08 October 2008

People will holiday in the credit crunch

Travel spend next year will be flat, but not negative and most people will refuse to give up their holidays, according to PricewaterhouseCoopers partner Malcolm Preston.

At the ABTA Travel Convention, Preston said that when people were asked Ã~´What is the first thing you will stop spending money on?', 10% said travel. However, when they were also asked 'What is the second thing you will stop spending money on?', and the two answers were aggregated, travel and holidays were way down the list, with only a single figure percentage saying they would give up travelling.

"There are many things that will go before that, which backs up our feeling that the industry is pretty resilient," he said.

For summer 2009, around 12% of the market is already sold and so far, volumes are holding up and prices are up by 5-10%, Preston revealed.

"Some people are also saying the price rises are even higher than that," he said.

There has also been an increase in all-inclusive bookings for next year.

Ã¢â¬ÅâœItÃ¢â¬â¢s a case of natural hedging by customers who are paying up front for their holiday and not having to suffer if the exchange rate worsens,Ã¢â¬~ he said.

Preston likened the economy to a grand prix, saying the downturn was like a pit stop.

"The important thing was what you do in a pitstop, to emerge stronger," he said. "You need to focus on customers and look after our best people. They will rise to the top and must be motivated in a difficult market."

by Jeremy Skidmore