It’s fair to say that the first half of 2017 has been eventful with the triggering of Article 50, BAs IT failure, a security breach of ABTA’s web server and a General Election that few could have predicted. We have, of course, sadly also experienced a number of devastating terrorist attacks on UK soil.
At the beginning of the year we highlighted a few areas of challenge for travel and tourism and at the half way point, let’s see how 2017 is shaping up.
The millennials and the continued advance of mobile technology
We looked at the rise of the millennials and continued advances in mobile technology and how providers would look to gain customer loyalty via advancing their technology solutions.
At the mid-way point of the year appraising use of Customer Relationship Management platforms (which can ensure GDPR compliance), platform agility, social media, apps and other forms of digital touch points with customers appear to be a focus for many businesses. There has been a range of events in the sector which focus on connecting with the millennial generation. It is clear the impact of digital disrupters remains a concern for both the industry and the regulators – the focus for many remains investing in technology to build the customer relationship. However, a recent RSM survey of the middle market was telling – just 37 per cent of those surveyed have a clear digital strategy in place.
As business invest and recognise the importance of R&D, we recommend advisor are consulted early in respect of R&D tax credit claims.
Businesses are mindful of the need to attract talent and new entrants to the sector with a wealth of social media and technology skills. Ensuring an engaging and effective recruitment process is paramount.
At the beginning of 2017 it was hard to predict the impact of Brexit on the economy and how this would affect consumers and businesses alike. Changes to regulation, foreign exchange uncertainty and the effect on input costs were all moved onto the board agenda.
Could the government’s DUP deal lead to renewed calls for a tourism VAT cut? The details of the government’s support for Northern Ireland following the agreement between the Conservatives and the DUP could herald renewed calls for a tourism VAT cut across the UK.
Shifting traveller priorities
With currency conscious and tech-savvy customers looking for a great deal on their holidays we anticipated there may be an increase in staycations and all-inclusive offerings.
The ONS reported that for the first quarter of 2017 UK residents made 1 per cent more holiday visits abroad than the same period a year previously – possibly a reasonable start and better than many may have expected. After VisitBritain reported a record 37.3m visitors to the UK in 2016 and early 2017 flight booking data indicates bookings to the UK 16 per cent higher for February to April compared to the same period last year. The inbound tourism sector appears to be benefiting from the weakening of the pound. With the recent events in Manchester and London, a drop in in-bound demand may be expected, however a number of UK operators have said customers are remaining defiant.
CAA response following continued failures
With a well reported operator failure in the first few days of 2017 we questioned how the operators would respond and advised that allowing plenty of time for planning and dialogue with the CAA ahead of ATOL renewal would be key. As we have continued through the year we have seen a resilient market with few failures hitting the headlines.
The peak summer season and the pressure this can bring on cashflow will be telling.
Package Travel Directive
At the beginning of the year we expected to see the second consultation on the Package Travel Directive, advising operators to review their business models and protect themselves with clear and effective trading terms. We saw corners of the industry crying out that the timing of the snap General Election was a 'disaster' leading to further delays to a 2nd consultation into the new PTD, which had been expected this spring. It is not expected until towards the end of the summer. It is doubtful many are holding their breath for the details from the Department of Business (BEIS) on implementation of the directive.
Against this backdrop of events, signs of planning for 2018 are emerging and businesses are citing this and Brexit planning as a reason for senior management recruits.
OTAs continue to be expected to have the biggest impact but further details are needed and expected on the implication of LTAs and practical application.
Bogus holiday illness claims
The last six months has seen a significant increase in the number of complaints and claims being lodged by customers. Handling holiday illness claims is a key issue for the travel and tourism sector. Risk management procedures should be reviewed to ensure businesses are armed to plan, prepare for and respond to an increase in claims.
Over the last six months of 2016 the industry saw huge rise in bogus holiday illness claims being lodged by consumers. This has continued into 2017 and Jet2Holidays issued the most public response to the trend of increased holiday illness claims, by sending private detectives out to resorts to seek out touts and claims management companies (CMCs). After reports of CMCs present in Portugal in May, the FCO have also warned consumers that if false or fraudulent claims are made, legal proceedings may follow.
Insurance firms have also been warned that the likely consequence of this trend continuing would not only be a price increase from travel firms to claw-back pay-outs but also a hike in holiday insurance premiums.
Whilst both ABTA and one of the trade publications launched government lobbying campaigns in recent weeks, it is likely the industry is in for more pain over the summer months but perhaps the second half of the year will see a positive result with the government responding and closing the current loophole in UK Law.
Cyber security and data privacy
The rules governing data protection are changing; is your organisation prepared for the General Data Protection Regulation?
We highlighted that with every travel business holding personal data, including customer details and staff and supplier information, 2017 is the time to prepare for the changes to data protection rules (GDPR) as they could have far-reaching implications for travel businesses.
Whilst the media attention has inevitably focused on the NHS’s and ABTA’s of this world, it is not large organisations being targeted by cyber criminals. Middle market businesses may not get all the press, but are at no less at risk. Several breaches have been reported in the sector and, with another significant global ransomware attack in recent days, this issue is set to continue.