Question 2

How are the different markets responding to the current economic climate?

It's been very interesting to see the reactions of our customers within our different source markets during this period of economic uncertainty.

The first market where we saw a marked reaction was in the United States. The sub-prime mortgage issue was a significant factor and unemployment rose much more quickly than in our other source markets and consumer confidence was lower much earlier. We experienced a marked drop in bookings across a number of our businesses. Having taken the pain earlier, however, the US market is now coming back strongly and the businesses are performing accordingly.

In the UK, we have experienced a later booking pattern – if someone is concerned about whether they will have a job or not, it's not surprising that they delay booking their annual summer holiday. They did, however, eventually book and, because we had ensured that we aligned capacity with demand, although they were booking later, we weren't having to discount the price.

There is evidence that consumer confidence in the UK is improving as we're seeing strong demand for late bookings this winter. Furthermore, I am encouraged by our booking pattern for Summer 2010.

In Germany and, to a lesser or greater extent, our other European source markets, we think it could be slightly different. The fiscal measures put in place in these countries means that they have not experienced the unemployment levels that we have seen in either the US or the UK. Once these measures cease we may see unemployment rise. We are, therefore, planning cautiously for next year in these source markets although there are positive signs in a number of these countries.