1974— the year of the crunch

G. C. Draper

By the end of the decade socioeconomic historians will have charted 1974 as the turning point in the declining fortunes of the Britsh travel industry.

By then the traumas of the mid-'seventies will be seen with a perspective it is difficult to afford them now. The change is not proving painless, but the change will benefit the industry and the British public.

It is not easy, nor comfortable, to be riding a vehicle which is changing gear and changing direction as it sheds its skin. At present the travel industry in Britain offers neither ease nor comfort to those who are along just for the ride.

It was not always so. In the heady days of the 'sixties the industry expanded in a seemingly neverending boom. The public joyously followed the lead. At home and abroad travel bargains were conceived with a high degree of imagination and resourcefulness. An appetite for travel was created and seemed to feed on itself. But the industry supplying it was becoming unwieldy and unwise.

Over-capacity and operations based on frighteningly narrow profit margins were gradually eroding the dreams on offer to the travelling public during the late 'sixties. By 1971 and 1972 the danger signs could not be ignored and profitable trading was becoming the industry exception rather than the rule.

In parallel with the leisure travel boom the business market had been enjoying halcyon days. Apart from the increasing comfort and speed of getting about, the cost of fares in the air, by rail and on the roads were continuing bargains.

The business community was able to enjoy reasonably stable fare levels which in turn represented real money value for businessmen on the move.

The realisation by the Arab oil producing states that oil was more valuable in the ground than on sale in an inflationary world changed everything. It hastened the day of truth for that part of the industry exclusively tied to leisure travel and it reversed, for the first time in years, the downward trend of business travel costs.

The prospects are not likely to turn upwards immediately in 1975. The tough economic recession experts believe is facing Britain has still to make its full impact felt on the community.

The public appeared to be the benefactors of the unreal trends in holiday travel in recent years. But this summer the dream crashed and it was the public who suffered in their thousands.

The weaker, the less soundly financed, and the over-ambitious have already begun to fall by the wayside. This trend will continue into 1975 and more familiar travel names will disappear from public view.

Out of this recession I believe a much stronger, leaner and more professional travel industry will emerge. The public will be better served by such an industry. Already there is a great awareness of the need for improved professional standards within the industry.

ABTA and the Institute of Travel Agents are devising new holiday programmes to equip travel agency staff to meet this new challenge. While the Institute of Travel Agents concentrates on basic training the Travel Industry Marketing Group is launching a new series of courses on marketing management for members of the travel industry.

There is certainly going to be less discretionary income available next year. The macro-economic forecasts from the various economic research bodies suggest a rise in retail prices of between 18 per cent and 20 per cent next year.

In real terms this will be translated into a further -decline of consumer spending generally. Recent British Airways research has shown that holiday travel spending benefits from boom conditions when it actually leaps ahead of other forms of consumer spending. When sales of consumer durables are up sales of continental holidays are also up. But when expenditure is pruned it is continental holidays that are likely to be cut back most.

• There is a parallel trend with business travel. In a time of recession business profit margins are at risk. But it is these Margins that tend to finance the travel budget of many companies. The pattern of this year's UK economy is mirrored in the travel industry performance; the country's gross national product has not risen and neither has the business travel market; holiday travel at home and abroad has slumped by up to a fifth across the industry; and the growth in personal travel to visit and stay with friends and relatives has slowed down.

But the fact that 1974 and 1975 are years of marking time and years of rationalisation, should not be allowed to take away from the industry the very real achievements it hag recorded. It was the industry which conceived the mass market of inclusive holidays which so fundamentally changed the holiday habits of the British public in the mid-'sixties.

The industry is also aware of the importance of catering for the needs of changing generations. They know that today's younger generation do not wish just to lie on beaches, they want a more active type of holiday: scuba diving, riding or sailing. There is also a growing demand for active holidays from people who wish to spend their holiday learing about antiques, painting, etc. More and more people want to do their own catering, and villa holidays increased in 1973 by over 40 per cent.

Looking ahead to 1975 the Travel Industry Marketing Group is optimistic about the future of the industry. One major source of encouragement is the attitude of the trade. The smaller tour operators and many individual retail agents are conscious of the fact that they will have to either merge or work with other companies in order to solve the cash flow problem. Perhaps the answer in the retail side is to form a co-operative, retail chain, a type of "Spar Travel chain. This type of activity would certainly go some way towards meeting the public demand for security in making their travel plans.

Specifically within the retail travel agency there appears to be a desire for co-operative trade action. At long last there is an understanding that the name of the game is 'profitability' and not just volume. Mature marketing and financial management are qualities recog• nised as vital to the well being of the industry. There is a need to master these techniques as never before. The reward will be there for those sections of the travel industrY who adopt this policy.

Dependability and value for money will be two premium qualifications on any product offered to the public by the travel industry. IP a year when the total market IS likely to show no growth these premiums are essential for any part of the industry trying to maintain its market share.

Value for money will be a changeable currency. By mid-summer next year the price of staying at home in Britain may outstrip the cost of a continental holiday — especially when all the component part of the holiday are totalled together at the end. The indifferent weather of the summer in Britain this year caused a surge of late holiday bookings for the continent. The trend may be even more marked next year.

G. C. Draper, OBE, is President of the Travel Industry Marketing Group and Director of British Airways Travel Division