Dubbed the “Jubilympic” year, 2012 promised a lot for the UK travel and tourism industry, with travel agents, airlines and hotels all hoping to benefit from the global international events being hosted in the UK this year.
As Jubilee celebrations settle and with only a matter of weeks to go before the London Olympics, the May release of ICAP’s UK LMI Employment Index suggests the sector has had a difficult 2012 to-date, with many companies limiting their hiring activity. Echoing ministerial caution last year, these global events have failed to ignite vacancy growth, a key lead indicator for overall sector health.
The past few years have been challenging for the travel and tourism sector. The balance of companies recording lower-than-expected volumes was at a near two-year high in Q3 last year and, by the end of 2011, almost one in five companies listed at Companies House within the sector were on insolvency alert.
The major travel companies have had an especially tough recessionary period, with Thomas Cook in particular experiencing major losses and axing hundreds of jobs. Problems for the travel agent and major Olympic sponsor have been compounded further by low demand for its Olympic packages. Nearly a quarter of its 300,000 tickets remain unsold, resulting in the firm recently announcing plans to make these tickets available to the general public at a heavily discounted price, costing the firm an estimated £10m.
Green shoots do appear on the horizon, however. The May data release for the UK LMI Employment Index notes a ‘Positive’ outlook for the sector over the next month, recovering from a ‘Strong Negative’ rating for the month just gone. Despite broader macro-economic uncertainty, an increase in permanent employment is expected in June, suggesting a more positive outlook for those companies hiring. Does this mean travel and tourism companies are through the worst…it’s too early to tell. But after a run of bad news and underperformance in the sector, even the smallest green shoots are a welcome sign.