PwC predicts five years of decreased travel spending

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PricewaterhouseCoopers (PwC) is warning travel companies in the UK to be prepared for decreased spending by consumers for up to five years due to the impact of the recession.

Travel company insolvencies have risen by an unprecedented 145 per cent in the last year, and PwC is predicting that the industry’s decline is likely to be long-term.

The increase in travel company insolvencies between the fourth quarter of last year and the first quarter of this year was 80 per cent, and PwC has indicated that this mirrors the level of failures seen last autumn, when 13 operators associated with XL collapsed.

According to PwC Director Ian Oakley-Smith, instead of one large travel company failing, it is likely that more small travel operators will collapse “at the first hurdle”.

He said: “History shows that there has always been a strong correlation between total consumer spend and consumer spend on travel. Travel businesses should therefore expect this trend to continue, which is likely to mean that spending on travel will decline for some time yet.”

Oakley-Smith added: “In the last recession, holidays were impacted at both volume and value levels. This is likely to recur and will take its toll on travel companies.”

PwC believes that the travel industry may be more vulnerable at this time than during the last recession because of the numerous ways in which travel can now be booked – and the move of consumers away from traditional two-week annual summer breaks to more frequent trips of varying lengths to an increasing variety of destinations.

Thanks to www.travelmole.com for the above quotes, for more information on this article please visit their website.

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