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ALTO: decrease in junior and adult markets despite previous growth

Language schools from around the world responding to the annual ALTO Deloitte survey reported drops in business in 2015, measured by junior and adult student weeks, despite reporting substantial growth the year before in the same comparative survey.

90% of schools who responded said that economic issues in source countries had a negative impact on their business

Student weeks taught at junior level fell 3.8% last year, which was a decrease of 3.4% in the junior market by revenue, despite almost double-digit growth reported the year before. This is based on responses from 122 participants representing 228 schools.

In 2014, junior student weeks increased by 9.1%, along with a revenue increase of 10.2%.

However, although 32% of respondents noted a fall in student weeks, 44% actually reported a rise in the same year. “[This] means clearly the schools that are reporting drops in their junior student weeks are a larger representation of the overall sample,” observed David Bonett, principal of the financial advisory at Deloitte, in a recent webinar.

A similar pattern was noted among the adult market, which, despite a small decrease of 0.1% in adult student weeks, saw a substantially higher growth in 2014, up 16.3%.

The revenue for this cohort was up by 1.2% last year, schools reported, much less than the 16.1% rise the year before.

“In terms of revenue, the trends are similar to the student weeks,” said Bonett. “No major inconsistencies there.”

Schools in the US reported the highest average turnover, at $742 for juniors and $615 for adults

The currency exchange and economic woes which have also played into recent narrative about language travel industry trends were voiced in the survey.

Almost 90% of schools who responded said that economic issues in source countries had a negative impact on their business last year.

Currency exchange rates also had a negative impact for 62% of the responding schools.

Other aspects which school respondents rated negatively last year in the travel market also included increasing cross-country competition, increasing costs, as well as the low level of accreditation repute.

However, the survey found that school maturity and experience in the business; improved management of company finances; and marketing initiatives were key aspects which had a positive impact.

The survey also sampled 59 agent participants from around the world, with 94% reporting that currency exchange rates had a negative impact on their business, and 90% saying the same about economic issues in the agents’ country.

When looking at booking channels, schools reported that 70% of their bookings came through agents, with 12% from the internet. A further 13% came through other direct channels.

The agents’ responses showed that 59% of their bookings came via their sales team, with almost a third (29%) generated from the internet.

Turnover and revenue was another focus of the survey, with the average turnover per student week being higher for juniors compared with adults.

“For juniors obviously it’s higher so you’re looking at $700-$750 and for adults it’s closer to $500-$600 range,” said Bonett.

Schools in the US reported the highest average turnover, at $742 for juniors and $615 for adults, whereas South Africa displayed the lowest, at $405 and $333.

Bonett said that the objective of the survey over time is to “generate a regular report” presented to the “worldwide language travel sector”, as well as a “comprehensive benchmarking dataset for the industry as a whole”.

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