Hospitality and Leisure
In a highly competitive sector, Barclays' hospitality and leisure specialists provide proactive strategic, banking and financing support.
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Barclays Travel Forum celebrated hosting its 14th year on 22 May with over 200 travel industry professionals attending. There were many insightful conversations throughout the event. Don’t worry if you couldn’t attend, you can click on the individual tabs below to read the write-up of the event.
Consumers continue to prioritise travel as an area to spend their discretionary income, despite slow sales for companies in the first half of the year.
In an economic update, Alistair Pritchard, Partner and Head of Travel at Deloitte, said there were many reasons for travel professionals to remain optimistic for 2019.
“One of the things that has come out of our work is that consumers continue to prioritise spending on holidays, which is fantastic news. This tells us that experience is really important to the consumer.”
Additionally, growth in the economy and low unemployment are also positive indicators for travel firms, as Pritchard believes “we will see a strong booking pattern over the next few months as people want to go on their holidays – what I can’t say is whether this will be domestic or overseas.”
However, staff shortages and rising costs were among factors affecting margins in the sector. He added that the drone activity at Gatwick and the grounding of Boeing 737 Max jets caused uncertainty.
Despite these concerns, travel firms have seen a growth in the solo travel and adventure travel markets, highlighting more people had a desire to discover new destinations. According to Pritchard’s work, there has been a 17% increase in solo travel over the past five years, with over 85% of solo travellers being female.
Travel agents also have a reason to remain optimistic, as Pritchard said information overload was leading people to seek out travel experts for advice.
“We are all using our phones, but we also feel we’re overloading with information.
“Successful travel businesses, whether they are homeworkers, high street retailers or call centres, all have one thing in common, that they spend time with the consumer working out what they want from their holiday.”
Businesses in the travel industry and beyond are being urged to do more in promoting women into senior roles and to hire females across all age groups.
In a wide-ranging discussion on diversity, Farina Azam, Partner at law firm Travlaw, said many companies were still reluctant to hire women of a certain age because they feared they would lose them when they become pregnant.
This comes at a time when a proposed new law outlawing redundancy for pregnant women is being opposed by some female pressure groups. This is because they feel it will make firms more reluctant to hire women.
“I don’t have the solution, but I definitely see a reluctance around hiring women of a certain age,” said Azam.
Meanwhile, those women returning to work part-time after having children are often extremely productive during a shorter week.
“People in my team who are part-time are very productive because they know they’ve only got a set amount of time to do their work and they get it done.”
However, Azam believes overt sexism still exists in the travel industry. She told the story of how she experienced this after a recent panel debate, when an article on the event quoted the three male participants on the panel and ignored the contributions of herself and another female panelist. In a photograph, only the men in the picture were identified.
“I was amazed because I was the only lawyer on the panel so I would have expected them to use something I had said and even if I hadn’t made a useful contribution, I know the other women did.
“I sent the author a request to connect on LinkedIn so I could point this out, but he didn’t accept the request.”
Lindsay Garvey-Jones, National Retail Manager at Holiday Extras, said men needed to do more to promote women.
“I’m really fortunate to have a boss who supports me and makes me feel valued. We need more of that and women will feel comfortable going for roles if they have the support.”
Wendy Papworth, Head of Diversity and Inclusion at Barclays, highlighted the work she was doing to help women, particularly those returning to work after pregnancy or a long-term break.
She said Barclays had done a lot of work to encourage people to work ‘dynamically’ – from home or on flexible hours.
“Five years ago, we looked at our dynamic working policies and they were pretty good, the best in the industry. But were people using them? A little bit,” she said.
“We have changed that. Globally, 63% of our 90,000 colleagues work dynamically. It is there for both men and women.”
Meanwhile, Garvey-Jones said travel companies need to do more for the Lesbian, Gay, Bisexual and Transexual (LGBT) community.
“There are some fantastic companies that are getting it right, because they are driving it from the top down,” she said. However, there remains an enormous amount that companies could do to engage with the LGBT community. “Come, learn, be educated.”
Travel companies are offering discounts to secure bookings in a soft market, but according to industry experts, this will have an impact on their profits later in the year.
Martin Alcock, owner and Director of the Travel Trade Consultancy, said virtually all travel companies had been struggling and thinking of ways to increase sales.
“Businesses representing all of the sectors are publicly very upbeat but privately they are all saying it is really difficult.
“Even the ultra-luxury companies are saying they are flat. We may well see these bookings come back, but at what price?”
These companies are expected to feel the impact of discounting later on in the year according to Alcock, and this is because they are offering discounts and low to zero deposits.
Alcock describes this as a ‘short term ticking plaster’. Zero deposits are expensive to fund and if the customers cancels, this is a big risk for companies.
“That, to me, dips into the sub-prime credit market and that’s a very brave place to be in the current climate,” he said.
Paul Carter, Chief Executive of Hotelplan UK, said companies had hoped for a ‘ketchup’ effect of bookings coming in quickly after the Brexit delay, but this had not materialised.
“June discounting is around 30-40% in the market,” he said. “I’m more optimistic in July but we’ve still got some way to go in July and August.
“Mainland Europe has struggled. But we’ve made it up in other areas.”
Additionally, Carter said the industry was hoping for poor weather over the summer to encourage people to travel abroad.
“If it’s a hot summer, it will be really difficult for everyone.”
Alcock said another challenge for the industry had been the cost of advertising on Google, following a fall in the number of people using the search engine to look for holidays.
The drop in searches means travel companies are having to pay up to 20% more than last year to attract a similar number of holidaymakers.
Similarly, the travel industry has experienced the law preventing companies from charging a fee to customers who book on credit cards. This used to be a money spinner for some firms. The change has led to more consumers buying holidays on credit, which in turn has increased the liability for credit card firms in the event of a failure.
Pete Cetnik, Senior Risk Manager at Barclaycard, said he was unable to comment on individual companies, but pointed out that getting the balance right was challenging.
“It’s important to remember that it’s not our money, it’s the clients’ money.”
The business travel market is performing well with bookings at expected levels, despite the difficulties in the leisure market.
“We’ve all been holding our breaths a little bit, but we’re on forecast,” said Simone Buckley, Chief Executive of business travel agent, Fello. “And we haven’t really seen any downgrading, for example from business class to economy class.”
However, business travel agents have experienced their fair share of challenges, particularly competing with airfares.
“It is becoming more difficult because airlines are pushing their air fares on their websites to everyone,” she said.
“It can sometimes take up to three days to find every variation of a price and so being ruthlessly efficient – as we claim – is becoming more difficult.”
Another area that is becoming of huge importance for business travel firms is ‘risk management’ – advising on destinations and knowing where clients are due to be at all times.
“People used to book with us because they wanted to book a flight. The reality today is that they don’t need us to book a flight – it’s really easy,” she said.
“What our clients need is for us to take care of them - we know where the clients are and how to get them out. That’s where we add value.”
But, as Buckley highlights, said companies may not look to book through them in the future.
“Do clients really need to book through us? Going forward, we might have a situation where we own the itinerary and do all that for them, but we don’t need to do the booking anymore.”
The secret of good management is to trust people to do their jobs and not micro-manage them, the Forum heard.
Robert Yeowart, Chief Financial Officer of Formula 1 team Sportpesa Racing Point, said he liked to give clear goals and then let people get on with their tasks.
“In my previous role at Mercedes, I made mistakes and learnt lessons from that,” he said.
“We hadn’t booked hotels for the grand prix in Monaco and I was getting frustrated with the team. I think there was an element of them waiting for me to tell them what to do because they were used to me giving them tasks.
“We worked through it, but I learnt quickly and changed my approach after that.
“Setting clear goals and trusting people to get on with the work made a big difference.”
John Bevan, Chief Executive of dnata Travel Europe, agreed but said that he also believed in strong leadership.
When he took over at dnata, he brought in heads of their netflights and travelbag businesses, to give them direction.
“All businesses need direction and strong leadership helps create that direction, so one of the first things I did was to re-introduce managing directors into our businesses, so those people had responsibility for everything.
“Leadership isn’t about them doing it on their own but building something with a team.”
In recent years, both admitted the workplace had changed where focus had shifted to the needs of staff, particularly younger members.
“When I first started, I’d be happy to have a job stuck in the corner making tea for a month. I’d have stayed there two months if I’d had too,” said Bevan.
“What I see now is a big difference in expectation, when someone comes in, if the kit doesn’t work or we haven’t quite got enough desks for them and they are asked to hot desk, they’re not happy.
“We had people not staying because they didn’t think the ‘onboarding’ process was smooth enough. We have near full employment in the South-East and if you do not keep them happy, they leave.
“As an employer we have to make the first impression good and not say ‘you’re the new boy, sit over there and make us cups of tea’.”
Yeowart said he saw a great sense of self-worth among young people and they had great energy and ambition.
“It is different, but it’s a generational thing. We have had to change.”
In addition, both also highlighted that they strive to avoid a meetings culture at work.
Yeowart said previous employers often had meetings until 5.30pm, when people had to start their work, which was unfair and bad for morale.
“The interactions now are quite short, you can have a quick chat with people on the phone and comparatively, my diary is pretty clear.”
Bevan said that at his previous employer, a well-known online travel agency, they had too many meetings.
“We regularly had meetings to prepare for meetings and it was just non-stop. For a big board meeting, you might have two or three meetings to prepare for those meetings.
“Where we are now, we still have a lot of meetings, but people are a lot more practical.
“If you can empower your leaders across the business, they can get on and do things and then maybe have quick meetings across the teams.
“Our board meetings are now down to one hour and a half per brand. They used to last a whole day.”
Communication within big organisations that consisted of a lot of brands was an issue.
Beavan noted “email is one of the worst ways of communicating because, depending on your mood, an email can sound different. Face-to-face is ultimately the best.”
dnata is moving into new offices in Preston. Bevan said they would be open plan, with no separate offices and no eating at desks to ensure people get away from their computers and socialise.
Some travel companies are relying primarily on technology to recommend personalised holidays for different travellers.
Tom Valentine, Co-founder and joint Chief Executive Officer of Secret Escapes, said its technology was able to offer highly personalised offers based on data acquired about its customers.
“Over the last year or two, we’ve moved away from having humans choosing what deals go into the communications to somebody who visits the site regularly,” he said.
“Technology has comprehensively replaced humans in creating that personalisation and when it is done properly and appropriately, it enables us to introduce a region or a hotel to someone that is perfect for them and wouldn’t have considered.”
Andy Washington, SVP Travel of Culture Trip, painted a picture of artificial intelligence assistants like Siri or Alexa making recommendations for holidays by collecting a huge amount of data on spending habits and desires.
“It’s just the collation of data. The generation coming will share their data if you give them something in return,” he said.
Government action is needed to protect our most popular resorts for future generations, according to industry experts.
Some European cities such as Paris and Barcelona have taken steps to limit the holiday lettings market. Amsterdam, for example, which last year had 19 million tourists in a city of 850,000 inhabitants, is restricting the development of new hotels and souvenir shops, and banning the drinking of alcohol in public spaces.
Nikki White, ABTA’s Director of Destinations and Sustainability, said government action was only the starting point.
“Destinations have to know what sort of tourism they want and have a plan. In some countries, the tourism voice is not always the strongest one in the destination. Too often destinations don’t have a plan and when you add in the sharing economy [like Airbnb], that does give a problem.”
Tracey Poggio, the Association of National Tourist Offices and Representatives chairman, and the Head of UK Tourism, Marketing and Media for the Government of Gibraltar, said there was also an opportunity to protect destinations and promote lesser-known resorts.
“Investment of local government, private enterprises and local populations contribute and shape in evolving an area. This collaboration has to be considered in how we grow tourism.”
On the other hand, White states some cities were using technology to manage the flow of tourists into popular areas and cited Lisbon as an example.
“Certain destinations are embracing technology. Lisbon is using data very well to see where people are at different times.”
Poggio suggested that pricing could be used to manage supply and demand by having different costs to visit attractions, depending on the time of day or season.
But White said she was not in favour because you quickly move to a place of social injustice and pricing certain people out.
Everyone has a responsibility to respect destinations and the sites they visit, Poggio believes.
“Travel is inspirational and we don’t want to stop people from going away but I think we all need to be a bit more appreciative of some of the sites that we see.”
To find out what our Hospitality and Leisure team can do for your business, visit Hospitality and Leisure
In a highly competitive sector, Barclays' hospitality and leisure specialists provide proactive strategic, banking and financing support.