08 Oct

Mark Tanzer's opening speech at the Barcelona Travel Convention

What a year its been! In addition to the financial storms and recession, the travel industry hasn’t lacked drama of our own.. terrorist attacks, the spectre of swine flu are external events we can’t control, but some large and complicated failures have made this a difficult year.  But far from a disastrous one. 

Our early and largely anecdotal evidence is that the industry is off about 10 – 15% in volume terms, although probably less in terms of margin.  This has come from a combination of holding prices through reduced capacity, and working very hard on costs.  But of course, in any business value chain, my cost is your revenue, and the pressure is being felt all the way along the chain, through to the hotels, some of whom are in the room today.  And I don’t see this pressure easing in the immediate future. 

Underlying the current business results are some long term financial trends which will profoundly affect the shape of our industry.  Who can tell what the settled value of the Pound will be, but you’d be very optimistic to see it rise in the near future to its previous strength two or three years ago.  And the tightening of the credit market seems to be impacting the travel sector particularly severely, with banks demanding higher levels of security and money becoming more expensive. But there are reasons to be cheerful: the UK traveler has proved resilient, and the annual holiday has been shown to be high on the priority list when families are tightening their belt.  And travel companies have shown that they do have the capacity to react quickly and adapt their business models in a changed trading environment.  The situation as we stand here today and look at the year ahead is still fraught with uncertainty, and the consumer tail of the recession may be a long and painful one, but the prospect of a meltdown has receded.. for now..!

This week our trade media partner, TTG, kindly invited me to guest edit the newspaper, and I chose as the feature Why Travel Matters. The reasons range from psychological well being, and the breaking down of walls between peoples,  through to economic impact for the individual and the country. This wasn’t just an attempt to cheer ourselves up, but to start to assemble the very strong arguments in favour of a vibrant tourism industry. If we are going to work effectively with governments and regulators, we need to educate them as to why our industry, and our issues, matter. And I believe that, as an industry, we do face some very profound structural challenges if we are going to continue to be able to provide tourism on the scale and of the scope that we’re used to. Tomorrow, in Tourism 2023, we’re going to see some fascinating scenarios that have been put together with the support of a number of key industry players. These are scenarios, not forecasts or predictions, but they raise a number of questions about sustainability. And I mean the sustainability not of the planet, not of trees and furry animals, but the sustainability of our industry. The carbon agenda is part, but only part of delivering this vision.When we see the scenarios, we’ll see some places we really don’t want to end up in.  But let me take a stab at a vision of what a sustained and sustainable future for the travel industry will look like. I’ve called it The Happy Place… (a technical term).  We are here to build successful companies, so that is the start and finish of the trip…fresh, interesting and easy to use products… a system of financial protection that is comprehensible and easy to administer (I’ll come back to that!).. a framework that allows us to deliver health and safety effectively and efficiently...and that means of course, working with hotels.. destinations that welcome tourism, and benefit from it.. a low-carbon model that minimizes climate change impact.. jobs, not just quantity, but quality.. a fair tax take for the Government..instead of the socially useless APD.. and that brings us back to successful businesses. 

The core principles of Tourism 2023 are very much about delivering this vision, and many other parts of the Travel Convention over the next two days will touch on elements of it.We certainly do not have all the answers, but I believe there is real urgency and intent to find the solutions. I also believe that ABTA has a key role to play in helping our Members get to the Happy Place.Financial protection is, of course, something ABTA is at the heart of, and many of you will be aware of a vigorous debate going on at the moment about responsibility for customer monies. Now is not the time to get into the detail of that, but I do believe the ABTA Board has made a strong statement of principle and of our commitment to financial responsibility, in reaction to a new industry phenomenon.This has nothing to do with judging one business model as better than another, or changing them. It is about maintaining the integrity of the ABTA brand, and its value to you, our Members.But this is part of a wider problem which we’re wrestling with, in a world where the financial protection has failed to keep pace with changes in the industry. Of the 45 million overseas trips last year, 18 million were packages, and it’s now time to address the unprotected majority.

ABTA believes that all holidays should be covered, and is working with the Government and the CAA to come forward with a new scheme that allows members to preserve their business model, and yet provide comprehensive protection. And reform is needed in the arena of Health and Safety, too, where we need a European commitment to a framework of at least minimum health and safety standards and certification.  ABTA’s merger last year with FTO has given us real expertise in this area, as it has in the realm of destination sustainability. Working with our Members, and their experts, I’m confident that we can push our points home in the UK and in Europe. The industry needs a routeplan to the future, and the ability to measure our progress along it. I believe ABTA is the right body to provide leadership.  We have the breadth of Membership to represent the industry, and to have the difficult debates that need to take place, and then make decisions, and the communications channels to tell the world what we’re doing.