Has the mini-budget impacted peaks? TTC quoted in TTG

The success of January peaks will largely depend on how this month’s Autumn Statement revives consumer confidence, a TTG Agenda 22 panel agreed, with the industry looking for calm and reassurance after the “mini-Budget” debacle that cost Liz Truss her premiership and Kwasi Kwarteng his role as chancellor.

Travel Trade Consultancy director Simon Brodie said:

with September’s Atol renewals coinciding with multiple changes of prime minister and transport secretary, the assumptions that underpinned the forecasts used by travel businesses to obtain their Atols “now look woefully out of date”.

“It makes it very difficult for our clients to really plan what the future looks like,”

said Brodie, who added that despite “tangible optimism”, the data suggested an ongoing need for caution – leading him to warn travel’s recovery “may stall” as a result.

Alan Bowen, legal adviser to the Association of Atol Companies, told the seminar: “I’m cautiously optimistic, but we have a Budget on 17 November and we are clearly being softened up with warnings of tax rises and budget cuts. Tax rises will put pressure on businesses to increase wages; that’s going to force inflation even higher.”

Bowen said this, along with interest rate increases, meant “the pound in people’s pockets is going to buy a lot less”.

“An unmitigated disaster” is how Bowen characterised the past seven weeks for travel following Truss and Kwarteng’s mini-Budget on 23 September, which triggered the pound’s fall. “Most people started looking at what the rules on surcharges were because they just thought we can’t trade at that level without increasing costs,” he said.

VFR demand, said Bowen, was driving “really good” seat-only sales, but he struck a more cautious tone when discussing the package market. “Unless we have more certainty about fuel costs after April, I expect peaks won’t be quite what we expect,” he said.

“I think possibly peaks will be pushed further down the line; people need security and stability about where they’re going to be by summer and we haven’t got that yet.”

Senior travellers, Bowen said, would benefit from higher interest rates and a possible retention of the “triple lock” pension increase. However, he predicted: “I think people who do find it difficult to spend money will wait until the beginning of next year.”

Julia Lo Bue-Said, chief executive of the Advantage Travel Partnership, said demand was strong, but businesses were worried. “They are all servicing debts they never had when they went into the pandemic.”

She advised members to operate with costs managed “as tightly as you can”. “You’ve got to find a way of improving your margins without necessarily improving your revenue.”

Lo Bue-Said added: “We have a duty to think creatively about how we encourage people to book early sensibly and there are lots of incentives out there. It presents opportunities for sure.”

She said Advantage would have a value-added message, as well as one “around making sure you’ve got somebody that’s got your back” when things go wrong.

“Consumers sat on a warchest during the pandemic, but this time round it might literally be used to keep the lights on,” he said. |I do anticipate – and so do our clients – that the booking decision will come a little bit later than we’d normally expect.”

Brodie also predicted a later 2023 peaks.

‘STABILITY’

The panel also tackled the recruitment crisis, with businesses facing higher wage demands. “Businesses will have to think about when the right time is to bring new staff on,” said Lo Bue-Said. “We have to make sure people are rewarded fairly against other sectors, and that will take time.”

Brodie said the problem was acute among finance staff who moved to other sectors paying more. He said travel was a fun, vibrant, “sexy” industry, but “it’s money in our pockets that’s most important right now”.

Lo Bue-Said added pandemic stress had led to redundant staff asking, “why would I want to go through all this again?” when approached about returning. “The fun right now isn’t in travel, let’s be honest,” she said. “We have to find a way of encouraging new talent and talent that left to come back in.”

The panel also discussed changes at the Department for Transport, with Mark Harper appointed the country’s new transport secretary and former transport committee chair Huw Merriman becoming a junior minister.

“I’m really pleased Huw Merriman has become a junior minister – he is one man who does understand and is really interested in travel,” said Bowen. “I have high hopes he will move up in due course. The minister himself is an unknown quantity.”

Lo Bue-Said said she was encouraged by Harper having spoken out on travel issues during the pandemic, stressing it was now “up to us to make sure he understands the sector and not the other way round”. She added lobbying Merriman over the past two had benefitted the industry.

Brodie added:

“A period of stability would be good. Mr Harper being in position for a period of time would be really helpful.”

Read the full article and watch the recording on TTG Media’s website.

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