Deloitte's Graham Pickett 5 Dec 13

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Deloitte's Graham Pickett 5 Dec 13

  1. 1. Travel and the economy VisitEngland Visitor Economy Conference 2013 Graham Pickett Lead Partner Travel, Hospitality & Leisure December 2013 1 © 2013 Deloitte LLP. Private and confidential.
  2. 2. Important notice The document is proprietary to Deloitte LLP and should not be discussed, presented, copied, reproduced or circulated without the express written authority of Deloitte LLP. Where Deloitte is accredited as the author/source, such authority will not be unreasonably withheld. Any requests should be forwarded (via email) to: Graham Pickett Senior Lead Partner, Travel, Hospitality & Leisure Deloitte LLP 2 New Street Square London EC4A 3BZ Tel: +44 (0)1293 761232 Email: gcpickett@deloitte.co.uk 2 © 2013 Deloitte LLP. Private and confidential.
  3. 3. Agenda • The role of travel in the global economy • The UK context • Consumer economy • Travel economy • Infrastructural challenges • Actions for the travel sector 3 © 2013 Deloitte LLP. Private and confidential.
  4. 4. The role of travel in the global economy A notable global economic power 9% of Global GDP 4 Source: World Travel & Tourism Council, UNWTO 1 out of every 11 jobs 6% of World’s Exports – ($1.3 trillion) © 2013 Deloitte LLP. Private and confidential.
  5. 5. The role of travel in the global economy Contribution to global GDP and employment is set to increase Travel & Tourism - Contribution to Global GDP 15,000 12% 500 Travel & Tourism- Contribution to Global Employment 10% 8% 10,000 10% 400 8% 6% 4% 12% 6% 300 4% 2% 2% 200 5,000 0% -2% 0% -2% 100 -4% 0 -6% Total Revenues (USD billion) Total Contribution to GDP (% Share) Real Growth, YoY(%) 5 Source: World Travel & Tourism Council, UNWTO -4% 0 -6% Total Employment (million) As % of Global Employment (% Share) © 2013 Deloitte LLP. Private and confidential.
  6. 6. The role of travel in the global economy Emerging economies fuelling growth % Change in Outbound International Tourism Expenditure 42% 32% 31% 33% 29% 29% 22% 15% 14% 13% 13% 12% 10% 10% 7% 8% 10% 8% 8% 8% 7% 7% 7% 7% 4% 4% 6% -1% 5% 7%5% 5% 3% 5% 3% 4% 2% -2% 8% 1% -2% -2% -4% -7% -11% -18% 2010/11 6 2011/12 Source: UNWTO Note: % change over same period the year before, local currencies at current prices © 2013 Deloitte LLP. Private and confidential.
  7. 7. The UK context General economic situation improving, with GDP and employment levels picking up UK GDP and Employment levels 75.0% 110 72.5% 105 70.0% 100 67.5% 95 2006 Q1 2006 Q4 2007 Q3 2008 Q2 2009 Q1 2009 Q4 2010 Q3 2011 Q2 2012 Q1 2012 Q4 Employment rate GDP Index (Base period = 2010) 115 65.0% 2013 Q3 UK Gross domestic product index (Seasonally adjusted) UK Employment rate (Aged 16-64%, Seasonally Adjusted) 7 Source: ONS © 2013 Deloitte LLP. Private and confidential.
  8. 8. -4% 8 Source: ONS Average earnings including bonuses (%) Jul-13 May-13 Mar-13 Jan-13 Nov-12 Sep-12 Jul-12 May-12 Mar-12 Jan-12 Nov-11 Sep-11 Jul-11 May-11 Mar-11 Jan-11 Nov-10 Sep-10 Jul-10 May-10 Mar-10 Jan-10 Nov-09 Sep-09 Jul-09 May-09 Mar-09 Jan-09 Nov-08 Sep-08 Jul-08 May-08 Mar-08 Jan-08 Nov-07 Sep-07 Jul-07 May-07 Mar-07 Jan-07 Nov-06 Sep-06 Jul-06 May-06 Mar-06 Jan-06 The consumer economy Lack of growth in real incomes remains a key concern Average earnings growth and inflation in UK 8% 6% 4% 2% 0% -2% UK annual inflation, CPI (%) © 2013 Deloitte LLP. Private and confidential.
  9. 9. UK consumers’ personal debt Relying on UK consumers to stimulate further growth is risky GBP 54,178 Average household debt GBP £158.7 billion Q3 2013 GBP 1.428 trillion GBP 163 million Daily interest paid Outstanding personal debt Every 5 mins 3 sec Outstanding unsecured lending in UK One declared insolvent or bankrupt Total household debt projected to reach GBP 1.931 trillion in Q1 2018 9 Source: The Money Charity © 2013 Deloitte LLP. Private and confidential.
  10. 10. Business confidence in the UK CFO confidence at its highest for nearly three years Net % of CFOs who are more optimistic about the financial prospects for their company 60% 40% 20% 0% -20% -40% -60% -80% 07 Q3 10 08 Q3 Source: Deloitte CFO Survey Q3 2013 09 Q3 10 Q3 11 Q3 12 Q3 13 Q3 © 2013 Deloitte LLP. Private and confidential.
  11. 11. Eurozone indebtedness Germany continues to pay for the rest of the Eurozone, as Eurosystem imbalances remains wide Net Balance of interbank payments with the Eurosystem/Target (EUR billions) 1,000 800 600 400 200 0 -200 -400 -600 Germany 11 Ireland Greece Source: Institute of Empirical Economic Research - Osnabrück University Spain France Italy Portugal © 2013 Deloitte LLP. Private and confidential.
  12. 12. The English Consumer Improved confidence and labour market driving discretionary spending in England Net spending up Net spending down Restaurants and hotels (eating out and short breaks) Utility bills Q3 2013: -12% Q3 2011: -25% +13 points +11 points Going out (cinema, theatre etc.) Q3 2013:-19% Q3 2011: -28% 12 Source: The Deloitte Consumer Tracker -8 points Transport Holidays (long breaks) Q3 2013: -3% Q3 2011: -14% Q3 2013: 31% Q3 2011: 39% +9 points Q3 2013: 15% Q3 2011: 22% -7 points Grocery shopping Q3 2013: 21% Q3 2011: 22% -1 points © 2013 Deloitte LLP. Private and confidential.
  13. 13. International travel to the UK Emerging markets are growing but US and Europe still lead on inbound visitors 3.8 Top 20 Markets by Volume (in million) 3.0 2.8 2.5 1.7 1.7 1.5 1.2 1.1 1.0 0.8 0.8 0.8 0.7 0.6 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 Top 20 Markets by Value (in $bn) 2.4 1.5 1.2 13 1.0 Source: VisitBritain.org 0.8 0.8 0.8 0.6 0.6 0.5 0.5 0.4 0.4 0.3 0.3 0.3 0.3 © 2013 Deloitte LLP. Private and confidential.
  14. 14. International growth in outbound travel UK will compete with other countries to get their share of the growth Average annual growth forecasts for outbound travel by region, 2010-2015 (%) World 4.40% Americas 4.60% North America 4.08% Central & South America 6.82% Europe 2.68% EU 1.92% non-EU 5.38% Asia & the Pacific 7.50% South East 8.75% South 9.18% Africa 4.40% Mid East 3.25% 0% 14 Source: Tourism Economics 2% 4% 6% 8% 10% © 2013 Deloitte LLP. Private and confidential.
  15. 15. Infrastructure challenges Heathrow’s capacity constraining ambitions to be an international travel hub Flight capacity & European Players 1,000 100% 99% 800 80% 71% 66% Flights (‘000s) 62% 600 54% 60% 400 40% 200 20% 0 0% Heathrow Paris Flight capacity (in '000s) 15 Frankfurt Flights handled in 2012 (in '000s) Source: Heathrow Airport Limited (“One hub or None”, November 2012) Amsterdam Madrid Percentage Full (%) © 2013 Deloitte LLP. Private and confidential.
  16. 16. Infrastructure challenges Rail and road travel infrastructure also needs strengthening Roads Rail Network Length and Passenger Usage since 1960 Traffic Growth Vs. Government Investment in Major Road Projects since 1960 40 15,000 30 10,000 20 5,000 10 0 0 Length of National Rail route (miles) Passenger Journey (billion miles) 16 Source: Department of transport and HM treasury - UK 400 3 300 2 200 1 100 0 Investment in projects (GBP billion) 50 Billion vehicle miles 20,000 Passenger Journey (billion miles) Length of National Rail route (miles) Rails 0 Billion vehicle miles (all vehicles) Investment in major projects (GBP billion) © 2013 Deloitte LLP. Private and confidential.
  17. 17. Driving economic growth through focused investment Actions to make UK and England a more attractive tourism destination Wide focus on infrastructure development Promoting England beyond London as a destination 17 Targeted marketing to attract high-spender visitors Pushing the digital agenda across the travel sector © 2013 Deloitte LLP. Private and confidential.
  18. 18. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms. Deloitte LLP is the United Kingdom member firm of DTTL. This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication. © 2013 Deloitte LLP. All rights reserved. Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom. Tel: +44 (0) 20 7936 3000 Fax: +44 (0) 20 7583 1198. Member of Deloitte Touche Tohmatsu Limited 18 © 2013 Deloitte LLP. Private and confidential.

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