The soaring costs of mortgage repayments are a “really worrying” challenge for travel, on top of the other cost-of-living fears as winter approaches, warned a cruise line boss.
Ben Bouldin, EMEA vice-president at Royal Caribbean International, told Abta’s Travel Convention about a Bank of England warning that there is an increased risk of “significant” numbers of mortgage defaults amid rising interest rates.
The warning comes amid the market chaos following the government’s mini-Budget last month.
“If you have a £300,000 mortgage and are negotiating a new fixed rate, you will see a £600 increase per month – that’s a decent family vacation over a year,” he said.
“We have heating, energy and fuel bills and then the mortgages – it really worries me, it’s coming down the hill.”
Giles Hawke, Cosmos Tours chief executive, said he fears the political “turbulence” will continue, adding: “Consumers don’t like uncertainty; we’re living in an uncertain world.”
But he said it might mean there will fewer holidays costing just £200 or £300 – which make it very hard for operators to make profits.
“It will be a good thing if we recalibrate the industry,” he said.
Chris Wright, Sunvil Group managing director, said the operator had been confident over the summer but added: “With more information that comes out, it gets more alarming. It is the uncertainty.”
His company’s core market of older travellers tends to have paid off their mortgage, and still have savings and the desire to travel.
“But there is uncertainty as people hunker down and see what happens,” he told delegates.
“The struggle is how to build flexibility if things change quickly; making sure there is not too much committed capacity.”
He also said the company is seeing more Gen Z customers, in the late-teen to mid-20s age group.
“A lot more are looking for security; they are risk-averse, so we are attracting them more,” he said.
“We are finding that strange as we usually get an older demographic.”
Photo credit: Arif Gardner