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Travel Agents & Overseas Tour Operators Market Report 2008
Key Note Publications Ltd, Nov 2008, Pages: 143
In 2007, UK outbound tourism expenditure (excluding expenditure on travel fares to and from the UK) totalled £35.48bn — a 3.1% increase compared with 2006. Expenditure on domestic tourism (excluding day trips) stood at £21.24bn — 1.3% higher than in 2006. Combined, the total UK resident tourism market was valued at £56.71bn in 2007 — a rise of 2.4% compared with the previous year. In 2007, the turnover of travel agents and tour operators totalled £22.6bn. This was a 20% rise on 2006, and was equivalent to 39.8% of total tourism expenditure by UK residents.
Despite the current economic difficulties in the UK (as at November 2008), the UK's leading tour operators are fairly confident that demand for packaged holidays will remain strong. For example, both Thomas Cook PLC and TUI Travel PLC have indicated that demand for their 2008 summer programmes has remained on course, and that there is no evidence to suggest that consumers are trading down, curtailing their holiday plans or reducing average holiday durations. Packaged, or all-inclusive, holidays have retained their popularity, possibly because consumers prefer to pay a fixed cost in these uncertain economic conditions.
To improve their financial performances, many of the leading tour operators have been increasing prices and reducing capacity. Thomas Cook, for example, has reported that its average selling prices in the period from May to early August 2008 were 14% ahead of the corresponding period in 2007, and that its margins were significantly higher. TUI Travel PLC has announced that it aims to reduce capacity by 15% for its UK summer 2009 season, and to reduce capacity in its winter 2008/2009 season by 21%.
The UK domestic travel and tourism market faces a number of threats in 2008, including poor summer weather and the depressed state of the UK economy. However, the fall in the value of sterling against the dollar and the euro could aid the domestic market as it increases the costs of holidaying outside the UK and improves the financial competitiveness of taking breaks in the UK. It is also possible that during the economic slowdown, consumers may decide to holiday within the UK, rather than travel abroad, in order to reduce their holiday costs.
Indicators of trends for the first half of 2008 in the outbound and domestic tourism market are fairly encouraging for travel agents and overseas tour operators, with increases being shown for both volume and value tourism, compared with the corresponding periods in 2007. The combined turnover of the UK travel agents and tour operators in the first half of 2008 is also higher than in the corresponding period in 2007, and the leading travel agents and tour operators remain fairly optimistic about demand for the year as a whole. Despite these fairly bullish assessments, however, UK residents' demand for domestic and outbound travel and tourism remains vulnerable to any substantial worsening in the UK economic climate, and this could in turn affect people's choices regarding holiday destinations and whether to travel at all in the early years of the forecast period from 2008 to 2012.
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