Healthy demand for holidays
[28th May 2008]
Despite the credit crunch and rising fuel prices, a new CBI survey shows people are still booking holidays.
The survey of consumer-facing and business services firms over the last three months generally makes depressing reading. Consumer services firms, such as hotels, bars & restaurants, cinemas and gyms endured an even worse quarter than they had feared. Business volumes and values fell at rates not seen since the end of 2001, says the report.
However, one sector bucked the trend. The only consumer services sector to report growth in business volumes over the past 3 months was travel services, the CBI reports.
Travel companies reported healthy demand for holidays in the past three months, with people more inclined to take a well-earned break as rising costs put greater demands on household spending, comments the CBIs chief economic adviser, Ian McCafferty.
While people still seem to be determined to book short breaks and longer holidays in the sun, its not all good news for the travel industry. The report adds that travel firms incurred rapid cost rises and, with limited ability to pass these onto customers, their profitability fell at the fastest rate for five years.
With the prospect of higher air fares and holiday costs it remains to be seen how much longer people retain their enthusiasm for booking a holiday.
The CBI report also makes depressing reading for some travel related businesses: Demand for leisure and personal care services - such as gyms, hairdressers or cinemas - fell markedly in the last quarter, as did spending in hotels, bars and restaurants.
Written by: Nick Purdom
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