Thursday 11 November 2010

Fair wind for travel?

I went to the world travel market at Excel and was surprised at the optimism in the Travel and tourism sector.
British Airways has moved into the black despite the volcanic ash cloud and dispute with their cabin crews.
easyJet and the chortling Ryanair have seen their already profitable businesses grow further and luxury hotels are recovering well.

The British Airports Authority said that 9.75 million passengers used their airports in October, an increase of 3.4% over the passenger numbers of the previous October. Heathrow did rather better with an increase of 7.2 %, helped by increases in business travel. 77.2 % of seats were occupied in planes leaving Heathrow. Some airlines travelling to favoured destinations did much better.

The North Atlantic traffic grew by 7.5%.

Speculation about the effects of the large increases in the air passengers duty now centre around falls in economy passenger numbers to long haul destinations and the possible switch to other European hubs in an attempt to reduce costs.

At home, M& S, Sainsbury's, John Lewis and Tesco are all cock-a-hoop about their most recent set of figures and buoyant about future prospects.

The gathering political rebellion about austerity cuts, particularly on defence and University fees will blunt the effects on the economy. Few economists are repeating fears of a double dip recession.

So the optimism encountered may have substance. I am keeping my fingers crossed.

Friday 22 October 2010

Summer swallow or Autumn squalls?

British airline passengers have apparently regained their zest for travel.

According to the British Airports Authority, passengers who travelled through the six airports they control show an increase in September of 3.3% over the same month in 2009.

Heathrow did much better, posting a passenger increase of 7.6%.

Heathrow's passengers to Brazil grew by 27.1%, to Russia by 23.7% and China by 10.3%.
Travellers to North America from Heathrow grew by 6.5 % compared to an overall BAA traffic count of 5.1%.

Clearly all travel, both on scheduled and charter flights, have shown growth in September and BAA put this down to: consolidation after the end of the recession, re-instatement of flights and increases in business travel.

‘One swallow does not a summer make’ is a quotation to bear in mind, even in the autumn. Attempts to cut the UK's financial deficit and ongoing problems with the banks are still raising fears of a double dip recession.

And then there is the certain impact of the increase in the airline passenger duty that will come into effect next month.

For travellers to the Caribbean, Southern Africa and the Far East, economy passengers will pay £75 instead of £50 and the original £20 charged in 2006.
Premium travellers will now pay £150, a huge rise from the £40 first imposed in 2006.

British tourists to the Caribbean have fallen by as much as 25% and this is very bad news. Alan de Chastenet, St.Lucia's minister for Tourism is reported to have said that tourism contributed 64% of the Island's GDP, 70% of tax revenues and 85% of its foreign exchange income.

Don't expect any improvement when the tax is possibly changed to airline flights instead of per passenger. APD will generate £3.8 billion of annual revenues in aviation taxes by 2015.

The Chancellor will not accept less.

Monday 11 October 2010

Jeremy Bullmore

Jeremy Bullmore is a man worth listening to. His observations are based on a willingness to listen and the ability to learn.
His career in advertising needs no elaboration suffice to say it was successful and merited.

One of the things he does well, is to write a column in Campaign, an advertising trade journal in the UK.
Last week he was asked for advice from a newbie in the business "What are your three most important bits of advice for someone like me?"

His answer :

“Advertising is, or should be, all about ideas, wheezes, hypotheses and improvisations : why don't we...? what about...? let's try...... Good advertising makes difficult things happen - and almost everything that's going to be suggested, at least in it's initial expression, will be patently flawed.
As an eager young recruit, you'll be sorely tempted to display your intelligence by pointing this out : by focusing the blinding light of your analysis on the obvious inadequacies of each fragile weakling : and almost certainly in the presence of the weakling's author and the author's superior. What's more, it will be clear from your expression that you expect praise for this act of wanton demolition.
So my first piece of advice; never, ever do this. It's the easiest thing in the world and the least constructive. If you want to be valued, you need to display a consistent ability to see potential in the feeblest spark and help to coax and cosset it until it blazes into glory. If you can't do that, just shut up and listen.
I don't know what the other two are.”

Tuesday 21 September 2010

A tale of two countries

People choose holiday destinations for some simple reasons.

They have good beaches. They are uncrowded. The hotels are welcoming and provide good service. Access is easy and the package is attractively priced.

It helps if the destination offers unique attractions, is desirable and provides reasons why this holiday should not be deferred.

Most holiday experiences are pleasurable, so what factors beyond a stress free holiday makes tourists return?

I believe the overwhelming reason given by regular visitors is the friendliness of the locals and the warmth of their welcome.
Mauritius is a beautiful island in the Indian Ocean with some of the happiest people in the world. Their people don't just welcome tourists; they don’t show any resentment or indifference to visitors from richer countries. It’s not just that the tourists are safe and treated courteously. Mauritians are genuinely welcoming.

The smile says it all. Even the hotel staff knows your name.

In the USA, the welcome varies .The people at customs and immigration are almost always rude, and though people in places like San Francisco and Boston are polite, the general impression left is negative.

Canada is another story. Their citizens are such a friendly bunch that a return visit is almost mandatory. Toronto is an interesting city, Niagara is inspiring and the CN tower impressive. I will remember with fondness a gentleman we met on the "Rocket "their equivalent of the London tube. He sat with us, marked our card about places to visit, including the wild and beautiful High Park, and even offered to take us around in his people carrier.

I think it was Pierre Trudeau who said: “Other countries have history. We have geography”. True it is a vast and beautiful place, but even more important, their people are amongst the friendliest and helpful. It’s like they believe in the old adage;

There are no strangers, just friends you haven't met.

Monday 26 July 2010

The age of Skiers

Two facts may interest you.

There are now more elderly people in the UK than there are children. The elderly are fitter, more adventurous and less concerned about leaving money for their children to inherit. Referred to as SKIERS, (Spending the kid's inheritance) they spend £100 billion a year according to The Independent, making them a force recognised both by politicians and marketers.

Another development is the growing amount of money returned by the tax office to charities through the gift aid scheme. In 2003/4 the sum was £577 million. Last year, in 2009/10, it had grown to just over a billion pounds, an increase of 73.5%.

Some charities are heavily dependent on Government funding and fear George Osborne’s austerity cuts. Other evidence suggests a fall in the number of private donors. All this means is that charities will have to work harder to attract donors, persuade them to give more often and in a more tax efficient manner.

Who gives to charitable causes?

The Target Group Index shows a marked skew towards the better off, in the social grades ABC1, and older. Many established charities have an average donor age of 70. People give to different causes, depending on the relevance of the appeal and its urgency, so it is possible to establish which cause will attract different types of donor. We analysed the TGI's lifestyle questions and identified seven clusters.

Dyed in the wool traditionalists will support heart, cancer and the poppy day appeals.

Cultured nest builders will contribute to schools and the arts.

Mid life moralists may be more inclined towards third world charities.

What they all have in common is the belief that they can make a difference and that they are morally bound to do so. Maslow in his insightful theory of The Hierarchy of Needs, described them as people whose basic needs are met, who are recognised in their community and have status. They are now in the stage of self-actualisation, when they ask themselves: Why am I here?

Wouldn't it be lovely if we all were in that state?

Wednesday 14 July 2010

A look on the bright side

The news is almost without exception bad.

Austerity measures taken by most of the world’s governments have raised fears that we may all fall back into recession. In Britain, this risk is real and though the coalition politicians are talking up the economy, they must know that 40% cuts in departmental budgets will mean increased public sector unemployment, a slack unlikely to be taken up by the private firms.

There will be increased pressure on banks to stay liquid, so lending -both to individuals and companies - will stay constrained. Falling consumer confidence may increase saving levels, but lower saving rates will reduce the income of savers.

But hang on!

Life hasn't been so bad if you are still in work, and most of us are. Unemployment rates are much lower than in the recession of the mid 70's. Mortgage holders have benefited from low interest rates. Credit card debts have fallen and fewer homeowners are borrowing from equity release schemes to fund or maintain an unsustainable lifestyle.

The British are beginning to understand the truth in Micawber’s dictum: Live within your means or the devil will get you. Actually he talked in terms of shillings and pence. The truth applies to businesses too, including UK Ltd.

The Economy needs to grow and Germany provides the template. A diverse industrial base, with their thriving automobile industry and now the leader in solar power technology. Our reliance on financial services makes us vulnerable to threats of exodus by these financial wheeler- dealers. Excessive reliance on this business has hurt even Jersey. Despite healthy surpluses in the past, they are considering a tax ceiling of 50%.

Currently the one industry that is doing well is tourism in Britain. In 2009, there were more domestic tourists than in the previous year, and this may surprise you, tourism contributes more to the economy than financial services.

The news from abroad is also good as far as travel is concerned. According to The International Air Transport Association, scheduled airlines showed an 11.7% increase in passenger traffic in May 2010, despite the European troubles relating to the ash cloud and British Airways’ battles with its cabin crews. This dispute affected passenger traffic from Heathrow, as well as those from Glasgow, Edinburgh and Aberdeen. Overall BAA airports showed a fall in passengers carried in June 2010 of 1.7% over the same month in 2009.

However, if BAA estimates are accepted, without the strikes, Heathrow would have carried 140,000 more passengers in June 2010, an increase of 2.5% over those of June 2009.

Recessions end when people get tired of feeling poor. Reliance on politicians to put things right is wrong. It's time to learn from Polonius's advice to his son: Borrowing takes the edge off husbandry.

So let’s work harder and reward yourself with a well earned holiday!

Monday 21 June 2010

The beginning of the end for the European single currency?

Douglas McWilliams is bright, particularly so, even by the standards for Economists. He is the Chief Executive of the Centre of Economics and Business Research in London. I have known him for twenty years and rate his opinions highly.

His views on the current crisis in Greece is realistic and bleak.

The European authorities did well to cobble together a rescue package for the weaker European economies.

However, no matter how much sticking plaster is applied, the fundamentals remain the same. A member state can sort out its problems, if it has a competitive problem but no debt, or a debt problem but no competitive weakness.

Ireland for instance, has a deficit problem compensated by rising exports. Greece has a huge deficit which cannot be alleviated by external demand for its exports.

In the days before the single currency, Greece would de-value its currency. So it must leave the Euro, but if it does so, it would default on its debts.

Greece certainly cannot pay its debts in Euros with a devalued Drachma, so part of the package of aid for leaving the Euro must be at a minimum to convert the debt into the new currency unilaterally. This would mean accepting a fall of at least 15% and even then having possibly to write off a high proportion of the remaining debt.

Would Spain and Portugal be also forced to leave the single currency?

At the recent ABTA travel conference he said:

"Spain's failure to address its banking crisis brought on by over exposure to a weak housing market will precipitate an exit from the single currency and other countries like Italy may use this as an excuse to leave too.

Traditional destinations will attract more British tourists to go back when the good old days of Lira and Drachmas return"

Sustained drives to attract tourists with special incentives will hasten economic recovery, even in Greece.

Thursday 13 May 2010

Tourism Travails

Click to enlarge.

The travel and tourism industry had in 2009, the worst year in decades.

The recession was mainly to blame, but there were other factors such as the Swine Flu panic
and the growing strength of the Euro. The airlines gambled on the price of oil and caught a bad cold resulting in fewer flights and higher air fares. Low cost airlines like Ryan Air benefited in Europe.

British travellers abroad declined by 15.2% with North America suffering most.
The traffic to Mexico dropped sharply as a result of the Swine Flu episode by 41%.
Holidays to Barbados fell by 53% and even popular countries with homes owned by the British felt the pinch. Portugal lost 29%, and the two countries that did well were Egypt and Sri Lanka.

Egypt was seen to offer value and Sri Lanka peace.

2010 started better, as figures from the British Airports Authority suggest. However acts of God and man have conspired to reverse the trend. First we had snow, then a British Airways strike by cabin crew, Volcanic debris from Iceland and now another bout of machismo by Willie Walsh.

Unite, the Trade Union has announced 20 days of strikes, unless management abandons its plans to cut crew numbers and change employment terms.

Supporters of the Chief Executive see him as a strong and astute manager. His opponents claim he has his priorities in the wrong order. The British traveller think that the contest will do British Airways irreparable harm.
So much for "The World's favourite airline"

What lessons can we draw from all these events?

Long haul traffic to the East and Southern hemisphere whilst affected by the British Airways dispute, and the cancellations caused by the Iceland volcano, still represents great potential.

Airlines can learn from the way British Airways handled the two crises in PR terms.

And the adage :"It's an ill wind that doesn't blow somebody some good " still applies.

Monday 1 February 2010

Omid and the Meercat

Motor insurance premiums have apparently risen by 18%.

Is this a fact or merely the industry's wishful thinking?

It's easy to see why they need a rise in premiums. Although this is a massive business worth £13 billion, it remains only marginally profitable. Claims, some fraudulent have increased and there are now a large number of uninsured drivers. However intense competition, particularly in the shape of advertising, £109 million's worth last year, has surely put a dampener on price rises.

Price comparison sites are now the new breed of broker and they spend a lot of money on the box. Some of them produce memorable advertising too. Can you forget the Russian meercat Alexandr and his catchphrase "Simples"?

All this activity suggests that there is very little loyalty in the market. According to an IPSOS/MORI study, three quarters of policy holders shop around when it is renewal time. And they get three quotes before committing. In this scenario, a renewal notice, from the insurer which has not been prior checked on a price comparison site is inviting defection.

Clearly price and price increases are key influencing factors. Past experience is also important. Disgruntled motorists complain about difficulties in sorting out claims. This is important because one in six policies are claimed against.

Like other business sectors, establishing trust is vital and especially so in the finance industry. Trust helps keep customers. And it is more expensive to acquire new ones.

Finally, do you know who writes the most motor policies?

It's the Royal Bank of Scotland. They own Churchill and a few others. And we own the RBS.

Monday 25 January 2010

Creative Magic.

I heard from an old friend last week.
We had lost touch many years ago and he found me through Google.
Chris Sharpe is a talented creative man who played the piano beautifully. He had been the creative director at Masius, then the second largest advertising firm in London.
BacoFoil was one of the many grocery brands we handled. Advertising appeared on television in November and December, because most of the year’s sales occurred at Christmas time.
The client came to the Agency for the annual pre-campaign meeting. My bit was simple. Television was the automatic choice of medium and there was little planning involved in the days when ITV was the only commercial station available.
The star performance would be the presentation of the TV commercial.
But Chris had not done the work and since the meeting could not be postponed, he had to think fast.
At the meeting he said:

"Gentlemen, you have a great product but despite our strenuous efforts we couldn't come up with a commercial that did your brand justice. Until last night. We came up with an idea that we liked so much that we threw out our earlier efforts to concentrate on this new notion. There was no time to produce storyboards, so I will just tell you about our advertisement.
First lets start with the proposition:
Wrapping a turkey with BacoFoil reduces dehydration losses. We have tested this and discovered that a BacoFoil wrapped turkey has an extra one and a half portion than an unwrapped bird.
Now we need a catch phrase.
Your oven ready turkey isn't ready for the oven till it's wrapped in BacoFoil
Every time we mention BacoFoil, the word will shimmer out of the foil.
Now we give it pace and wrap it around a Christmas carol.
Your oven ready turkey isn't ready for the oven till it's wrapped in BacoFoil. (Imagine this and add the shimmer of the brand logo on the screen).
The camera shows a warmly lit home with the family around the table which features the Christmas turkey. Outside in a snow-covered garden, two boys are singing the BacoFoil carol.
One is tall and his friend quite small.
The end shot shows the young boys invited to join the family at Christmas dinner. The voice-over makes it clear that this generosity is possible because BacoFoil has delivered one and a half extra portions"

Chris Sharpe sat down to enthusiastic applause.

Could this happen now in our over researched world?