Foreword: Welcome to our October trends update.
2022 has been a tumultuous year so far, but the travel sector is recovering well and looks set to continue growing into 2023, albeit with some challenges to overcome. This October update gives an overview of the UK economic situation and some insights on what this means for travel.
We will of course be at WTM in November and we look forward to seeing many friends at the show. Please do get in contact if you would like to meet, we would be delighted to discuss future sales, marketing and PR plans with you.
Kind regards
Rob Wilson
Winner of PR & Representation Company of the Year 2022
Four Communications is delighted to announce that for the second year running we have been voted PR & Representation Company of the year at the TTG Travel Industry Awards 2022. Voted for by an expert industry panel, the award highlighted our client work and our company values in diversity and inclusion.
Over the past year our amazing team has created some real standout campaigns which we are very proud of – if you would like to find out more, please do not hesitate to contact us.
The Economic Situation
Throughout summer, news headlines were dominated by the cost of living crisis with ever-increasing energy prices driving up prices for everyday goods. The Bank of England has rapidly increased interest rates to 2.25% to try to stem the inflation tide caused by rocketing energy costs, however this is a supply side inflation issue caused by the war in Ukraine.
The UK governments is taking supply side action to bring down the price of energy, but this will take time. While on 23 September, the UK government announced a mini-budget with the aim of increasing economic growth by 2.5% a year.
Reaction from the markets to the mini budget has been hesitancy, as Sterling has lots value to an already strong US Dollar. If Sterling continues to remain weak, the Bank of England will undoubtedly increase interest rates quicker than expected.
The Mini Budget
Liz Truss the new UK Prime Minister and Kwasi Kwarteng, the Chancellor of the Exchequer announced an aggressive free market stimulus budget on 23 September. The core approach in this budget being:
What does this mean for travel?
GFK’s UK confidence tracker reported consumer confidence at -41 in June, a new record low as the cost of living crisis started to bite. Reported by Travel Weekly, The Lloyds Bank UK Sector Tracker showed that tourism and recreation saw the sharpest fall in consumer demand of any sector. Eleven of the fourteen sectors reported on saw demand fall.
This shows that consumers tightened their budgets ahead of expected energy price rises taking effect in the UK this winter, when most energy is used.
The recent announcement of UK Government energy price cap and the aggressive taxation reductions will help consumers and confidence should return, however we expect consumers to be cautious in spending money.
The longer-term impact of Sterling is another consideration as markets evaluate the effectiveness of this new economic approach. The value of Sterling will influence travel purchase decisions for many, so value will need to a key focus in destination promotion.
We do expect to see more consumers book closer to travel, so they are less exposed to unforeseen global events.
Luxury travel will continue, while we expect premium mainstream to continue with less holidays and breaks taken over a year, but with more money spent on the ‘key’ holidays and breaks. We are already seeing this with tour operators seeing increased average spend.
The low cost travel segment is expected to be hit the hardest, with decisions being made whether to travel abroad, stay in the UK or not to travel at all.
About Four
Four Communications is an integrated sales, marketing and PR agency in the UK and Middle East. We work across sectors including travel and tourism.
If you want to find out more contact: Rob Wilson here
2022 has been a tumultuous year so far, but the travel sector is recovering well and looks set to continue growing into 2023, albeit with some challenges to overcome. This October update gives an overview of the UK economic situation and some insights on what this means for travel.
We will of course be at WTM in November and we look forward to seeing many friends at the show. Please do get in contact if you would like to meet, we would be delighted to discuss future sales, marketing and PR plans with you.
Kind regards
Rob Wilson
Winner of PR & Representation Company of the Year 2022
Four Communications is delighted to announce that for the second year running we have been voted PR & Representation Company of the year at the TTG Travel Industry Awards 2022. Voted for by an expert industry panel, the award highlighted our client work and our company values in diversity and inclusion.
Over the past year our amazing team has created some real standout campaigns which we are very proud of – if you would like to find out more, please do not hesitate to contact us.
The Economic Situation
Throughout summer, news headlines were dominated by the cost of living crisis with ever-increasing energy prices driving up prices for everyday goods. The Bank of England has rapidly increased interest rates to 2.25% to try to stem the inflation tide caused by rocketing energy costs, however this is a supply side inflation issue caused by the war in Ukraine.
The UK governments is taking supply side action to bring down the price of energy, but this will take time. While on 23 September, the UK government announced a mini-budget with the aim of increasing economic growth by 2.5% a year.
Reaction from the markets to the mini budget has been hesitancy, as Sterling has lots value to an already strong US Dollar. If Sterling continues to remain weak, the Bank of England will undoubtedly increase interest rates quicker than expected.
The Mini Budget
Liz Truss the new UK Prime Minister and Kwasi Kwarteng, the Chancellor of the Exchequer announced an aggressive free market stimulus budget on 23 September. The core approach in this budget being:
- An energy price cap expected to cost the UK Government £150bn consumer / £50bn business
- Basic rate of income tax being cut by 1p to 19p (in the pound) from Apr 23
- Reversing of NI Insurance tax rise introduced in April 22
- Stamp duty (purchase tax) reduction on property purchases
- Corporation tax rise cancelled, keeping it at 19%
- Cutting government regulation (supply side reforms)
- Public sector efficiency drive
What does this mean for travel?
GFK’s UK confidence tracker reported consumer confidence at -41 in June, a new record low as the cost of living crisis started to bite. Reported by Travel Weekly, The Lloyds Bank UK Sector Tracker showed that tourism and recreation saw the sharpest fall in consumer demand of any sector. Eleven of the fourteen sectors reported on saw demand fall.
This shows that consumers tightened their budgets ahead of expected energy price rises taking effect in the UK this winter, when most energy is used.
The recent announcement of UK Government energy price cap and the aggressive taxation reductions will help consumers and confidence should return, however we expect consumers to be cautious in spending money.
The longer-term impact of Sterling is another consideration as markets evaluate the effectiveness of this new economic approach. The value of Sterling will influence travel purchase decisions for many, so value will need to a key focus in destination promotion.
We do expect to see more consumers book closer to travel, so they are less exposed to unforeseen global events.
Luxury travel will continue, while we expect premium mainstream to continue with less holidays and breaks taken over a year, but with more money spent on the ‘key’ holidays and breaks. We are already seeing this with tour operators seeing increased average spend.
The low cost travel segment is expected to be hit the hardest, with decisions being made whether to travel abroad, stay in the UK or not to travel at all.
About Four
Four Communications is an integrated sales, marketing and PR agency in the UK and Middle East. We work across sectors including travel and tourism.
If you want to find out more contact: Rob Wilson here