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Rising consumer confidence is reflected in a heightened willingness to book overseas holidays in the coming year. Ian Taylor reports on the latest First Rate Holiday Confidence Index
UK consumers plan to holiday abroad more often in the next 12 months as the improving economy makes growing numbers feel more secure at work.
A two-point rise in the latest Holiday Confidence Index, published this week by foreign exchange provider First Rate, took the index to its highest level since it launched last year – reflecting the fact that “more people intend to travel abroad and do so more often”.
The index is compiled from a survey of 5,000 adults and published three times a year.
More than two in five respondents (41%) expressed confidence in retaining their jobs over the coming year, and 48% of those planning an overseas holiday. More than half (57%) intend to take a holiday abroad – up from 54% a year ago, although the proportion who do go away is likely to be lower.
Almost one in ten said they plan to take more holidays, with 37% suggesting they will take two trips abroad – up from 35% a year ago.
There was a seven percentage-point rise in the proportion of consumers who consider overseas holidays good value. More than half (57%) of those planning trips held this view and 44% said they would cut spending in other areas to take a holiday abroad.
Yet there was only a marginal increase in the amount consumers expect to spend on holiday bookings and no increase in the amounts people anticipate spending on travel money or in destination over the coming year.
First Rate exchange services head of innovation and insight Alistair Rennie suggested this showed “clear evidence of wallet watching”.
The survey found the proportion of consumers confident in a continuing UK recovery had declined to 31%, down from 35% in the summer, and identified signs of concern about a likely rise in interest rates next year. One in four respondents (24%) felt a rate rise would adversely affect their holiday plans.
Of those not planning a holiday abroad, 71% agreed “other financial priorities are more important”.
Rennie said: “Against a backdrop of low inflation, a growing economy and a sense that jobs are more secure, it’s no wonder Britons feel more confident to plan holidays abroad.
“Overall confidence has gone up 2% – the key drivers are an improving view of job security and improving view of personal finances. People’s finances have improved although household income has not reached the pre-recession level. When we compare those who intend to travel and those who don’t, the real driver is whether people feel secure in their jobs.”
Rennie noted: “We do see the first signs of concern about an increase in interest rates, but it’s difficult to quantify the impact. We know household debt levels are high and holidaymakers say a rate rise would affect their holiday plans, but they don’t say how – whether they would trade down or change duration. Older people could do quite well from a rate rise which benefits savers rather than borrowers.”
* The First Rate Holiday Confidence Index is based on a YouGov survey of 5,000 adults, which goes to produce six indices of consumer travel intentions reflecting intention to book, frequency, duration and spending (cost of booking, travel money and destination spending). The index appears three times a year. For a copy, email: HolidayConfidenceIndex@firstrate.co.uk