The latest trade survey of around 100 travel firms by business consultancy PwC (PricewaterhouseCoopers) found prospects for 2023 should be boosted by consumers’ increased willingness to travel overseas as the fear of catching Covid subsides.

There is also an expectation that the current flight and airport disruption will be largely resolved in the coming months as more staff are recruited, which should give the market another boost.

The study found cancelled flights and airport delays were the top two barriers to international travel this summer at 72% and 66% respectively, well ahead of worries about household finances (37%) and holiday prices going up (34%).

Many businesses are continuing to benefit from pent-up demand, but slightly less so than earlier in the year – satisfying this demand has dropped from 69% in April to 57% in July as the main opportunity for the trade.

Just over half of firms (51%) are now seeing bookings at or above pre-Covid levels, although this figure is similar to the previous survey, suggesting the industry’s recovery may have lost some momentum in recent months.

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David Trunkfield, head of travel and leisure at PwC, said: “The lack of improvement suggests trading has not been as strong as we had hoped for earlier in the year. Although there has been a steady improvement over time.”

Tour operators’ main worries for the coming months centre on challenges such as travel disruption and staffing shortages, alongside the UK’s deteriorating economic outlook. Recruiting new staff remains the biggest business concern for travel firms, although it has eased from 42% in April to 30% in July.

Fears about potentially lower consumer spending are also rising with half of travel companies already experiencing a “significant” or “slight” reduction in new enquiries, and another 38% expecting to start seeing an impact on bookings soon.

Despite these headwinds, most operators (88%) are optimistic they will increase revenue in 2023 compared with 2022, as they have already secured “stronger bookings” for next year or expect holidays to remain a priority despite the overall squeeze on household incomes.

‘Very strong demand for travel’

The positive news for travel is that demand remains strong for holidays, with more people returning to the market and travel remaining a priority area for consumers – ahead of other discretionary spending categories.

But PwC’s latest quarterly survey of 2,000 UK residents revealed some consumers intend to become “more cautious” with their overall spending, while a proportion of the market has been put off travelling abroad by concerns about flight cancellations and wider disruption this summer.

Having said that, travel sentiment has continued to improve across all consumer groups, with more affluent people and younger age groups still the most eager to take an overseas holiday. There are signs, though, that less affluent travellers are starting to be affected by the cost of living squeeze.

Eleanor Scott, director, travel and leisure, at Strategy& for PwC UK, said: “As most countries are now open for travel and testing restrictions have eased, there is clearly very strong consumer demand for travel. Holidays are still one of the areas least likely to be cut back on and where a lot of people intend to spend more in the next year, relative to other discretionary spend categories.”

Ironically, the travel disruption that has dominated headlines this summer may have helped to store up some of the pent-up demand for international travel until next year. This could help to create a “slightly more steady recovery” for the industry, even if expectations for 2022 have tailed off a little from earlier in the year.

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