LONDON—Results of the 2009 WTM Global Trends Report (in association with Euromonitor International) presented at the World Trade Market revealed how the global financial crisis is taking its toll on the travel industry.
“Falling expenditure, lack of credit and rising unemployment is causing a slump in consumer business confidence and demand with forecasts far worse than anticipated,” BBC journalist Thalia Pellegrini said. “Global arrivals are expected to decline by 8 percent, hotels by 16 percent and air sales by 14 percent, going from boom to bust.”
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| “Falling expenditure, lack of credit and rising unemployment is causing a slump in consumer business confidence," BBC journalist Thalia Pellegrini said. |
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The report found that companies have been taking action to reduce costs, including cutting capacity and staff, restructuring investments, mergers and acquisitions and strategic alliances. Consumers have responded by “shedding luxury and trading down,” Pellegrini said. What has been described as “the lipstick effect,” however, with consumers clinging to small luxuries in a crisis, was apparent with spas and golf tourism continuing to be popular. Still, Pellegrini emphasized that a “new era of austerity has emerged in the face of unemployment and mass public debt.” The H1N1 epidemic also played a role, adding to a lack of demand.
The findings showed that 2009 marked a revival in some traditional markets, such as camping (or “glamping,” glamorous camping), “staycations” and also new product development such as nano breaks.
A full travel-and-tourism recovery to pre-crisis levels is not expected until 2013 for global arrivals. Demand will be inhibited by low consumer confidence, rising job losses and burgeoning public debt, ultimately leading to higher taxes.
The findings highlighted that consumers are expected to embrace thrift for the long term and operators need to adapt, with the onus being on the travel industry to put sustainability at the heart of business to survive.
Focussing on the U.S. market, a dramatic drop in demand and subsequent widespread discounting has led to the emergence of a new kind of consumer. With 2009 prices cited as an average 20 percent to 30 percent lower than in 2008, one of the key trends noted has been the rise of “funemployment,” fuelled by under-35s with few responsibilities, a severance package and a now-or-never attitude toward travelling.
With the U.S. jobless total at 10.2 percent (not counting those who are part-time workers or not registered as unemployed) operators were said to be fully exploiting these new consumers with specific discounts being offered to those with proof of job loss.
“Marketing to the ‘funemployed’ in the off-season may be a means of increasing occupancy rates all year round,” Pellegrini said.
She added that this group also serves as a target for extended trips, world cruises and long-haul airline tickets and offers the travel industry the opportunity to understand such new consumer shifts and therefore prepare for the impact of higher unemployment rates.
In the U.K., the key trend highlighted was the emergence of pop-up hotels. With the country in recession and the housing market down, “new pop-up hotels offer affordable, mobile and innovative accommodation to consumers.” Temporary hotels of prebuilt units incorporated into a steel frame that can be demolished easily can reduce construction time by 50 percent as well as minimising noise, waste and hassle.
The core target markets for pop-up hotels include Generation Y, baby boomers, “transumers”’ (consumers driven by experiences) and environmentalists. As green tourism demands increase, the report findings maintain the appeal of temporary hotels will grow with modular based cargo container and prefabricated hotels providing a sustainable alternative for both business and leisure travellers.
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| Euromonitor research managers Caroline Bremner and Nadia Popova field questions about the 2009 WTM Global Trends Report. |
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“Temporary hotels are expected to change the face of U.K. travel by attracting a larger consumer and customer base with their affordable pricing and sustainable living,” Pellegrini said.
Other areas of the world also are seeing new trends develop. In Europe, for instance, concierge travel is moving away from the luxury market and becoming more mainstream, driven by the need to add value to the midmarket and to bolster competitiveness. In the Middle East, new opportunities such as female-only hotels were being capitalised on. The African market is seeing an increased interest in roots tourism, particularly from Americans of African descent with air traffic between the U.S. and Africa having increased by more than 30 percent during the first part of 2009. And golf tourism in Asia was growing at a tremendous pace while Latin America is moving toward reinventing itself as a luxury region.
