Concerns raised over economic slowdown
(26 September 2008) Travolution's Question Time this week was dominated by how the online travel business in the UK is responding to the slowing economy and post-XL consumer protection issues.
When asked if the double whammy of global slowdown and the XL collapse would impact demand for travel, the panel was in agreement that the market in 2009 would be difficult. Matt Cheevers, MD for Teletext Holidays, said that the next three months in particular would be "tough".
He said that searches on Google for ´holidays´ and ´cheap holidays´ this week were down 26%, against last year´s seasonal drop of 6%. "There is a massive reduction in initial demand," he said, "but it will come back. There needs to be consolidation; there needs to be failures."
Justin Cooke, CEO of the event´s sponsor Fortune Cookie, suggested however that people who were still looking to travel would spend even more time planning and researching online. He said "efficiency of spend and ROI" would be critical for travel businesses, with cross-selling and up-selling becoming as important as the initial conversion.
The "uncertainty" surrounding the global economy was highlighted by ABTA´s chief executive Mark Tanzer as a key concern for consumers and its members. "The question is, how long is [the uncertainty] going to last? The experts don´t know and it changes day by day."
To prove his point, in the 72 hours following the event, the price of oil has risen again, concerns are surfacing about the US government´s bank bail-out is and Alitalia gets ever closer to being grounded.
The difficulties faced by the airline sector could threaten dynamic packaging businesses, according to Paul Evans, CEO of lowcostbeds. His argument was that airlines will drop non-mainstream destinations and increase the price of seats to popular destinations, resulting in an increase in the cost of dynamic packages.
In terms of protection, Tanzer, Cheevers and Evans repeated the industry´s party line that the current situation is still confusing and needs addressing. Chris Loughlin, Europe MD for deals publisher Travelzoo, offered a different slant, based on his time in the US where protection is the responsibility of the passenger. "It seems a bit ´nanny-state´ in the UK," he suggested.