The travel sector faces storm clouds ahead as consumer disposable income comes under increasing pressure this year.
While the industry is set for a short-term boost due to household savings made during pandemic lockdowns, the longer term outlook appears more uncertain.
A combination of energy price hikes, increased National Insurance payments, rising inflation and increased interest rates threaten to stifle travel demand.
Julie Palmer, partner at business recovery firm Begbies Traynor, warned that those factors could force consumers to rein in spending, while rising fuel prices and wage pressure could weigh heavily on travel companies.
She echoed Tui Group chief executive Fritz Joussen’s comments about pent-up demand for summer 2022 holidays as people cut spending due to Covid-19 restrictions such as orders to work from home.
“Money squirrelled away will give the industry a real boost in the short-term,” Palmer said.
But cost of living pressures will start to bite, leading people to “tighten their belts”.
She also questioned whether corporate travel would return to pre-pandemic levels and if cheap air travel can be sustained.
The industry also faces a younger demographic with a heightened awareness of carbon footprint issues surrounding travel.