UK TRAVEL SECTOR SPEND ON TECHNOLOGY RETURNS TO GROWTH, BUT SLOWDOWN PREDICTED
- UK Travel firms increased spend on technology in 2018 by 5% taking total expenditure to £1.79 billion. All UK businesses increased spend by 9% to £148.7 billion
- Forecast for 2019 is that UK travel firms will see no growth in their technology spend while all UK firms will increase their spend by 6%
- Travel firms warned not to cut back on innovation and digital transformation as technology budgets are squeezed
Spend on technology by the UK travel industry saw positive growth in 2018 following a 5% fall the previous year.
The latest analysis of Government Office for National Statistics Data by specialist travel technology publication Travolution, in partnership with leading travel technology solution provider the ATCORE Group, has found UK travel firms spent £1.79 billion on technology last year.
But a slowdown in growth is predicted for 2019 with no growth forecast as the travel sector faces an uncertain economic outlook and continuing concerns about the impact of Brexit.
Lee Hayhurst, Travolution editor, said: “Latest industry booking data indicates we are seeing a slowdown in holiday bookings for this summer although, overall, the sector remains up on last year.
“However, there is clearly some uncertainty among consumers about what impact Brexit will have amid reports in the national media warning about potential disruption after March 29.
“The travel industry is a significant investor in technology, so it’s heartening to see that it increased spend last year, but there’s a danger that it reacts to a potential slowdown by shelving plans to advance innovation and digital transformation and fall behind in a highly competitive market.”
Dave Cruickshank, CEO of the ATCORE Group, said: “It is very clear that the technology landscape continues to rapidly evolve, which is evidenced by Travel IT spend again outpacing GDP and wider travel sector growth rates.
“We are seeing particular investment focus on advanced search, dynamic packaging and data/yield management to drive competitive advantage as well as leveraging more modern technologies to increase operational efficiencies to reduce costs and increase agility.’
Travel technology consultant Ian Richardson, chief executive of TheICEWay, said: “If travel companies pull the plug on investment and innovation completely they will be two to three years behind when things pick up, if they make it through the downturn.
“Companies need to be more data-driven and more digitalised. If they suddenly stop in their tracks and do not keep moving forward, they could be setting themselves up for a fall. It’s a question of reprioritisation while still moving towards some kind of long-term digital vision.”
The annual Travolution Innovation Report analyses ONS data for five travel sectors: Travel Agents, Tour Operators, Hotels, Air Passenger Transport and Water Passenger Transport.
The data also allows an analysis of five categories of IT spend: Hardware, Software, Computer Services, Telecom Services, and IT and Telecoms Staff, and of firms in five different size categories based on the number of employees.
Travel Agents and the largest firms in travel – those with 1,000-plus staff - are the biggest annual spenders on technology in the sector, accounting for 37% and 55% of the total respectively.
The IT category on which travel firms spend the most is Computer Services - consultancy, training, outsourcing and software and hardware support – accounting for 36% of the total in contrast to all UK firms which spend the most on IT and Telecoms Staff (38%).
This year’s Travolution Innovation Report includes contributions from ATCORE on the emergence of voice search, contact centre technology specialist Babble on using cloud technology for marginal gains, and leading UK Online Travel Agent On The Beach on the importance of investing in talent.
It will be officially launched on February 20 at this year’s Travel Technology Europe trade show which will see around 6,000 travel technology buyers converge on Olympia for two days on February 20-21. To download the full report go to www.travolution.com from February 20.