Travel & tourism industry - looking ahead for 2018

29 January 2018

2017 was a difficult year for many in the travel industry.

Brexit worries, changing consumer tastes, the weaker pound and political turmoil overseas coupled with a lack of supply in areas considered ‘safe to visit’ (especially Spain) all played their part.

There were several high profile failures, in particular the failure of Monarch. The unexpected response from the government that everyone affected should be repatriated irrespective of whether they had booked an ATOL protected holiday potentially undermined the efforts the CAA have been putting in to increasing consumer awareness of ATOL protection. With the government already having hinted that they would do the same again in the event of a major failure, persuading travel arrangers and consumers alike of the benefits of the ATOL scheme is likely to be a tougher sell and we may see more companies seeking to move some of their operations overseas to avoid the costs of full compliance.

However passenger numbers departing from UK airports continue to go up and the British love affair with holidaying abroad shows little sign of abating despite the increase in ‘staycations’. Consumers are just looking to get new experiences for their money including trying newer destinations or else fixing budget uncertainties by choosing all inclusive breaks. There were also signs that demand for corporate travel was increasing as businesses looked to seek out new contracts in the US and Far East.

Looking forward, 2018 promises to introduce more change for the travel industry than the last 10 years combined.   

Package Travel Directive

The new Package Travel Directive (PTD) was published in the Official Journal of the European Union on 11 December 2015 and the UK was supposed to transpose the requirements of this Directive into UK law by 1 January 2018, and then had a further 6 months up to 1 July 2018 for these requirements to come into force. 

PTD creates additional legal protection for consumers purchasing non traditional packages and to a large extent is an attempt to address the change in consumer behaviour particularly the use of online travel websites.  When a consumer chooses separate components of their holiday from one business, either online or offline they will now be covered by the new PTD if two or more travel arrangements are booked within 24 hours of each other through links.

All travel businesses will also need to make the new package regulation rights extremely clear to consumers on their websites.

Consultations were also supposed to take place in Autumn 2017 but as of this date these have not been concluded and the 1 January 2018 deadline to change the law has been missed – perhaps unsurprising given the momentous vote on Brexit. Indeed, Brexit seems to have overridden most government department plans in the last 12 months, leading to growing concerns as to the future of air transport and holidays within the EU and elsewhere. Although few agreed with Michael O’Leary of Ryanair when he warned that flights could simply stop after Brexit, that worry has been confirmed by the EU Commission as a potential outcome if no new agreement is reached.

It is clear that new agreements on ‘Open skies’ within Europe and also to the US which is currently based on EU agreements, must be reached within the next 6 months or so if operators and airlines are to be able to produce their plans for 2019 in mid-summer this year. The issues run deep, many UK citizens are employed as overseas representatives and managers and may lose the right to work after March 2019 and yet the government gives the impression that everything will be resolved ‘in time’. What is becoming clear is that without urgent action, the second half of this year may well be very worrying for the UK travel industry. Despite PTD being a European initiative, the government has made it clear that it will implement it perhaps in the hope of currying favour to obtain a better outcome of the current negotiations. The deadline for implementation still remains 1 July 2018 but there must now be serious doubts over whether this can be met either by the government or the travel industry itself.

General Data Protection Regulation (GDPR)

GDPR comes into force on 25 May 2018 and will impact on how personal data is allowed to be stored. For an industry where the ability to generate repeat sales is key and where a key component of the value of the business is the customer list this is clearly going to present some problems. However, with adequate planning these are not insurmountable but a surprising number of businesses have failed to even consider the cost implications of compliance and how to deal with the emerging compliance needs and ensure proper data management policies are in place and we will cover this in follow up articles. It is vital to realise that it is not just customer data that can be affected, all employment records are likely to subject to review as well and the threat of potential fines, should be sufficient for all businesses, large and small to sit up and take action soon. 

Ban on Card Surcharges

This EU wide ban on card surcharges came into force on Saturday 13 January 2018. It should also be noted that whilst it is acceptable to encourage customers to pay using a particular method, it is not permissible for there to be a financial penalty or reward for the choice of a payment method – therefore giving a discount for paying a certain way will also fall foul of the rules.  

The topic has proved very emotive as can be seen in various articles in the press but the simple fact is that with many travel businesses operating on tight margins this is going to have a big impact. Businesses are going to have to manage their costs very carefully and some have already introduced booking fees – these are totally acceptable as long as they are applied universally irrespective of the method of payment. This is another case where a plan to save customers money has backfired due to the law of unforeseen consequences.

In summary 2018 looks to be another challenging year but there is still scope to generate income especially as travellers seek out ‘the experience’ and reduce cost through better use of technology, adapting business strategy and taking advantage of government schemes such as apprenticeship funding and R&D claims. A good business can accept the challenges and win with sensible planning and good advice at the right time

Contact us

For further information please get in touch with Rajeev Shaunak, Partner and Head of Travel and Tourism sector, or send us an online enquiry.

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