West is best - As long haul bookings show unexpected growth

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Just when it looked as though Europe would get a shot in the arm from holidaymakers reluctant to commit to a long haul holiday in 2012, the latest trend report from Hayes & Jarvis suggests otherwise.

However, the boost to long haul bookings is not a worldwide phenomenon: instead British tourists seem to be opting for destinations they perceive to be safe from the troubles that have dampened demand for Egypt and Kenya.

‘West is Best’ could be the motto as Hayes & Jarvis reports record bookings for Mexico, Latin America and the Dominican Republic as well as significant increases for both the USA and Caribbean. Value is key to the Caribbean success with rock bottom pricing fuelling demand for three and four-star trips to Barbados and St Lucia.

As a result 2012 bookings in the Caribbean are up 37 per cent overall – but as much as 800 per cent for the Dominican Republic, 66 per cent for Cuba and 55 per cent for St Lucia – while Mexico has seen a further surge of 143 per cent compared with a year ago. This means that in total Mexico bookings have rocketed by 258 per cent since British Airways launched direct flights to Cancun in autumn 2010.

Hayes & Jarvis Commercial Director Niel Alobaidi said: “We have seen massive year on year growth in bookings heading West to the USA, Caribbean or Latin America, clearly highlighting the importance of “value” in driving customer demand. Much of this has come about because of the competitive pricing of luxury All Inclusive packages, which are perceived as a bargain.”

H&J says that booking trends suggest customers are destination-swapping to get the best deals too. Mexico is scoring here because four and five-star All Inclusive prices are lower than in the Caribbean – even when prices for St Lucia and Barbados have been slashed by over 40 per cent. This means that even though holidaymakers can save 49 per cent on a trip to The BodyHoliday, St Lucia in June, a week at the Valentin Riviera Maya in Mexico is still 20 per cent cheaper. Similarly, a week in June at the four-star Viva Wyndham Maya, Mexico works out 24 per cent cheaper than at the Almond Beach Club in Barbados.

Set against these positives, Kenya is sinking under the weight of bad publicity and Sri Lanka is struggling to capitalise on the rating its resorts received as cheapest worldwide in the latest Post Office Travel Money Barometer and following over a year of poor sales, it is only in the last month that Egypt has seen an upturn, with bookings over 110 per cent up year-on-year. Niel Alobaidi said this is much a reflection on how badly the destination slumped in after the revolution last February, as it is a case of strong demand:

“Despite excellent offers for Egypt over the past year, it is only in the last month that we have seen any signs of a positive reaction in the market. We believe that many holidaymakers swapped to Mexico to take advantage of great value All Inclusive packages and it will take time for Egypt to win back business to the levels it enjoyed in 2010. By contrast, Dubai is pulling back and the introduction of All Inclusive packages has helped fuel a 28 per cent growth in bookings.

“Unsurprisingly, Kenya has performed very poorly in the last few weeks with bookings down 58 per cent. What has surprised us, though, is that South Africa and Tanzania have also seen much reduced booking levels. Previously these destinations have performed strongly whenever Kenya has suffered, as customers switched to another area. This time, however, the current issues appear to be affecting demand across Eastern and Southern Africa as a whole.”

Only Dubai and Mauritius are making headway in the East this year and all because of their move to offer All Inclusive. Mauritius has seen bookings rise 24 per cent overall year on year – but a massive 141 per cent a year for resorts that offer All Inclusive packages. By comparison sales of Sri Lankan packages have fallen by 43 per cent compared with a year ago.

Explaining the trend, Niel Alobaidi said “The importance of the dual effect of flight and hotel savings has had a marked impact in the Indian Ocean where there has been very significant growth in Mauritius. You can put this down to Air Mauritius having offered some very attractive flight savings, whilst hoteliers have been equally forthcoming with offers.

“By contrast Sri Lanka is really suffering. Last year we had great offers to pass on to customers but this year our suppliers have been much less pro-active in coming forward with deals and the result has been a big dip in bookings. This all goes to show that holidaymakers are happy to swap destinations to get the best value.”

Post Office Travel Money’s latest trends report supports H&J’s research. 2012 currency sales confirm the buoyant position for Mexico where sales of the peso have doubled in two years as well as for the Caribbean (Barbados dollar +12 per cent, Trinidad & Tobago dollar +22 per cent), Latin America (Peru nuevo sol +28 per centl) and Dubai (+10 per cent). By comparison, it reports sharp falls year-on-year for African currencies led by the Kenyan shilling (-41 per cent) and South African rand (-18 per cent). Egypt is still struggling with sales down 13 per cent year-on-year but 47 per cent since 2010.

Hayes & Jarvis Top Ten Destinations 2012 to date
– Mexico
– St Lucia
– Las Vegas
– Dubai
– Dominican Republic
– Barbados
– Mauritius
– Cuba
– Penang
– Khao Lak

Other Key Conclusions:

Anecdotally, H&J believes that British tourists are putting available funds into one big holiday and adding extra days to this because of cheap extra night prices or added value free nights. The average duration has risen from 11.5 to 12.1 nights. Niel Alobaidi said: “The average duration of holidays sold in January grew by over five per cent, year on year, as customers maximised their savings on free night offers and tactical hotel room discounts. This, and the growth in 4/5* and All Inclusive holidays, backs up anecdotal evidence that customers are sacrificing second and third holidays and off-setting this by making their one main holiday extra special.”
H&J believes that the current perception of value, as far as holidaymakers are concerned, is for prices to have remained roughly in line with 12 months ago – but for more extras to be added to the package. Getting more for your money is a realistic objective, while big prices falls are not (perhaps because consumers have become accustomed to inflationary price rises in the UK)
There seems little evidence that APD is a concern to holidaymakers because bookings to the Caribbean, said to be hardest hit by the added tax, are showing an increase of 24 per cent after April when the next hike in flight duty takes place. Niel Alobaidi said: “While there has been negative reporting about the possible implication of the Air Passenger Duty tax in April, we do not believe we are seeing any direct impact from this at all. Looking at bookings in 2012 to date, the overall value of the holiday is the key driver of customer demand, and customers are not actively breaking down the cost of individual components within the package.”

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Theodore Koumelis

Co-Founder & Managing Editor - TravelDailyNews Media Network | + Articles

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.