Consumer spending on holidays is unlikely to return to pre-recession levels until 2014-2015 in line with a pick-up in the economy, according to Mintel’s 2011 British Lifestyles survey.
Last year total expenditure on domestic and overseas holidays, excluding transport on trips abroad such as flights, dropped to a five-year low of £33.4 billion.
Domestic holidays accounted for 60% of 2010 holidays, the same as 2009, but overseas holidays made up more than 60% of total expenditure with £12 billion spent on UK trips and £21.3 billion on holidays abroad.
However, average holiday expenditure increased last year, in part due to increasing UK petrol prices. Just over three-quarters of UK holidays are taken by car.
Mintel’s report forecasts total holiday expenditure will rise gradually to £37 billion in 2015 – the same as it was in 2008.
Senior travel and tourism analyst Tom Rees said: “The economic situation continues to constrain spending with rising inflation, petrol costs and fuel and food bills going up. The recession may have officially ended but it certainly doesn’t feel that way to people making their holiday purchase decisions.”
The report surveyed 2,017 internet users aged over 16 to look at the impact of the economic slowdown on consumers. Almost half (45%) spent less on holidays in the 12 months to June 2011.
Holidays were rated as the third biggest area in which consumers had spent less, behind entertainment and leisure (54%) and food and takeaways (53%). Consumers were less likely to have cut spend on technology and communications, clothing and accessories, and home and garden.
The same poll found 23% would always or mainly priotise price over quality when it comes to buying holidays. “It is particularly interesting people are still willing to go for a bargain even if they do not know the brand,” added Rees.
Overall the number of holidays taken by UK consumers has continued to decrease with a significant drop from 99.2 million in 2009 to 93 million holidays in 2010. Overseas breaks are at their lowest level for more than a decade.
Despite the fall in the number of holidays, domestic holidays have maintained their share of the market. This is set to continue, said Rees, with consumer confidence at a 20 year low.
The domestic holiday trend could continue even when expenditure picks up because of other rising costs such as university tuition fees, he added. “I wonder if we are seeing a rebalancing in favour of domestic holidays more than we have done before. Are people getting used to a new financial reality?”
The survey also shows consumers no longer view holidays as a necessity; four in ten class holidays as a luxury and one in four as a necessary spend, based on a poll of 2,000 people.