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The economic crisis had a significant impact on UK outbound travel and tourism market in 2009, as the recession, fears over unemployment, increasing levels of air travel taxation and a low exchange rate for sterling affected the propensity of consumers to travel abroad. By contrast, the domestic market for travel and tourism in the UK benefited from the trend for 'staycation' holidays in 2009, as a weak pound made overseas holidays more expensive and many consumers chose to holiday at home. In its new Market Report, Travel Agents & Overseas Tour Operators, market intelligence provider Key Note expects 2010 to be another difficult year for the UK outbound tourism market as the aforementioned negative factors continue to have an influence. As such, the turnover of travel agents and tour operators is projected to fall in 2010, before returning to growth in 2011.
As a consequence of the negative trends affecting the market, expenditure on outbound travel in 2009 fell to its lowest level since 2004 - the value of the outbound market fell by 14% to £31.69bn compared with a 3.7% increase to £21.88bn in the value of the domestic tourism market. Furthermore, the number of outbound trips made was at its lowest rate since 2001 - contracting by 15.1% to 58.6 million.
Despite the decline in the total UK resident tourism market, the turnover of travel agents and tour operators increased by 1.7% in 2009, equating to 45.1% of total expenditure on outbound and domestic tourism, and 76.2% of outbound tourism alone. However, Key Note projects that the turnover of UK travel agents and tour operators will fall in 2010 in line with the contraction in the overall value of the UK resident tourism market - it is forecast to fall to £22.95bn*, a reduction of 5% on 2009.
The trend for UK tour operators to cease trading has continued. In September 2010, Holiday Direct Ltd, which sold packages to Spain, Turkey, Cyprus, Egypt and Greece, ceased trading. This collapse followed the failures in August 2010 of three other holiday companies - Blue Skies Destinations Ltd, Flight Options Ltd and Sun U Travel Ltd. Between January and September 2010, 15 companies which held ATOL (Air Travel Organisers' Licensing) licences went into liquidation.
The travel sector has traditionally been the focus of much merger and acquisition activity and Key Note expects that this will continue to be a feature of the market again in 2011, with some of this activity coming from US companies which want to expand their UK presence. A number of major US travel and tourism companies, including Expedia, acquired UK companies in 2010, and Key Note expects that this trend could be repeated over the next 12 to 24 months.
In view of forecast trends, Key Note predicts that the value of the UK resident tourism market will fall by around 4.6% in 2010 to £51.1bn, with much, if not all, of the decline resulting from the continuing contraction of the outbound tourism market, the value of which is projected to fall by 8.5% in 2010 to £29bn. By 2014, the turnover of travel agents and tour operators is forecast to equate to around 48.3% of the value of the UK resident tourism market, up from a forecast 44.9% in 2010.
Press enquiries: Lisa Ivey at Key Note at email@example.com or 0845-504 0452. Press/review copies of the report are available on request.
Notes to editors:
* excluding local Northern Ireland enterprises.
Key Note's 2010 Market Report, Travel Agents & Overseas Tour Operators, examines the market for services provided by UK travel agents and overseas tour operators. The report focuses primarily on firms that serve leisure travel markets, although reference is also made to retail agents that deal with business travellers. The UK travel and tourism market comprises two main sectors: overseas travel by UK residents - outbound tourism; and travel within the UK by UK residents - domestic tourism. Journeys to work are not included in this definition. Unless otherwise stated, the statistics quoted in this report include day trips (trips not involving a night spent away from home) to overseas destinations, but exclude domestic day trips, which rarely require the services of travel agents or tour operators.
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