As we enter a new era of recession, holiday spending is not only strong in many areas – it’s on the rise. The Firebird team takes the temperature of the market.
A 95% surge in overseas holiday spending this September alone.
An apparent resistance to the cost-of-living crisis.
Full financial recoveries, post-pandemic.
After two years of unstable markets around the world, and more on the horizon, large swathes of the travel sector are booming, while other industries struggle with the incoming recession. A widely-shared consumer survey conducted by Barclays, which examined UK spending habits between 20 August to 23 September 2022, has revealed that travel agents saw the largest spend growth per customer – at almost 95% – followed by airlines at 60%.
Business travel in particular is on the rise, with two-thirds of UK businesses planning to increase their travel spend by 50% or more on 2020/21 levels; part of action intended to “[drive] revenue, profitability and [enable] growth”, as found in an autumn survey by American Express. More than three-quarters of respondents said limits on travel for the past two years had caused their business to suffer. In response many feel it’s now important to reconnect remote teams through travel, and enter new international markets.
Fourteen years since the last global recession, we’re seeing an ongoing hunger for holiday travel too, irrespective of – or, in many cases, because – of the general financial crisis. After the challenges of living long-term in lockdown, and further national uncertainties in the pipeline, there has been a surge in consumers wanting a break from the climate of Covid-19 and recession.
Holidays to help weather the stress are proving to be a “must-have.”
Articles by the trade press continue to share news of travel sales growing at impressive rates; so impressive they were recently described by one company Director as “just ridiculous”. That same Director told TTG that “a full financial recovery from the pandemic” is predicted for his company by January 2023.
Earlier this year, a survey of 2,000 UK consumers from credit card company Tymit found that “28% plan to spend more on holidays this year, despite the rise in the cost of living.” Research from the Post Office, which looked at holiday spending plans and behaviour, gauged these figures to be higher still, with 54% of those surveyed saying they planned to increase their holiday budget.
The type of overseas holidays attracting growth are worth considering, as Firebird’s own Chris Thompson shared in a specialist article at the start of September. This emphasised the increased appetite for high-end trips among affluent consumers, a trend that has been widely reported elsewhere.
At the same time, less affluent consumers are opting for holiday options that allow them to lock in affordable prices now, guaranteeing rates for next year and beyond before inflation hits further. All-inclusive family holidays are proving especially popular as per ABTA’s recent Holiday Habits report. With food, drink and activities paid for in advance, there’s no need for these holidaymakers to fret about rising costs – or the fragile pound – once their down-payments have been made.
The impact of the changing economy on the pound will of course affect holidays taken in Britain for visitors and residents alike, with almost two-thirds of Post Office respondents saying “the strength or weakness of the pound” is a factor affecting their holiday decision-making this year.
It’s worth bearing in mind that robust companies offering overseas travel continued to deliver strong results in the previous recession of 2008/09, despite adverse economic circumstances more generally. Core strategies, such as those outlined by TUI’s annual report of that time, prioritised flexibility and restructuring for resilience. Others looked at the targeting of emergent markets.
This year, travel trends continue to show signs of strength and potential for growth, albeit one that’s polarised: with both luxury and low-cost travel winning out for a range of consumers.
We’ve no doubt that companies will be rewarded for staying on top of financial events, monitoring how exchange rates are dictating travel decisions, and for offering versatile products that give consumers the change of scene they’re seeking, as well as piece of mind should conditions change.
The Firebird Partnership offers expert advice to support travel, leisure and education businesses with any aspect of growth, sales and fundraising – including specialist strategies to build resilience. To arrange an initial consultation, visit www.firebirdpartnership.com