers have had to cope with currency devaluation on top of the recession, and both have driven significant changes in travel patterns.’ This article investigates these emerging trends with relation to travel to Europe in 2009/10 and goes some way to providing an outlook for the future.
Fewer people are expected to travel this year but us Brits love a bargain and, rather than giving up our travels entirely, most of us are on the lookout for good value and special deals. In fact, in mature markets such as the UK and Germany, the percentage growth of Google travel searches for 2008/9 matched growth for 2007/8. Andrew Pozniak, Google Head of Travel Europe, Middle East, and Africa, surmised that: ‘Activity rates have increased solidly, but conversion rates have been tougher. This shows appetite (for travel) has not been dimmed by the recession.’ Conversely, the recession has highlighted the importance that Brits place on travel over other activities. The Travel Nation report carried out by Eurostar in April 2009 concluded that Brits prioritise holidays as the most important of all luxuries, above eating out, buying new clothes and entertainment. According to their survey, over a third of adults (36%) would happily not eat out in restaurants for an entire year and nearly one third (29%) would rather not buy any new clothes for an entire year than miss out on their holiday.
So although we are unwilling to forgo our precious annual holiday(s), we are nonetheless looking to travel in cheaper, more cost effective ways. Through the internet we are able compare and contrast vast quantities of information to find the best deals at websites such as travelsupermarket.com (flights, hotels, car hire, insurance, holiday packages,) and The Currency Exchange Site (http://www.currencyexchange-uk.co.uk/) (foreign exchange). For this reason the online travel market has grown steadily over the past five years and is now worth 60 billion Euros. In contrast, the offline travel market has seen a steady decrease in sales with a CAGR of -0.6% for 2002-2008 (European Online Travel Report 3 by Eye). Package holidays have also been popular during the economic crisis as people are looking for security and prefer to know exactly how much their holiday is going to cost from the outset. Another trend that has emerged is the rise of the ‘soliday’ – many people are resorting to travelling alone as friends and family struggle to fund holidays. According to ebookers.com, nearly 15% of holidaymakers took ‘solidays’ in the past year due to friends and family being unable to fund travel plans as a result of the recession. The most popular locations for solo travelling include Europe (34%), India (14%) and Africa (11%). Ben Reynolds, Head of Marketing at ebookers.com said: ‘The recession is changing the way we travel, with people looking at new ways to ensure they can still jet off on a break this year. The soliday seems to be emerging as a trend for people who can still afford a break.’
Surprisingly, findings by the Travel Nation report carried out by Eurostar suggest that people will be continuing to travel to the same European destinations in roughly the same numbers as last year, suggesting that the fall in exchange rate of the pound against the Euro has not had the dramatic impact on travel to the Eurozone that has been widely predicted. According to their survey, exchange rate influenced choice of destination for less than one in five of us and is therefore not a significant factor. Two theories that go some way to explaining why we have remained loyal to the Eurozone, despite the exchange rate, are that it is close to home and so travel costs remain low, which is without doubt a huge factor in considering a holiday destination, and that people are ‘more inclined to go somewhere tried and tested,’ i.e. Europe, during these uncertain times.
The vast majority of us would also like to manage risk for our holiday by doing our homework and ‘looking for advice’ on how to get the best value from our destinations. The recession means that our attitude to consumption has become more constrained. This brings with it a more considered approach to travel spend, meaning people will increasingly seek ways to minimise risk and maximise on overall value. In response, European travel retailers are on the verge of rolling out customised concierge services to the mainstream. Concierge services range from destination based experts who contact customers before departure and help them create a tailor-made experience to traditional travel agents offering a before, during and after service. This is a means for travel companies to drive up margins and increase loyalty and customer satisfaction at a time when consumers need help trawling through the plethora of information on the internet and are demanding more experience led travel. As Caroline Bremner, Research Manager to Euromonitor International Global Travel and Tourism, put it: ‘Concierge services traditionally cater to the wealthy and luxury travellers. However, companies are ripping up the rule book and realising that these services are just as helpful and appreciated by the mass market. This area offers the opportunity to reach out and provide value added services like never before.’
With the democratisation of luxury therefore on the cards, travel and tourism in Europe has a bright future despite current global financial uncertainties.