Market research firm Mintel is revising its travel booking forecasts for the autumn and winter on account of the deepening cost-of-living crisis and increased likelihood of recession.
Mintel Reports UK travel and leisure director Paul Davies warned: “A lot of people will be forced to look at cheaper options [for travel].”
However, he insisted “it’s not all doom and gloom” for the sector beyond this summer.
The next Mintel holiday travel report is due out in September and Davies told Travel Weekly: “We’re revising our outlook for the market. It’s definitely more negative, particularly for overseas travel.”
A Mintel UK consumer survey in June found one in three (32%) planned to spend less or nothing on holidays in the next 12 months. Of those cutting back, Davies noted: “Two-thirds said they would cut short breaks.”
He argued: “People tend to sacrifice short breaks in difficult economic times to protect their one or two-week summer holiday, and that is what we expect over the next 12 months. People will find short breaks harder to justify especially if there are delays at airports and flight cancellations.”
However, Davies also noted “a polarisation of consumer behaviour”, insisting: “There are still plenty of opportunities [for travel businesses] because a lot of consumers aren’t as badly affected by the economic climate.
“A good proportion of consumers say their savings are healthy – they still have lockdown savings.”
Davies suggested: “There will still be significant demand for holidays – that won’t change dramatically. But there will be more people who plan to spend less.”
Businesses which “rely on the squeezed middle or less-affluent consumer” will face a tougher time, he said, adding: “We expect the luxury and budget segments to perform best.
“We’re revising our forecasts downwards. We’ll nudge our 2022 forecast down a bit, but 2023 will be more difficult.”
Mintel forecast earlier this month that spending on overseas travel this year would exceed £38 billion, only 12% shy of the £43.3 million spent on holidays abroad in 2019.
The latest Bank of England forecast suggests inflation will rise above 13% this year and remain high through next year and that Britain will enter recession in the fourth quarter of this year, with the downturn lasting through the whole of 2023.
The Mintel survey found 72% of ‘active travellers’ – those who typically took holidays prior to Covid or plan to take a holiday in the next two years – would be put off booking overseas travel by disruption to flights.
Mintel surveyed 2,000 UK adults aged 16 and over in early June.