Recession avoided in 2012 but economy still casts shadow over prospects for UK travel sector

Monday 23, April 2012


Recession avoided in 2012 but economy still casts shadow over prospects for UK travel sector


The UK travel industry will remain at the mercy of the local and global economy this year, with the London 2012 Olympics creating as many challenges as opportunities, reveals research unveiled tomorrow (Thursday, April 19) at the World Travel Market (WTM) Vision Conference – London.


The UK “will narrowly avoid moving into recession” this year, while increasing unemployment, a drop in consumer confidence, and an increased propensity to save will put travel spend under pressure, according to research company Euromonitor International.

Overall, the UK will see a 0.8 percent growth in GDP for 2012. This breaks down into a 0.3 percent lift in Q1, a flat second quarter, a 0.6 percent improvement in Q3 before the year ends, with a 0.3 percent rise in the last three months, Euromintor International Head of Travel and Tourism Research, Caroline Bremner, will explain to the senior travel industry delegates in attendance. 

Other indicators are a concern, however, with unemployment expected to rise above 9 percent this year. The net result is a significant decline in consumer confidence, with more Brits choosing to save rather than spend, claims The Travel Industry Global Overview.

Some tour operators may take comfort in the findings that gross incomes for people earning more than £25,000 a year will grow in both 2012 and in 2013. However, people earning less £25,000 per annum will have less disposable income. The gross figures do not factor in the impact of inflation and other costs-of-living on disposable incomes.

London 2012 presents a new dilemma for pricing, yield, and capacity planning for the outbound tour operating sector. No clear picture is emerging about the impact of the Games on domestic and outbound tourism. The event takes place at the heart of the peak summer season, starting on July 27 and finishing on August 13.

Another issue is the UEFA Euro 2012 football tournament, which opens on June 8, with the final taking place on July 1. Traditionally, tour operators experience a drop in bookings and travel during big soccer events, and with the Republic of Ireland also taking part in Euro 2012, chances are more people might be distracted from thinking about a summer break.

The latest increase in APD, the government’s GREAT campaign, the potential for unrest overseas, and the ongoing Eurozone debt crisis are other variables likely to have an impact on outbound demand.

Reed Travel Exhibitions Chairman World Travel Market Fiona Jeffery said: “The impact of the global financial uncertainty is still playing its part in the economy and the travel and tourism industry.

“However, the travel industry has a lot to be positive about. WTM 2011 will generate a record £1,653 million in industry deals, which shows there is a great amount of confidence within the sector.”

The Euromonitor International report – The Travel Industry Global Overview – worth £1,000), is given to all attendees of the WTM Vision Conference – London.WTM Vision Conference series was launched in 2009 in London expanding to Milan and Dubai (at fellow Reed Travel Exhibitions Event Arabian Travel Market) in 2011.

The full program of WTM Vision conferences in 2012 is:

  • April 4: Moscow
  • April 19: London
  • May 1: Dubai (at ATM) 
  • May 10: Shanghai
  • May 18: Florence



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