How is the summer season performing for you?

We enter the make-or-break month of August for the domestic holiday market with a couple of record-breaking months behind us; June the hottest on record in the UK followed the wettest July ever recorded and in some place by a considerable margin. The latter is never good news as it suppresses day and spontaneous staying trips, it impacts on the performance of summer events programmes and it can have a negative influence on future intentions for those those who have chosen and committed to take UK holiday this year.

A quick ring round of selected members last week, suggests that despite the generally good pre main season weather in June, results were mixed and generally still below para for both the time of year and for the generally long run of good sunny weather. Not surprisingly the overriding feeling is that the cost-of-living crisis is subduing visitor volumes but, in particular, day and staying spend among those that did visit. 

The cost-of-living crisis has been either on the cards or with us now for the best part of a full year. The critical new factor is the more recent impact of interest rises on mortgages now being physically paid and/or the prospect of more households following suit, as advantageous fixed deals come to an end of their agreed span. For the “average family”, who are the bread-and-butter trade of the main summer season, housing cost (mortgage or generally related rental costs) are bound to be an almost universal concern.  Even if you can easily afford the increases, the sums involved are typically in the order of hundreds of pounds a month and equate to the cost of a short break or second holiday or two.  Logically something must give and retaining a roof over the family’s head is likely to take priority over discretionary, leisure spending, days out, short breaks and second and subsequent holidays all of which are the lifeblood of domestic tourism.

I remain convinced that we have returning to a phase where the domestic market is increasingly in direct competition with domestic outbound travel.  When the leisure and tourism market was constantly expanding (pre-2020) there was plenty of room for both domestic and domestic outbound within the elasticity of the leisure pound.  Covid-19 followed almost immediately by a financial crisis means that that elasticity has gone, disposable income is contracting and for those lucky enough still to have the choice, it is increasingly one or the other, not both.

Certainly, high quality sentiment research conducted in the latter half of 2022 and early 2023 supports the view that many individuals were choosing to curtail general UK visitor economy activities (pubs, eating out, to days out and holidays) in order to preserve “the annual holiday” by which most mean a longer overseas holiday trip. Having preserved those trips, usually booked well in advance, whether they have regretted the decision due to changing financial circumstance in more recent months, or in some cases due to the equally record-breaking unpleasantly hot weather condition in many popular near European destinations still remains to be seen.

Crystal ball gazing, it seems likely that record breaking weather conditions we have seen in this and previous years are set to be the norm now. It is also becoming clearer that the changes are not necessarily going to work in our favour.  The traditional main summer season months of July and August may not now be the best months for outdoors tourism, as we would traditionally expect them to be?  We can’t change the weather (we already done that!). Nor can we realistically hope to quickly or easily change the established patterns of when the critical main summer school holiday period falls.  We can, however, look at how we compete both with other general calls on disposable income and, in particular, how we compete with our direct competitors for tourism spend, the outbound domestic market. 

One colleague in my recent ring round sagely commented on their belief that some parts of the market, self-catering holiday cottages in particular, had potentially priced themselves out of a now depressed market, based on the over optimistic results of the relatively short-lived immediate post covid-19 period.  This is something that is certainly worth further investigation and it is supported by anecdotal evidence that some agents, Hoseasons (?) for example, may have been encouraging discounting among its owners this season.

Going forward and with thoughts turning to 2024, a modest reset of the pricing within some parts of the industry may be necessary?  This of course isn’t a palatable message for those still trying to recover from the Covid effects on their businesses and also under the self-same additional financial pressures as their potential customers.  It is something perhaps to mull over in what remains of this year’s season. Something that we might then jointly try to influence in a positive fashion and do so rather sooner than if it were simply left to the alternative which is to let market forces rebalance pricing over time, with all the attendant untidy and often unwelcome consequences that usually entails. Beyond evidencing the need, developing convincing arguments and encouraging businesses to consider the option I am not sure what form that influence could take. Thoughts on the need, the rational and means would be welcomed.

While I was conducting my “quick and dirty” survey I received the following update from VisitEngland.  Their excellent sentiment tracker and accompanying headline summary gives a quantitively assessment of consumer intent and attitudes:

The Domestic Sentiment Tracker Report for July 2023 has now been published on our website this morning: https://www.visitbritain.org/domestic-sentiment-tracker

Summary of findings

The perception of the cost of living crisis remains stable in July. Domestic overnight trip intention has remained steady at 75%, although slightly down from the April 2023 peak of 77%.

• In July, 50% of UK adults stated that the ‘worst is still to come’ with regards to the cost of living crisis (49% in June / 49% in May / 54% in April). This is stable compared to June and May which were the lowest recorded.

• Next 12 months trip intentions for domestic overnights: 75%, with 50% planning a trip July-September and 33% an October-December trip.
• Next 12 months trip intentions for domestic overnights are higher than same time last year, although the gap is beginning to close: 75% July 2023 v 72% July 2022.

• Next 12 month trip intentions for overseas trips is 56% (down from high of 58% in May) and on par with July last year (55%).
• In comparison to the past 12 months, in July 2023, 36% are more likely to choose domestic trips over overseas.

As every I would welcome comment on how your season is panning out from the many members I didn’t or couldn’t contact last week.  I would also appreciate any views, particularly to the contrary on either performance or on the suggested actions, I.E. the potential need for a re-set of price points for certain products (clearly not all).

Finally please don’t forget to book into our joint annual conference Tuesday 19 September. Some of the above will be addressed within or at the fringes of the conference: https://britishdestinations.net/annual-conference-19-march-2018/