The latest trade survey of around 30 travel firms by business consultancy PwC (PricewaterhouseCoopers) for TTG revealed that neither the cost-of-living crisis or the war in Ukraine have so far derailed their recovery. 

Instead, pent-up demand from clients determined to travel again continues to fuel the recovery in bookings. 

Operators are also benefiting from higher demand from clients for more premium options, as well as deferred holidays finally going ahead and increased bookings for experiences and activities.

David Trunkfield, hospitality, travel and leisure leader at PwC, said around half of operators had now seen summer bookings return to pre-Covid levels, with more than 30% already ahead of normal booking levels. 

This recovery started to gather pace in autumn 2021 before suffering a “blip” at the turn of the year due to the spread of the Omicron variant. 

The ending of UK testing and quarantine rules has helped boost enquiry levels for operators, but they have still not returned to pre-pandemic levels – 62% of travel companies said while there was growth in enquiries during peaks, they still lagged behind 2019 levels. 

Trunkfield described recent booking patterns as “still quite short-term”, although the situation had improved since January, with 77% of sales now for departures in spring and summer 2022.

DESTINATION TRENDS

The rise in consumer confidence in travelling abroad can also be seen in a relative drop in sales for UK domestic holidays, which have fallen from 39% of bookings in January to just 19% in the latest survey.

Bookings to Europe remain high at 85%, up from 79% in January, while long-haul destinations such as North America, the Caribbean, Middle East and Africa have also seen double-digit surges in demand over the past three months. 

The main barrier to travel getting back to normal is now concern over household finances, rather than Covid travel restrictions, although the ongoing requirement to take tests for some destinations and worries that the holiday experience will be impacted by Covid restrictions remain barriers for some customers. 

The war in Ukraine’s main impact on operators has been to increase their costs, primarily through higher fuel prices, which ranks far ahead of other potential fallout from the conflict such as later bookings, consumers travelling less and cancellations.

The vast majority of operators (90%) continue to expect holiday prices to be higher this year, although inflation means more firms (20%) are forecasting lower margins than in January’s survey, as they cannot pass all of these extra costs on to customers through increased prices. 

DELAYED IMPACT

The cost-of-living crisis does not appear to have hit sales yet for most operators. However, half of those surveyed are expecting to see some impact soon on their sales. 

“Many people are still prioritising holiday spending, and more affluent groups are not being significantly impacted yet,” said Trunkfield. “It could be worse later this year and into next, so could impact 2023 more than 2022.” 

Recruiting and retaining staff continues to be the top operational worry for 42% of travel firms. Other concerns include the effect of a potential squeeze on consumer spending (19%), higher fuel costs (15%) and increased staff costs (8%).

The positive short-term picture for operators reflects the findings of PwC’s accompanying survey of 2,000 consumers, which illustrated resilient UK holidaymakers are determined to travel this year after being largely grounded during the pandemic. 

Storm clouds, though, in the form of the cost-of-living crisis, seem to be gathering on the horizon beyond this summer. 

TTG+ members can read the full report at ttgmedia.com/digital-editions/supplements/