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dda Market Insight September 2008

Monthly Report BVI Tourist Board

September UK Travel Trends Caribbean tries to reassure potential visitors after storms Clients should not be deterred from booking luxury travel to the Caribbean, agents have been advised. The key message should be “business as usual”. Following three devastating storms in less than a month, tourism leaders in the Caribbean are rushing to get out the message that many of the islands are undamaged and ready to welcome visitors. The majority of the Caribbean's islands were not hit and tourism officials are trying to overcome the impression that the entire area has been devastated Monarch takes up XL Caribbean slots Monarch Airlines has stepped in to help fill the void in Caribbean flights left by XL Airways’ demise with a new year-round service to Grenada and Tobago. Specialist operator Golden Caribbean secured the weekly flight following the collapse of XL Leisure Group two weeks ago. The company had been in talks with Monarch since XL’s announcement in August that it was scrapping its Caribbean programme. The new service will use an Airbus A330. It starts on December 17, in time for the busy Christmas season, and will depart Gatwick every Wednesday at 09.00.

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Monthly Report BVI Tourist Board

Survey shows ethical holidays set for growth The number of people taking ethical holidays could quadruple over the next three years, according to a YouGov travel trends survey of 2,000 British adults. Topping the list were cultural/sightseeing holidays, taken by an estimated 11.5m over the past three years, but showing potential growth of 17%, with 13.4m intending to take such a holiday in the next three years. Other sectors expected to see strong growth include safaris (+263%) and environmentally friendly holidays (+212%), Holidays with an ethical or environmental angle, or generally those with some meaning attached to them, are set to experience a boom in growth in the next three years.’ Ryanair transatlantic plans re-emerge Low cost flights from three UK airports to New York are under consideration as Ryanair considers setting up a transatlantic off-shoot. The Irish budget carrier believes the turmoil in the sector which has led to multiple airline casualties following soaring fuel prices strengthens its hand in winning European approval in its bid for Aer Lingus. If successful, Ryanair would use some of the 15 long haul aircraft the Irish flag carrier has on order for the new low cost transatlantic service, reported. Routes to New York from Stansted, Prestwick and Birmingham have been identified as part of the plans.

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Monthly Report BVI Tourist Board

BAA puts Gatwick Airport up for sale BAA, the airports operator, is putting Gatwick airport up for sale. The move comes a month after the Competition Commission recommended BAA sell two of its three London airports. Virgin Atlantic immediately expressed an interest, saying it would be happy to join a bidding consortium.

Mainstream bookings hold up for next summer Bookings for mainstream package holidays next year have so far been unaffected by rising prices and turmoil in the financial markets, according to TUI. However, sales of budget packages have fallen off, indicating that some price-conscious families are waiting to see if they will be able to afford to travel. Demand for all-inclusive breaks has risen by 30 per cent in the past five years and is expected to increase further as consumers look for greater value for money and the ability to budget their spending.

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Monthly Report BVI Tourist Board

Advertising Trends Holiday industry’s blues What a difference a summer makes. In May, tour operators were arguing that their industry was “recession proof”, with consumers unwilling to cut back on their weeks in the sun, even if it made for belt-tightening elsewhere. Now, with up to 80,000 XL Group and K&S Holiday customers stranded in destinations across the globe, the recent high-profile failure of budget carrier Zoom and with Italian carrier Alitalia on the brink of bankruptcy, things no longer look quite so sunny. Already this year, several airlines, including Zoom, Futura and business carrier SilverJet, have gone out of business. More grim news followed when budget carrier Ryanair reported an 85% fall in first-quarter profit, and British Airways and easyJet both announced management cuts. Seguro Travel is also shutting up shop, while the demise of XL, the UK’s third-biggest travel company, is – at an estimated £60m to the Civil Aviation Authority – the biggest in 20 years. The nervousness is spreading across the spectrum. Thomas Cook and TUI Group – both of which posted bullish results in May – look likely to ride out the storm, but at some cost. “The big daddies of the industry, such as TUI and Thomas Cook, will consolidate their market positions and be resilient, and smaller brands will face more doom,” predicts Caroline Bremner, Euromonitor global travel and tourism manager. When Thomas Cook, the second-largest travel agent in Europe, reported in May that its losses had reduced from €267.7m (£212m) last year to €193.6m (£153.5m) with especially strong trading in the UK, it claimed that people were “unwilling” to cut back on family holidays.

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Monthly Report BVI Tourist Board

Despite evidence going back to 1990 showing that holidays are one of the last things consumers cut back on, many analysts point to travel demand lagging behind consumer expenditure trends by six to 12 months, so the true extent of slowdown may yet to be seen. The collapse of XL highlights an industry not only hit by the global economic slowdown, but by high costs such as fuel, as well as a weak pound. This weekend both Thomas Cook and TUI launched national print campaigns aimed at reassuring stranded passengers that they were there to help, and to bring back confidence to a beleaguered sector – as well as communicating the strength of their operations. Such a situation is likely to lead to changes in strategy and marketing plans – as the reassurance campaigns already suggest – and further consolidation. A few players are potentially able to capitalise on market volatility, but for others there are “more failures and worse times ahead,” according to one observer. Even Thomas Cook has reduced 2009 summer capacity by 7% and is focusing on prioritising medium-haul destinations over long and short-haul ones. TUI, owner of Thomsons and First Choice, will reduce summer capacity by 15%, both substantially slowing a market that was growing. Some categories, like premium cruise, luxury trips and adventure packages, will consolidate, while “vanilla products”, like flights or accommodation only, will stagnate, according to experts. Richard Cope, senior travel analyst at research company Mintel, says holidaymakers are altering their holiday shopping patterns and will opt for “a single big holiday, rather than numerous short-haul breaks”. He feels that the low-margin, high-volume players and the short-haul players will be hit the most in today’s challenging times. British Airways has already seen its short-haul numbers Page 6 23/12/2012

Monthly Report BVI Tourist Board


But short-haul carrier Flybe feels “insulated”, as less than 30% of its customers fly for pure leisure. BA agrees this is one of the toughest times as it “struggles to break even”. A BA spokeswoman says: “While we have witnessed growth in the premium holiday industry, our numbers in the shorthaul segment is severely crunched.” Much of BA’s marketing will revolve around promotional activity and communicating the heritage of the brand. But just like BA, other travel and tour operators, and airline companies will be under pressure to redefine their offerings to survive in a competitive market. Internet marketing increase The Internet is becoming the ad medium of choice as advertisers increase their spend on online advertising, according to research from the European Interactive Advertising Association. The research has found that 81% of advertisers have increased their allocated online ad spend over this year, and 82% of those respondents claims that they are moving spend from traditional media. Over three quarters (77%) of those questioned found online advertising to have a positive impact on the perception of their brand as well as overall brand awareness (68%). Research shows that while other forms of media are suffering from slowing spend, online continues to take a growing proportion of advertising budgets as brands increasingly recognise its impact, value and potential ROI. Advertisers are starting to realise that online can also be used for pan-regional campaigns.

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Monthly Report BVI Tourist Board

Times Online posts biggest rise in August Times Online has posted the biggest increase during the month of August, while has seen the biggest leap year on year, according to the latest ABC figures. However, has strengthened its lead for the third month in a row. Guardian News & Media's attracted 23 million unique users, rising 12.07% compared to the previous month, while also rising 46% year on year. It also remained the leader among UK audiences.

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dda 2008 Market Insight Overview  

What a difference a year makes. At the beginning of 2008, the forecast for the travel market was very positive with an increase in passenger...

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