Profit warnings by travel and tourism companies at highest level for four years

Profit warnings by UK-listed travel and tourism companies have reached their highest level in nearly four years according to a new report.

 

The latest Profit Warnings report by EY-Parthenon, a global strategy consulting organisation and an operating branch of Ernst & Young, cited seven profit warnings from April to June this year by UK-listed travel and leisure companies.

 

It said this was the sector’s highest quarterly total of profit warnings since July to September 2022 and more than any other FTSE sector in the second quarter of this year.

 

In total across all sectors, UK-listed companies issued 59 profit warnings in the second quarter of 2026, up from 55 in quarter one. More than half of warnings in the quarter cited policy change and geopolitical uncertainty as a leading factor.

 

For the first six months of the year, there were 12 warnings in total by travel and tourism, one less than the first half of 2022. Of these five were from the travel industry.

 

Travel and tourism also recorded the highest number of profit warnings linked to the Middle East conflict so far, it said, with seven companies since the February 28 outbreak mentioning its impact.

 

Profit warnings have been split almost evenly between travel and tourism businesses, with five from airlines, six from hospitality operators such as restaurants and bars and one from a recreational services business.

 

But the report suggested travel companies have performed more strongly than tourism this year, with hospitality facing more acute challenges despite some short-term boosts provided by the football World Cup and favourable weather.

 

Christian Mole, EY-Parthenon partner and EY’s UK head of hospitality, said: “What we are seeing now is a divergence within the sector. Airlines and travel operators have, so far, proven relatively resilient, supported by stabilising fuel costs and continued demand.

 

“In contrast, hospitality businesses are more directly exposed to cost inflation, the continuing impact of National Insurance Contributions and National Living Wage increases, and pressure on discretionary spending, placing significant pressure on margins. There is also the question of whether the sector has yet seen the full impact of these pressures.

 

“Travel demand has held up, but booking patterns are changing, with consumers delaying decisions and becoming more price-sensitive.

 

“At the same time, shifts towards domestic travel following the Iran war and concerns over new EU entry requirements, whilst generally beneficial for the sector, are creating more uneven demand, which makes planning more difficult.” 

 

Mole predicted the combination of uncertainty, cost pressures and variable demand would continue to test the sector.

 

He added: “Businesses that can remain agile in pricing, capacity and cost management will be best positioned to navigate what remains a volatile trading environment.  However, the recently announced 20% reduction in business rates for pubs and clubs may signal a shift in government attitude towards the sector and provide some grounds for optimism.”

 

Other sectors which issued profit warnings included software and computer services; industrial support services and retail. Nearly a fifth of all UK-listed businesses have issued at least one profit warning in the past 12 months, the report said.

 

Jo Robinson, EY-Parthenon partner and UK&I financial restructuring leader, said: “The latest figures show pressure and profit warnings are increasingly concentrated in sectors and businesses facing rising costs, cautious consumers and tighter credit conditions.

 

“Just as one source of pressure begins to ease, another emerges; a year ago, companies were grappling with disruption from tariffs and shifting trade policy, while the conflict in the Middle East has now triggered more than two-fifths of recent warnings.”