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The Guardian - UK
The Guardian - UK
Business
Gwyn Topham Transport correspondent

One in three Britons will cut holiday spending as living costs rise

Sandy beach at Sithonia peninsula, Halkidiki, Greece
A beach in the Sithonia peninsula, Halkidiki, Greece. Abta said strong demand for travel was expected to continue next year. Photograph: NurPhoto/Getty Images

One in three holidaymakers will cut back on holiday spending next year, seeking all-inclusives and cheaper package deals due to the cost of living crisis, according to travel industry research.

The travel association Abta said a strong recovery in demand for travel this year was expected to continue next year, but its own surveys suggested people would opt for cheaper trips and cut back on spending money.

Abta said twice as many Britons holidayed abroad in the last year than in 2021, after pandemic travel restrictions were lifted, and were up to 70% of 2019 numbers – which it said was a significant recovery with UK travel restrictions lifted only in March this year.

According to its research, only 4% of those who travelled this year have ruled out a further trip next year for financial reasons – and 61% of all people surveyed will take some kind of holiday abroad. But 35% will cut back on spending and opt for cheaper trips.

The research was conducted in late August, before Kwasi Kwarteng’s mini-budget hit the pound and fuelled the expectation of rising interest rates, higher mortgage costs and shrinking disposable incomes.

“The current ‘turbulence’ in the financial markets – to use our chancellor’s nonchalant description – is a real cause of concern for our members,” said Mark Tanzer, the Abta chief executive, speaking at the Travel Convention in Marrakech.

“Higher interest rates on top of rising energy bills put a double squeeze on businesses – increased costs just when consumers are tightening their belts.”

He added: “Many travel businesses have come out of the pandemic with less financial headroom than they went into it, so increased borrowing at higher costs is not an option.”

In its Holiday Habits report, Abta said it had noted a rise in people booking through agents or travel professionals in 2022 than in 2019, after many suffered problems with cancelled trips during the pandemic. There was a particular rise in demand for such services from families, with more than half of those with young children booking this way.

However, Tanzer said the lifting of the UK’s travel restrictions had “unleashed a surge in overseas holidays, with almost twice as many people travelling abroad in the six months from March to August 2022 than in the previous six months”.

He said reaching 70% of 2019 levels was “quite remarkable” after the Omicron restrictions – although 39% of travellers were taking a rebooked or delayed trip.

Tanzer said: “We now face an uncertain year ahead given the cost of living challenges, but Abta’s research suggests that we should continue to see an increase in foreign holidays next year.”

Richard Singer, chief executive of Ice Travel Group, which includes Travel Supermarket, said that the value of holidays booked on price comparison sites had fallen by about 20% since the beginning of the year. With holidaymakers cutting back – and Turkey suffering worse inflation than the UK – he said: “It’s no surprise that Turkey is the fastest growing destination.”

Several industry bosses said customers were looking increasingly at all-inclusive holidays, as well as value packages, to minimise spending abroad with unfavourable exchange rates. Alistair Rowland, chief executive of Blue Bay Travel, said: “They’re protecting their exposure – but they will still go away.”

Garry Wilson, chief executive of easyJet holidays, said: “People going with their kids don’t want to have to watch their money all the time. The kids want waterparks, that’s $50, ice-cream, that’s €50… in these all-inclusive hotels that’s the price locked in.”

Abta said that the main destinations next year would be back to 2019’s favourites, primarily Spain, followed by France, Italy and the US.

Tanzer added that he believed appetite for travel had “not been dimmed by the pandemic – in fact it may have been intensified.”

“Where perhaps we took for granted unimpeded international travel, we now know what a precious gift that is,” he said.

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