THE LOTUS WEEKLY BREXIT ROUND-UP
TRAVEL & BREXIT
The key booking ‘peaks period’ for the travel industry has started well according to the travel trade media. Travel Weekly reported that customers have been queueing at travel agency doors as pent-up demand from Brexit uncertainty. marketing campaigns and renewed consumer confidence have driven strong early peaks sales.
Many also agree that the clarity on Brexit following the election has also provided a boost and helped with the strong start.
The UK’s largest operator Tui reported that demand for summer 2020 is already strong with sales for the family market particularly buoyant, with destinations such as Greece, Balearics and Turkey remaining the most popular choices so far for beach breaks and Mexico for long-haul; North Africa is also performing well.
They also reported an emerging appetite for solo travel, particularly with the over-50s.
The positive outlook was reflected in Travel Weekly’s online polls. Almost two-thirds of 133 respondents on Facebook said they had had a positive start. One-third said business had been slow.
TTG reported that there was cautious optimism among the trade following a nuanced start to peaks with agents reporting a healthy flow of bookings to kick off the busy trading period.
BBC Radio 4’s consumer programme You & Yours, reported on a survey conducted by Savvy Marketing, which found package holidays remain an appealing proposition despite the collapse of Thomas Cook with nearly two thirds of the 1,000 respondents saying they were still happy to book an Atol-protected package trip.
Travel industry fragile
However, in another piece of research for You & Yours, conducted by Company Watch, warned that a third of UK travel agents and tour operators could go bust in three years.
Nick Hood, insolvency expert at Opus Restructuring & Insolvency, said many travel businesses were “fragile”. “A puff of adverse commercial wind will blow these straw houses down,” he said.
Brexit costs have led to staff cuts
Brexit has increased European holiday prices by an average of £97 per person since 2016 and prompted some operators to cut nearly a third of their overseas staff, according to new research by pressure group Seasonal Businesses in Travel (SBIT).
A survey of 65 independent operators in November found they had cut capacity by an average 19%, or 3,800 beds per week, meaning 66,000 fewer holidays on sale compared with 2016.
The research, A Crisis is Upon Us said: “This represents a loss of economies of scale for many companies which has filtered through to higher prices for consumers – despite the best efforts of most companies to keep prices down.”
SBIT said the operators surveyed had cut an average 30% of staff and estimated there had been more than 1,700 jobs lost since the 2016 referendum, with a “significant acceleration” since the pressure group last highlighted the issue in August 2018.
The report said: “With most of these cuts affecting jobs seconded to the EU to run holiday operations being filled by 18 to 34-year-olds, it is this age group bearing the brunt of these job losses.”
Operators, particularly those in the winter sports market, fear they will not be able to employ staff in-resort on UK terms, paying instead into more expensive foreign state social insurance schemes rather than UK tax and national insurance. Most have already cut back on recruitment as they plan 12-18 months in advance.
After leaving the EU, UK overseas staff would need to apply for right of stay and a work permit, unless a deal was agreed during next year’s transition period.
Trust remains a key theme for 2020
Amongst insights from Mintel for trends for 2020, trust remains a key theme reports Travel Weekly. This is due to uncertainties around Brexit and the Thomas Cook collapse which have instilled cautious booking behaviour.
In November 2019, 39% of UK adults said Brexit had made them more cautious about booking holidays. Another 44% said the collapse of travel companies (for example, Thomas Cook and Super Break) had made them more cautious about booking.
Those who plan to book their main holiday as a package in 2020 appear likely to let their travel company choice be influenced by their previous experience of a brand, while many will take brand reputation and customer reviews into account.
Mintel predicts use of well-known brands with high-customer satisfaction ratings will surge in the package holiday market in 2020.
Kylie Minogue fronts Tourism Australia campaign
Tourism Australia has launched its biggest UK marketing campaign in more than a decade with Kylie Minogue fronting the ‘Matesong’ campaign which, in a nod to Brexit, celebrates the friendship between the countries.
POLITICS & BREXIT
EC New President visits UK
The European Commission’s new president, Ursula Von der Leyen will make her first official visit to Britain on Wednesday, to lay the groundwork for the next phase of Brexit talks ahead of the UK’s departure from the union on 31 January.
The Independent says that Ms Von der Leyen is expected to use the meeting to advise Mr Johnson to consider extending the Brexit transition period, which will expire at the end of this year unless the UK decides to extend it.
If no free trade agreement is negotiated then the UK will crash out without a trade deal on WTO terms. Labour has said Mr Johnson should extend the transition period by the maximum two years.
Fraser Nelson in The Telegraph say that he understands that Boris Johnson will hope to produce a strong, amicable, velvet divorce with the EU, although he concedes that the size of his majority means that Boris Johnson could, if he chose, adopt a very hardline Brexit stance.
The Sunday Times reports that ministers are split over how best to negotiate a new trade deal with the EU with Dominic Raab, the foreign secretary, and Liz Truss, the international trade secretary, pushing for the UK to begin parallel talks with America, putting pressure on the EU by making progress towards a transatlantic trade deal, whilst David Frost, Johnson’s chief negotiator, is focused solely on the EU.
His Taskforce Europe team will begin finalising Britain’s negotiating position this week.