Value conscious consumers are more likely to consider cheaper European destinations to economise on holiday expenditure when faced with a relatively weak pound-to-euro exchange rate.
However, the long-haul market is expected to become a more attractive option this year due to the rise of transatlantic budget airlines and a more favourable dollar exchange rate compared to 2017.
Staycations should continue to prosper, according to Mintel’s flagship British Lifestyles report published today (Thursday).
A quarter (24%) of adults say that if they won £1,000 to spend on holiday, they would spend it all on one or more holidays in the UK.
Meanwhile, 61% say they do not see enough of the British countryside, suggesting that many might take the opportunity to explore rural locations closer to home.
The fall in the value of sterling the has undoubtedly dampened travel abroad with Mintel estimating overseas volume growth slowed from 6.8% in 2016 to 3% in 2017.
However, the number of overseas trips finally surpassed the 45.5 million trip milestone – the record high reached before the 2008 recession.
With the pound susceptible to changes due to Brexit, and only subdued real wage growth projected by the end of 2018, it is possible that people will choose to holiday in the UK, marking a continued decline in foreign travel.
In line with this change, Mintel expects a slowdown in total growth over the next three years due to the impact of ongoing Brexit negotiations and a fluctuating pound.
The UK government will need to renegotiate benefits such as package travel protection, flight delay compensation, access to free health cover through the European Health Insurance Card, caps on mobile phone charges and access to the European Common Aviation Area before it leaves the EU or risk disrupting overseas travel.
In addition, oil prices have begun to rise in recent months and if this continues it may limit airlines’ ability to offer cheaper fares Mintel warned
Mintel senior travel analyst Fergal McGivney said: “A number of factors are likely to prove challenging for the holiday market in 2018, including limited real wage growth, the rising price of oil and the fluctuating pound.
“This could mean a slight reduction in the growth of overseas trips as some consumers opt for staycations.
“Many will choose to drop their supplementary short breaks in the low season; however, they will be reluctant to give up their longer summer holiday.
“As a result, there is an opportunity for big brands to attract customers by diversifying their summer product offerings to fill the void of these missed short breaks.”