The cut in interest rates will do nothing to stimulate travel demand as the market continues to fluctuate, Australia’s two largest retail groups have warned.
Flight Centre managing director Graham Turner and Jetset Travelworld Group chief executive Peter Lacaze both told Travel Today the half a percentage point cut yesterday would make little difference in driving more customers into travel agencies.
Turner described the market as “not brilliant but not bad” and warned times will get tougher.
“I think it will get more difficult before it gets better. If people think it’s not so good now, it will probably get worse,” he said. “The economy is not going that well generally…and I don't the interest rate drop is going to help us at all. Whether it’s 4% or 5% makes no difference.”
Lacaze said the cut in interest rates would provide mortgage relief rather than spur consumers to spend money on travel.
“It doesn’t hurt but I can’t see it making a big difference,” he said.
Retailers are encountering mixed fortunes, Lacaze added, partly depending on their geographical location.
“If you are in Western Australia or near Queensland mining towns there is good demand,” he said.
Turner said the solid growth in outbound travel over the past two years would inevitably slow.
“You just can’t keep getting growth like that outbound,” he said. “The dollar is probably not going to get any stronger so it has to flatten out. There’s not much doubt about that.”
