Deloitte’s Consumer Tracker shows growing levels of optimism, says lead partner for travel & aviation Alistair Pritchard
Our Deloitte Consumer Tracker shows that the consumer are feeling more optimistic. In Q2 2021 consumer confidence bounced back to its pre-COVID-19 level and the Deloitte Consumer Confidence Index rose by two percentage points quarter on quarter to -9%.
This overall confidence index is the aggregate of six individual measures: levels of disposable income, levels of debt, job security, job opportunities and career progression, children’s education and welfare, and general health and wellbeing.
This rise, combined with the reopening of indoor hospitality in England from May 17, led to a huge increase in net spending in most of the leisure categories in Q2 2021 compared to the previous quarter and this time last year.
For instance, spending on ‘eating out’ and ‘drinking in pubs and bars’ were up by 50 percentage points and 38 percentage points respectively, compared to the previous quarter. Spending in these categories was also up year on year, by 83 points and 64 points respectively.
Consumers also turned their attention to holidays and culture. With international travel restrictions still in place at the time of the survey, consumers were more likely to opt for ‘staycations’; and spending on short holidays grew by 24 percentage points compared to Q1 and 49 points compared to a year ago.
Net spending on long holidays was also up by 21 points and 44 points respectively. As soon as museums and cinemas reopened consumers headed out in search of culture and entertainment, which enjoyed a 24 percentage point increase in Q2 2021 compared to Q1 and a 56 point increase compared to this time last year.
Positive expectations for Q3 2021
The outlook for Q3 2021 leisure spending is also positive. Compared to this time last year, consumers expect to be spending more on all leisure categories with net spending on short breaks up by 11 points and long holidays 8 points.
However, the sector remains at the mercy of ever-changing travel guidance and restrictions which has resulted in confusion and a game of lottery as to whether the destination they thought was safe to travel to in one week remains on the green list the next. It makes planning for a holiday abroad difficult for travellers and the prospect of recovery for the sector more uncertain.
In the coming months the travel sector is likely to rely on consumers spending the savings they accumulated during the pandemic. According to our Tracker research, 79% of consumers have saved since March 2020. Out of those consumers, half (58%) said they intend to spend some of their savings in the next 12 months and 49% said they will be spending their savings on holidays and hotels, boding well for the travel sector.
However, how long that willingness to spend continues remains to be seen, especially if the consumers are faced with disappointing experiences of having to change or abandon travel plans due to changing rules or industry capacity.
Careful planning will be required to handle the pent-up demand from eager travellers while remaining flexible as destinations move up or down the traffic light system.
The travel industry needs to balance demand and capacity, as well as recall furloughed staff and retrain them quickly. They may also need to adapt their offering to inspire consumer confidence.
As most travel companies are already working hard to ensure consumers can go on holiday confidently and safely, these positive consumer signals are undoubtedly motivating news for the sector, and hopefully a sign of a recovery ahead.