The UK was slower than all other major economies to emerge from
recession and, while there are signs of improvement, recovery is
expected to be slow and fragile.
High unemployment is benefiting some sectors of the outbound
travel market, particularly youth/backpacker travellers who are
having difficulty finding employment or getting into
university.
This sector, along with the traditionally strong 50-plus traveller
market, will remain the focus for New Zealand as other travellers
look at destinations closer to home in 2010.
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Economy
Outbound Travel
Airline Update
Competitor Activity
Economy
Economic recovery in the UK remains slow and fragile. The
country was the last of the world's major economies to emerge from
recession, with growth finally returning in the last three months
of 2009, after the UK's longest recession on record. Despite the
upturn, the economy grew by only half the pace expected in the
first quarter of 2010 (0.2 per cent).
The Pound has fallen back almost 30 per cent against the Euro
since September 2007 and the banking sector remains unstable.
Worsening public debt is causing concerns.
Analysts believe the upturn in the housing market has run out of
steam, with the number of new mortgages approved falling in January
2010 and house prices declining in February.
Consumer confidence fell in April 2010, despite restrained
economic growth. Inflation and unemployment also increased
slightly.
January reports confirmed that a total of 1.3 million British
lost their jobs during the recession. The 18-24 year old age group
was most affected, with unemployment among university graduates in
this age range up 3.5 per cent since the start of the
recession.
Key Indicators
Sources:
www.economist.com (GDP Growth)
www.xe.com (Exchange rates)
| Exchange Rate vs NZD |
GBP1 = NZD2.08 (7 May 10) |
| Expected GDP Growth |
-4.7% for 2009
+1.3% for 2010
(Apr 10 est.) |
Outbound
Travel
Of all the European markets, Great Britain recorded the largest
decline in outbound travel in 2009, with Britons taking eight
million fewer overseas holidays than they did in 2008 (source: www.ipkinternational.com).
The ash cloud caused by the Iceland volcanic activity in the
second half of April caused a major disturbance to flights out of
the UK and other parts of Europe. The cancellation of flights
impacted on UK arrivals to New Zealand during this period.
UK visitor arrivals to New Zealand have continued to decrease
throughout the first quarter of 2010 compared to the same months in
2009. Feedback from UK travel sellers suggests British consumers
are opting for holidays to warmer, closer and cheaper
destinations.
Economic fragility and uncertainty surrounding the 6 May General
Election also negatively impacted on visitor arrivals.
However, two sectors of the UK market continue to perform well
for New Zealand: young 'Adventurers' (including backpackers,
especially in the second half of the year), and older 'Explorers'
(over 50s).
The youth market remains strong, with young Britons choosing to
travel as a result of fewer university places and weak job
prospects. Travellers aged between 15 and 34 accounted for over 50
per cent of visitors to New Zealand in the second and third
quarters of 2009. Older travellers are also choosing to make that
trip of a lifetime as they find themselves between jobs. Tourism
New Zealand is continuing to target both of these sectors through
ongoing campaigns in market.
New Zealand's backpacker sector has seen some benefits from
strong promotion by Australia of youth and working holiday travel
from the UK. A number of these travellers have carried on their
trip to New Zealand, and work by Tourism New Zealand targeting
European backpackers based in Australia is helping further boost
this dual-destination travel.
Official travel agents have reported very strong sales of Rugby
World Cup 2011 travel packages to date, with reports the 2011
tournament is already out-performing 2007 in terms of travel
sales.
The UK cruise market is also on the upturn. Although cruise
numbers were static in 2009, the expectation is for growth again in
2010, with new capacity being added worldwide. Around 13,000
British took cruise holidays around New Zealand in 2009 (10 per
cent of all British holiday arrivals).
Airline
Update
A reduction in the number of available airline seats has also
negatively impacted travel to New Zealand from the UK, following
capacity cuts on the Hong Kong and Los Angeles routes in 2009.
Airlines are continuing to launch short-term fare initiatives in
the shoulder and low seasons. However, cheap fares to New Zealand
are generally only available for the first few days of the
promotion, while cheaper fares to Australia tend to be more readily
available.
The change to Air Passenger Duties (APD) from November 2009,
which marked the introduction of a new environment tax on
international flights, has received considerable media attention.
From November 2009, economy fares to B and D destinations (over
6,000 miles), the category into which New Zealand falls, rose by
GBP55 and will increase a further GBP30 in November 2010. The
increase is GBP110 and GBP170, respectively, for business class
fares.
The New Zealand and Australian Governments have lobbied British
decision makers against the duty increases. Industry heads at the
Pacific Tourism Leaders' Forum in April also condemned the changes,
saying the changes placed long-haul tourism in the Pacific at
considerable risk.
Competitor Activity
Closer, warmer, cheaper destinations appear to be of greatest
appeal to British travellers at present. Destinations outside the
Euro-zone continue to sell well, with Egypt, Morocco and Turkey all
popular.
Spain, a traditional favourite of British travellers, was voted
as "not foreign enough" for a holiday in a recent UK survey.
Of the medium-haul destinations, South East Asia is offering
great value.
Tourism Australia is working with Emirates and Singapore
Airlines as well as a number of wholesale partners to ensure it
retains its high profile in the UK this quarter. Increased
partnership advertising is giving Australia strong visibility in
all sectors, although the focus is firmly on backpacker and
gap-year travel.
In 2009 Tourism Australia reduced investment in some European
markets in order to fund additional marketing activity in the UK.
All advertising activity has been tied to partner deals, with
strong calls to action. Despite this investment, Australia is
seeing a softening in numbers in the previously buoyant working
holiday sector. Overall, however, indications are that the
Australian market is still performing better than New Zealand in
the current environment.
With England qualifying for the 2010 Football World Cup, South
Africa has increased promotion in the UK and Europe. Up to 100,000
Britons are expected to travel to South Africa in 2010. Sales have
reportedly been slow.