the uk travel sector competing in a changing world · 2020-05-11 · q3 2011 q4 2011 q1 2012 q2...
TRANSCRIPT
© 2014 Deloitte LLP. Private and confidential.
The UK travel sectorCompeting in a changing world
Graham Pickett
Lead Partner – Travel, Hospitality & Leisure
© 2014 Deloitte LLP. Private and confidential.
Agenda
2
The business outlook
The successful travel company of tomorrow
Over-capacity concerns
Key takeaways
© 2014 Deloitte LLP. Private and confidential.
Business outlook
3
© 2014 Deloitte LLP. Private and confidential.
Emerging markets driving economic growthWhile Eurozone creates concern in the developed countries, some emerging markets are
experiencing slower growth
4 Source: The Conference Board - Global Economic Outlook 2014, April 2014 update
2.4%
1.9%
-0.4%
1.8%1.5%
4.7%
7.7%
7.2%
2.4% 2.3%
1.1%
1.9%
4.7%
3.6%
2.8%
2.1%
1.1%
2.9%
1.4%
5.5%
7.6%
7.1%
1.9%
1.5%
2.3%
2.9%
4.7%
2.4%
GLOBAL US EuroArea
UK Japan India China East Asia &Pacific
LatinAmerica
Brazil Mexico Middle East& NorthAfrica
Sub-Saharan
Africa
DevelopingEurope &
Central Asia
Global outlook for growth of Gross Domestic Product (Year on Year,%)
2013e 2014 (Projected)
© 2014 Deloitte LLP. All rights reserved.
Euro
Chinese Yuan
UAE Dirham and US dollar
Indian rupee
80
90
100
110
120
130
140
British Pound vs. Major market currencies (Indexed to 1st week of February 2010)
Indonesian
The currency effectImproving currency rates make UK outbound travel more attractive
5
Onset of talk regarding
tapering of Quantitative
Easing by US Federal Reserve Outbound
travel for UK
becomes
cheaper
Outbound
travel for UK
comparatively
more
expensive
Source: Bloomberg
© 2014 Deloitte LLP. All rights reserved.
UK vs. other European countriesUK is leading the growth scenario in Europe
6 Source: Eurostat
1.7%
0.5%0.3%
-1.2%
-1.8%
3.1%
2.0%
0.9% 0.9%
0.1%
0%
5%
10%
15%
20%
25%
30%
-3%
-2%
-1%
0%
1%
2%
3%
4%
United Kingdom Germany France Spain Italy
Un
em
plo
ym
en
t r
ate
(%
)
GD
P a
t m
ark
et
pri
ce (
% Y
oY
)
Gross domestic product at market prices (% change over previous year) &
Unemployment rate (%)
2013 2014F Unemployment % (Apr 2014)
© 2014 Deloitte LLP. Private and confidential.
Improving business confidence in UK UK CFOs are becoming more confident and show increasing appetite for risk
7
0%
10%
20%
30%
40%
50%
60%
70%
80%
Q12009
Q22009
Q32009
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
Q12012
Q22012
Q32012
Q42012
Q12013
Q22013
Q32013
Q42013
Q12014
Risk appetite (% of CFO who think it is a good time to take greater risk onto their balance sheets)
Source: The Deloitte CFO Survey Q1 2014
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Political and business uncertaintiesThe uncertainty around the outcome of the referendum and UK position with the EU has
increased business and consumer uncertainty
8 Source: HMRC, Scotland analysis report , May 2014
Business
RisksPolitical
Risks
UK Elections 2015
Scottish
Referendum
Pending EU vote
Overheated
housing market
Potential interest
rate hike
SE Airport decision
£
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Consumer confidence on the riseGrowing consumer confidence could be reflected in higher consumer spending during the
year
9
-20%
-18%
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
Deloitte Consumer ConfidenceNet % of UK consumers who said that their level of confidence has improved over the last three months
Source: The Deloitte Consumer Tracker Q1 2014
© 2014 Deloitte LLP. All rights reserved.
Interest rate riskUK consumers also expect conditions to continue to improve in 2014 but rising interest rates
remain a key concern
10
24%
26%
54%
71%
27%
34%
-11%
23%
-11%
5%
-1%
22%
30%
13%
43%
63%
23%
29%
-12%
22%
-7%
9%
2%
29%
-20% -10% 0% 10% 20% 30% 40% 50% 60% 70% 80%
The value of your property
The taxes you pay
Your spending on utilities
Price of goods in supermarkets
Your spending on transport
Your spending on grocery shopping
Your level of debt
Your housing expenditure
Your spending on non-essential categories
Your income before tax
Your saving or investments
The UK interest rate
Expectations for 2014 compared to 2013 (% Net balance, increase minus decrease)
Q1 2014
Q3 2013
Source: The Deloitte Consumer Tracker Q1 2014
© 2014 Deloitte LLP. All rights reserved.
UK household debtThe rising levels of household debts in the UK raises serious concerns over liquidity
11 Source: Money Charity, Note: * Office for Budget Responsibility (OBR) forecasts
£Total household debt
£2.251 trillion*(Q1 2019)
£1.443 trillion(Q1 2014)
Average
household debt
£54,629
Daily interest paid
£161 million
Loans written
off daily
£7.3 millionPer 5 min 12 sec
A person declared
bankruptDaily purchases
using plastic cards
£1.496 billion
© 2014 Deloitte LLP. Private and confidential.
Consumer category spending in UKUK consumers are more positive about the economy and are expected to take more holidays
this year
12
-20%
-20%
-12% -15% -18%
-19%
-16%
1%
-6%
20%
10%
12%
21%
-18%
-18%
-15%
-17%
-18%
-16%
-17%
-2%
-7%
8%
9%
11%
27%
-13%
-12%
-11%
-11%
-11%
-10%
-10%
1%
1%
6%
9%
10%
16%
Electricalequipment
Going out Alcoholand
tobacco
Furnitureand
homeware
Restaurantsand
hotels
Clothingand
footwear
Majorhouseholdappliances
Phone,Inernet etc.
subscriptions'
Holidays(long break)
Transport Housingexpenses
Groceryshopping
Utility bills
Category spending in the next three monthsNet % of UK consumers spending more by category over the next three months
Q1 2012 Q1 2013 Q1 2014
+1% (Q1 2014)
-6% (Q1 2012)
Source: The Deloitte Consumer Tracker Q1 2014
© 2014 Deloitte LLP. Private and confidential.
UK domestic vs. international travel Greater consumer confidence and expectations for rises in real income in 2014 is likely to see
an increase in overseas travel at the cost of holidays in UK
13
70%72%
74%
66%
73%
78%
29%
39%
48%
58%56%
45%
2009 2010 2011 2012 2013 2014
Domestic and Overseas travel intentions of UK residents (7+ nights)
(In percentages)
Overseas Holidays UK Holidays
Source: BDRC Continental, 2014
25%
13%
13%
13%
12%
5%
5%
5%
4%
25%
19%
14%
12%
10%
9%
8%
7%
8%
Spain
USA
France
Italy
Greece
Caribbean
Portugal
Turkey
Far East
Top outbound destinations considered for 2013 & 2014
2014E 2013
© 2014 Deloitte LLP. Private and confidential.
Over-capacity concerns in the airline industry
14
© 2014 Deloitte LLP. Private and confidential.
Heathrow
Gatwick
Manchester
Stansted
Aberdeen
Birmingham
London City
Luton
Bristol
NewcastleBelfast City
Belfast International
SouthamptonLiverpool
JerseyGuernsey
Leeds Bradford
Norwich
Isle of man
Cardiff Wales
Scatsta
Humberside
Kirkwall
Sumburgh
Exeter
Southend
Average
-15%
-10%
-5%
0%
5%
10%
15%
20%
-20% -10% 0% 10% 20% 30% 40% 50%
2013 v
s 2
014 (
Jan
uary
-Ap
ril)
Air
Tra
nsp
ort
M
ov
em
en
t (%
)
2012 vs 2013 Air Transport Movement (%)
Air traffic movementAirline movement at major UK airports grew at a slower pace in early 2014, except in South
East, thus raising concerns about reducing demand and over-capacity in supply
15
60% of top 30 airports in UK
saw below-average YoY growth
in ATMs in Jan-Apr 2014
© 2014 Deloitte LLP. Private and confidential.
Over-capacity risk in the airline industryOutbound holiday trips see a modest growth in the first quarter of 2014, adding to the fear of
over-capacity
16
7%4%
19%
6%4%
6%
-24%
-31%
-11%
5% 5% 5%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
All trips Holidays Business Trips
UK Outbound trips: Q1 2014(% change YoY)
v Q1 2013 v Q1 2012 v Q1 2008 v Year to March 2014
Source: Travel Weekly Insight, May 2014
© 2014 Deloitte LLP. Private and confidential.
Industry concerns on over-capacityConcerns on over-capacity increases as more airlines plan to add new planes and new routes
17
© 2014 Deloitte LLP. Private and confidential.
The successful travel company of tomorrow
18
© 2014 Deloitte LLP. Private and confidential.
Investing in digital technologiesDigital has become a major driver in the sector as travel companies recognise the efficiency
and customer acquisition and retention benefits it can bring
19
Improved conversion rates
Increased consumer value
Dynamic service assistance
Enhanced customer loyalty
Better decision making
By 2015, 89% of airlines will sell tickets via mobile apps
70% of airlines will implement flight status updates via social media
80% of airports/airlines will invest in
business intelligence solutions in the next 3 years
Data analytics
Social media influence
Mobile travel
© 2014 Deloitte LLP. Private and confidential.
Consumer centricityTravel agents are looking at innovative ways to increase consumer engagement and enhance
customer experience
20 Source: Travel Weekly consumer trend survey 2013
Targeted and tailored approach
Loyalty programmes
In-destination Services
© 2014 Deloitte LLP. Private and confidential.
Key takeawaysHow to build on success in 2014/2015?
21
• Improving consumer confidence and economic situation in the UK creates a positive
environment for more overseas trips
• But interest rate hikes and rising household debt remain key concerns for UK consumers
• Political uncertainty over Scottish referendum and potential EU votes add to business fears
• Fear of over-capacity due to disproportionate increase in fleet additions and slower growth
in passenger traffic could create pricing pressures for the industry later this summer season
• Using social media and mobile technologies to benefit from efficiency and increase
customer satisfaction
• Leveraging analytics for targeted marketing and delivering tailored travel offerings
• Striving to provide end-to-end travel solution leveraging digital technology to enhance
customer experience
• Strengthening loyalty programmes to compete with online and offline travel agency
competitors
UK economy
Successful travel company of tomorrow
© 2014 Deloitte LLP. Private and confidential.
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