General public cutting back on holiday spending

The Easter holidays are fast approaching and a recent poll by the Association of Investment Companies (AIC) has found that 42% of the general public and nearly a third (31%) of active investors plan to cut back on holiday spending this year due to the difficult economic environment. Not everyone is looking to cut back however with 40% of active investors saying that they will not be making any changes to their holiday plans at all and a slightly lower number of the general public (30%) will not be altering their holiday plans either.

Significantly nearly a quarter (22%) of the general public have already decided that they are not going away this year and 8% are cutting back on the number of breaks they are taking, whereas 9% of the active investors are not going away this year and 10% are cutting back on the number of breaks. The weakness of the Pound has affected people's holiday planning with 13% of active investors and 6% of the general public reassessing where to go on holiday this year. Not surprisingly 7% of active investors and 5% of the general public are looking at less exotic destinations to travel to and 5% of active investors and 7% of the general public have decided to take a UK based holiday instead of going away this year.

With the UK in recession it is not surprising that people are looking to cut back on their holiday spending. In fact, the survey also revealed that both active investors and the general public are tightening their belts and saving more than before at the moment. Some 40% of active investors and 34% of the general public said that the credit crunch and the recession had led them to decrease their spending and save more each month where possible.

Investment Opportunity

As more people look to spend their holidays in the UK, investment opportunities could arise in the UK holiday and leisure industry as these companies start to benefit.

Murray Income Trust PLC has a top 20 holding in Whitbread, the UK's largest hotel and restaurant company which operates businesses in the budget hotels and restaurant sectors.

Charles Luke, co-manager of Murray Income Trust PLC, commented: "Some companies are likely to benefit from UK consumers cutting back their spending on expensive foreign holidays. One of these companies is likely to be Whitbread. While well known for its brewing heritage, following a period of streamlining its operations, its principal focus today is the Premier Inn chain of budget hotels. The chain should see some benefit as consumers trade down in search of value for money or decide to holiday in the UK due to the weakness of Sterling. Whitbread also owns a collection of pub restaurants mostly collocated with Premier Inn hotels as well as the Costa Coffee chain. It benefits from maintaining a substantial freehold estate and currently trades on around 10x earnings and offers a good yield."

Annabel Brodie-Smith, Communications Director, AIC said, "It's clear from this research that holiday plans are no longer immune from the public's economy drive. Nearly a quarter of the general public are staying at home this year and those that are going away are cutting back on their spending, with some taking less breaks, or opting for a UK holiday or a less exotic location. However, for some fortunate people their holiday remains sacred, with just under a third of the public not altering their plans."