BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Friday, 21 December, 2001, 13:24 GMT
Holiday shortages and price rises ahead
Relaxing could be about to get more expensive
Sarah Toyne

Many people who have taken a holiday or a boarded a flight since the horrific events of September, will have picked up a travel bargain.

But the tide is about to turn, according to a new survey.

The reduction in overall capacity will result in a hardening of prices for next summer, provoking a late booking response from customers

Survey respondent

There have been a number of stories about holiday prices in recent weeks, but a new survey obtained by BBC News Online reveals what prices the tour operators and travel agents are actually forecasting for next year.

The survey asked 38 travel companies - including some of the biggest names in the travel business, such as JMC, Airtours, Thomson and First Choice - for their market predictions.

According to the research by Allan Beaver, visiting professor at the International Centre for Hospitality and Tourism Research at Bournemouth University, holiday prices will rise by nearly 5% next summer.

The chances of picking up a lastminute bargain could also be under threat, as there might not be enough holidays to go around.

Professor Beaver says that there won't only be price rises but "holiday shortages unless the holiday companies increase capacity."

Supply and demand

Prices will rise and there will be a decrease in the number of last-minute deals, basically because of two factors.

Key forecasts
On average package holiday prices will rise by 4.8%
Larger operators predict price rises of 3.6% on their programmes
11% less independent travellers will go abroad in summer 2002
Cut places (capacity) by 15%
1.5m less 2002 summer holidays offered by respondents
Operators to North America expect capacity to fall by 20% to 25%

Over the last couple of months, as the world's tourism industry has reeled from crisis to crisis, most companies have reached for the corporate machete.

Many airlines have slashed their routes; while tour operators have chopped the number of deals to popular destinations such as Florida.

Capacity has been cut by 14.6% compared with last year.

The combined effect now means that there is expected to be one and a half million less holidays on offer to British tourists next year.

However, while there will be far fewer seats, there is expected to be a comparatively small drop in demand - about 11% less.

Industry experts believe that as long as there are no other similar incidents to 11 September, confidence will gradually improve leading to increased demand, higher prices and a shortage of holidays.

Fortuitous scenario?

There has been some speculation that the tragic events were merely a chance to cutback and push up prices for some companies which were already having difficulties.

Most people will find Professor Beaver's interviewee's comments, particularly grisly.

"Capacity in 2002 will fall as a result of the terrorist attack [in September] and this will be a blessing! Demand will not fall and there will be a shortage of holidays to Europe; prices will go up as a result."

"Unless we have another airline related terrorist hit, 2002 will be a lot better than the industry expects at the moment."

Peak season

Christmas and New Year is traditionally peak time to pull out the holiday brochures - and no more so than this year.

It has been a dreadful year for the tourism industry - and consumers will be bombarded with offers to get us flying again.

Airtours, one of the big four tour operators, is planning a multi-million pound advertising campaign aimed at "getting Britain back on holiday", which launches on Boxing Day.

Tour operators are expected to offer heavily discounted fares throughout January, for example, up to 25% off the holiday's cost.

Additional charges

In November, the Association of British Travel Agents, lost its appeal to the government to change surcharge regulations.

As a consequence of that decision, it is expected that many holiday brochures will contain a clause this year that will allow the company to impose a surcharge after the holiday has been booked.

Airtours is one company which will do this next year.

Its brochures will contain a clause which will say that it reserves the right to surcharge customers after they have booked their holiday for up to 10% of the holiday's costs.

Where will we be going?
Short breaks expected to increase by 1% or 2% despite downturn
Scheduled air passenger decrease of 10.6%
Cruise prices are expected to fall
"Self drive camping/mobile homes are selling strongly for 2002
Europe and South America will be strong

An Airtours spokesman was quick to point out: "We are in no way thinking of charging 10% of the holiday".

Many chartered and scheduled airlines have also introduced additional fees for security and insurance costs - typically 5 for each leg of the journey.

Air Passenger Duty, which is set by governments, is also going up in some destinations, particularly if you are travelling to America or stopping off there, due to the increased costs of airport security.

Journey Latin America, a specialist travel agent, said that the cost of taxes for a return flight to Mexico from UK, via America, had increased from about 40 to as much as 70.

As the number of routes have been cut, the number of cheap seats available have also been reduced.

One travel agent, who wished to remain anonymous, said that on one Middle Eastern route, the number of cheap seats had been reduced by 20%.

Where we will be holidaying?

Our behaviour as tourists is also expected to change next year.

European, self drive and shorter holidays are expected to do well, compared to trips to the Middle East, Near East, India and America.

Travel agents surveyed by Professor Beaver said there had been a dramatic increase of between 30% and 45% of short breaks, following September 11.

Professor Beaver said: "Short breaks are frequently booked a short time before departure; thus, this market reacts quickly to economic and political changes, since 11 September."

More people are expected to take short breaks next year.

They are expected to increase by 1% or 2% in 2002 despite the general downturn.

One respondent to the survey reported that coach holidays were likely to rise following concerns over airline security.

"Coach holidays in the UK are already 40% to 50% up on last year and the momentum is rising. To Europe the market may rise by 3% continuing to benefit from the current terrorism problems."

See also:

18 Sep 01 | Business
What now for tourism?
18 Dec 01 | Working Lunch
What's happening to holiday prices?
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories