Slowdown in luxury travel forecast

Hotel News - 11/12/2008

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PricewaterhouseCoopers issued the warning to the industry sector, predicting that ‘aspirational’ holidaymakers will abandon luxury travel during the recession.

The UK is expected to begin recovery from the downturn by early 2010, but luxury travel will likely remain at recessionary levels until late 2011 or early 2012, as the core customer base - high net worth individuals - continue to be wary.

Despite optimism in the segment last year, luxury travel has not been as recession-proof as expected, with sales falling off across the sector as customers watch the deflation of their asset base and uncertainty loom for longer than anticipated.

Luxury travel operators are being advised to ensure that their finances and working capital are in order, that their liquidity is secure, and that all exposures are closely examined. Management is also advised to take a hands-on approach to operations and cash management during the period.

Mergers and acquisitions can be key to survival in the current economic climate, with the need to take advantage of synergies more important now that it has ever been in the past, PricewaterhouseCoopers added.

It was also suggested that difficulties in obtaining financing could be avoided through share-for-share exchanges.

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