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Mixed picture in first quarter
Tuesday, 05 Mar, 2009
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Comment by Jeremy Skidmore (www.jeremyskidmore.com)
As we’re nearly at the end of the first quarter of a year which may go down as one of the worst in living memory – for some sectors at least – I thought it was worth having a look at how the travel industry is coping.
Everyone, it seems, is having to contend with a deal-driven market, whether they are selling the holiday equivalent of a Bentley Azure or a Ford Ka and, of course, people are leaving it later to make a decision.
But the picture that is emerging is far from desperate for many companies. Families are buying and, as has been reported, the big operators are well sold for this year.
The majority of people who are still in a job are effectively in an institution, where they are given four or five weeks off each year and are conditioned to take a holiday. They may cut back and take just one – which is why city break and no-frills bookings are down – but they won’t completely give up on holidays, particularly when they have kids to entertain.
Within the family market it has been well documented that there are certain countries, such as Turkey and to a lesser extent Egypt, selling well because of the exchange rate as euro destinations struggle.
Hoteliers in the euro destinations are slashing their prices, so we will continue to see good deals this summer.
Meanwhile, there are also pockets of high demand for various types of holidays – particularly long haul trips. Perhaps people have a fatalistic view that we’re all doomed and you might as well enjoy yourself now, or that there’s no interest to be earned on savings, so you might as well spend, spend, spend.
The big cruise companies are also faring well after cutting prices in January and February and that is because cruising has successfully re-invented itself as a great family holiday. It’s also all-inclusive, which families on a budget love.
So, who is suffering?
My feedback suggests it is those companies that are almost solely dependant on older clientele living off investment income. As exchange rates have been slashed, so has that income.
Some smaller cruise companies that target elderly couples are having a tough time, as are operators selling cultural and historical tours which appeal to that market.
It’s difficult to make money if you plan to take 16 people on an exclusive tour but can only sell half that number.
But as one specialist operator said to me this week, whether you are currently doing well or not, if you can survive the next year or two and come out of it in good shape, you won’t be doing badly.
How are you surviving the great depression? Let us know by commenting below.
Jeremy Skidmore
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