Travel and tourism recorded a positive performance in the UK in 2005, as a result of both the good shape of the economy and the complete recovery of air transportation after 11 September 2001. Even the bombings in London in 2005 did not prevent healthy growth in the number of arrivals to the country.

Rationalisation in the hotel industry

Accommodation is polarising into two distinct types: luxury accommodation and the growing group of budget hotels. Hotel groups are consolidating and rationalising their property assets in order to remain competitive and the increasing number of internet hotel bookings indicates further commoditisation, with many travellers selecting on price.

Low cost airlines still on the rise

Similarly, the airline industry is focusing activity in two main areas: luxury first class and budget. The latter forms an area of growth and fierce competition. British Airways remains the leading UK airline. However, all airlines, regardless of size, are recognising the growth and potential of budget or no frills flights.

High potential for car rental services

Car rental is picking up steady growth, in line with the growing visitor numbers. Higher passenger values are no guarantee of profitability however, as some large car-rental operators continue to struggle. Whilst rental companies needed to consolidate and extend the life of fleets in recent years, budget travel and internet booking promise high potential.

On-line players continue to gain ground in travel retail services

Retail travel providers are losing share to growing internet-based competition, particularly within highly commoditised short-breaks, with a trend for travellers to book their own flights and accommodation. As a result a steady move of the major UK tour operators towards internet sales is exepcted for the 2005-2010 period.

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