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Insider UK
Insider UK
National
Peter A Walker

Cost-of-living crisis still 'yet to be felt' by travel industry

While purse strings are tightening to deal with soaring inflation and energy bills, the cost-of-living crisis has yet to have a significant impact on holiday bookings.

Speaking to Insider, Barrhead Travel president Jacqueline Dobson said that pent up demand is still being released, with 2022 business back at - and often surpassing - 2019 levels.

"Travel was one of the worst hit industries, and last to start a recovery, as we still had Covid restrictions until mid-April," she commented. "Travel is also one of the most resilient industries though; we always bounce back with strength.

"We've had no issues yet in terms of the cost-of-living crisis so far this year, although the trend does seem to have been towards fewer, but longer, holidays - probably a reaction to not having gone away from two and a half years."

Dobson added that between the main Scottish airports, around 90% of direct routes have now been restored.

A survey carried out by market research firm 56 Degree Insight earlier this month, among more than 1,000 Scots, found that 73% of Scots are intending to take at least one holiday this year - with 58% already having done so.

One in three have been on holiday in Scotland so far this year, compared to 19% heading to Europe and only 4% opting for a long-haul trip.

Spain is the most popular overseas destination, with 16% of Scots visiting this year - split fairly evenly between the mainland, the Balearics and the Canary Islands.

As for the rest of the year, 84% of Scots claim their holiday choices have been impacted by rising costs, with more pricey fuel cited by 70% looking at domestic breaks, while 61% complained about continued coronavirus concerns.

Just over half of those surveyed said that potential disruption at airports has impacted their holiday choices, whilst smaller, but still significant, numbers have been hit by rail and cross-channel ferry delays.

Meanwhile, tourism industry leaders have warned that the soaring rate of inflation could hit travel agencies hard in the coming months.

Responding to July's inflation hike, Marc Crothall, chief executive of the Scottish Tourism Alliance (STA), said: "This will have a significant effect not only on Scotland’s tourism industry’s ability to recover from the severe economic impact of the last two years; it will almost certainly see the closure of many businesses who are struggling to trade in this spiral of challenging conditions.

"Many are reporting they are on a knife edge, with everything heading in the wrong direction; all costs are rising plus domestic and consumer spending and future booking indicators all in slowdown and decline."

Recent STA research found that almost 40% of travel businesses have reported a decrease in spending in since May 2021, while 57% reported fewer bookings than normal for the period of September to December, in comparison to pre-pandemic.

More than 700 tourism businesses took part in the survey in May and June, with responses coming from all 15 core industry sub-sectors; predominantly self-catering, hotels, bars and restaurants, bed and breakfast, visitor attractions, guest houses and tour operators.

Of those, 34% described their business as currently in steady recovery, 50% stated that it would take them at least a year to recover and 6% said they are unlikely to make it.

While the travel agency sector was arguably more damaged than most by the pandemic - with Scottish Government support coming late in the day - it appears to have recovered quicker, although Dobson admits that this has not been without issues for others further down the holiday supply chain.

Airlines and airports have not matched the consumer desire to jet-off this spring and summer, with a serious shortfall in fully-trained and security-cleared staff leading to well-publicised delays and cancellations.

"I know that Scotland's airports have been working tirelessly to get back up to speed, but there were Brexit issues with baggage handlers coming in from Europe and problems with the time it takes to get security checks carried out for new joiners," she explained.

"The cruise market is also doing well for those who didn’t want to fly, and cruise lines largely haven’t had the same issues as airlines and airports, while most vaccination protocols are now removed."

Indeed, Barrhead Travel has reported a return to 2019 cruise booking levels, as the industry welcomes 16 new ships in 2022.

Recent research from the company found that financial security (65%) and value (89%) were the most important factors for Scots when booking a holiday.

Dobson said: "Since the pandemic we have noticed a spike in people booking via travel agents since travelling has resumed.

"We've seen a shift back to the personal touch, as many found themselves coming up against unresponsive online systems and clogged up call centres when trying to rebook or get money back."

This has even seen the web-savvy younger age groups favouring high street agencies, with Barrhead's survey suggesting that the 18 to 29 age group is now the most likely (92%) to change their booking habits.

Dobson added that since January, 6% of bookings have been by customers that are new to using Barrhead, which has recently been on a recruitment drive and is looking at opening several new shops in the coming months.

Just this week, the Glasgow-headquartered business announced the return of its year-long modern apprenticeship programme.

In partnership with Glasgow Clyde College, more than 50 positions will be created across its high street locations in Scotland and delivered via the in-house training academy.

Further apprenticeship opportunities are also set to be released for head office positions, including roles within marketing, HR and IT.

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