The travel sector defied growing cost of living pressures last month as consumers continued to book summer holidays.
Despite uncertainty over potential flight cancellations, travel agents (6.4%), airlines (2.8%) and hotels, resorts and accommodation (3.3%) all saw monthly growth as holidaymakers booked getaways for the summer, data from Barclaycard reveals today (Tuesday).
Consumer card spending grew 6.2% in June compared to the same period in 2021, however, concern around rising living costs continues, with consumers becoming more selective about their spending and feeling less able to live within means each month.
While household bills came under pressure due to scoring utility costs and shopping at supermarkets declined year-on-year, hospitality and international travel sectors all saw uplifts over the previous month as people enjoyed the early summer weather.
Cinema bookings grew 5.3% due to blockbusters Top Gun: Maverick and Jurassic World Dominion, while sports and outdoor retailers (4.9%) and pharmacy, health and beauty (1.9%) also saw strong monthly growth, as did department stores (1.8%) and clothing retailers (2.4%), owing to Brits enjoying more time outdoors and preparing for summer holidays and events.
The latest analysis from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, shows that spending on essential items increased 4.4%, largely driven by a surge in fuel spend (24.8%) as petrol and diesel prices continued to climb.
Shopping at supermarkets and specialist food and drink stores saw year-on-year decreases of -0.8% and -1.1% respectively, with almost half of consumers (49%) seeking more value from their weekly shop – an eight point rise on the May figure (41%).
As household bills continue to mount, spending on utilities jumped 39.6% year-on-year, representing a 5.1% increase month-on-month and leading 44% of people to cut back on their energy and water consumption to keep costs down.
More of the nation (91%) than last month (88%) are concerned about the negative impact of rising household bills on their personal finances.
Consumers are also feeling less optimistic about their ability to live within their means (66% versus 71% in May), and their ability to spend on non-essential items (48% versus 54%).
In addition, confidence in the future of the UK economy has decreased slightly to 25%, down from 27% in May.
Barclaycard head of consumer products Jose Carvalho said: “The continued rise in fuel, food and energy prices means consumers are having to budget and seek out value where they can for both essential and non-essential purchases.
“While this cautionary approach is impacting supermarket and individual basket spend, there are bright spots to be found, with Brits increasing their discretionary spending on entertainment, travel and takeaways as we head into high summer.”
Emily Whalley, senior travel specialist at payment technology firm BR-DGE, said: “This data shows that the UK travel industry’s recovery is gaining pace as operators benefit from an impressive surge in demand for flights and holidays, with month-on-month consumer card spending at travel agents up 6.4% and 2.8% for airlines in June.
“More positively for the sector, it seems recent travel disruption at UK airports hasn’t been a drag on consumer demand. For the most part, travel operators are seizing the moment this summer.
“That said, the knock-on effect of disruption will see travel operators pay out millions of pounds in refunds which is an area many travel operators have failed to innovate in recent years.
“In the busy months ahead, it is vital that travel sellers consider how they can deliver a smooth refund experience for customers to better their chances of repeat business.”
Meanwhile, data compiled for BBC News by travel comparison site Ice Travel Group found that average prices for car hire, accommodation, airport parking and insurance are higher for holidaymakers this summer than before the pandemic in June 2019.
The research also reveals all-inclusive package holidays were, on average, 17% more expensive, rising to £1,000 for a family of four.
Bed-and-breakfast accommodation was also up from £608 to £755, on average. Prices for these deals varied by destination though, with the biggest rises for both holiday types in Egypt, Greece, the US, the United Arab Emirates and Italy.