Travel was the only consumer services sector to report growth in business volumes over the last three months, according to the latest Confederation of Business Industry report.
However, travel companies incurred rapid cost rises and, with limited ability to pass those on to customers, profitability fell at the fastest rate for five years.
The CBI’s chief economic adviser Ian McCafferty said: “Travel companies reported healthy demand for holidays in the past three months, with people more inclined to take a well-earned break as rising costs put greater demand on household spending.”
Spending in hotels, bars and restaurants also fell markedly in the last quarter, and hospitality firms’ profitability fell at a record rate.
The report was conducted in the period from April 23 and May 7, and 143 firms responded to the survey. The CBI represents 240,000 businesses in total.