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The Travel and Tourism industry was among the industries worst affected by the recession, with many households cutting their spending on non-essentials. The crisis had a clear impact on consumer behaviour where French households decided to continue travelling but they adapted their behaviour to suit the changing economic environment.
In crisis, trips taken by French households were generally marked by shorter length of stays, shorter distances and bargain hunting. The length of stay and spending were down more than number of trips, secondary holidays were sacrificed more often than the main holidays and domestic and short-haul trips held up better than long-haul travel.
The average length of summer holidays went down from 12 days in 2008 to 9.5 days in 2009, with marked differences according to socio-professional categories. Proximity has become a decisive criterion since it is a good way to reduce expenditure. Domestic travel benefitted at the expense of international destinations since more and more French chose to spend their holidays in France or to travel closer to home.
Many households reduced their expenses as a result of the financial crisis. 2009 travel budgets were on average EUR150 lower than in 2008 at about EUR1,800. This can attributed to different causes: choice of closer or cheaper destinations, shorter trips, cheaper accommodation, and reduction of leisure and food expenses.
Of the people interviewed by Ipsos during a 2009 survey on holidays by French households, 18% declared they would spend less on food, 14% would stay closer to home, 11% would spend less on accommodation, 10% would spend less on leisure and 6% would change their mode of transport.
One of the most important trends that emerged from the recession has been the increased search for value for money. In the travel and tourism industry this has taken the form of trading down. Price is becoming a key aspect and in most travel markets major discounts were offered in order to salvage the bottom line.
Customers are increasingly looking for good deals on the web since online travel agencies fares are perceived as more interesting than those of traditional ones. French travellers are estimated to compare offers on seven websites on average before making their choice.
In 2009, travellers have tended more than in the past to leave bookings until the last minute, partly because of their lack of confidence in their employment prospects and financial situations, and partly in the hope of picking up last-minute special offers and bargains.
25% of French holiday makers booked their summer holiday less than one month in advance, compared to 21% in 2008. However, early bookings have also tended to develop since tour operators tend to offer attractive prices at the beginning of each season.
Source: Euromonitor International
Most of the crisis trends are expected to remain in force in the 2010 holiday season when leisure travel is expected to be constrained by job losses and weak consumer confidence. In 2010, there is general agreement that consumers are continuing to economise through short lengths of stay and trading down on services, while domestic tourism continues benefitting at the expense of outbound tourism.
The search for good deals and the increased use of the internet are expected to continue being reflected in consumers’ habits. Most travel and tourism sectors are expected to be impacted by such trading down. Airlines and accommodation are forecast to be among the most affected areas.
Strikes over the rise in retirement age illustrate that social unrest is rising in the country following the austerity measures put in place by the government to fight the deficit. Already the travel industry witnessed some disruption at the beginning of September as flights were cancelled due to the strikes.
In the travel retail market, most players have only been concentrating on lowering prices, which has led to a deterioration of margins. It might be a better option for some players to differentiate themselves through other means such as focusing on niche markets, or increased personalisation and advice.