New TTG-PwC (PricewaterhouseCoopers) research, produced for TTG’s first Agenda 2022 seminar of the year, shows clear evidence of “pent-up” demand being unlocked after the UK government starting easing travel restrictions in early January.

The PwC survey of 30 travel firms revealed that 39% of operators were back to “meaningful levels” of business in late January, with most travel firms expecting a full recovery to pre-Covid levels during 2022 or next year.

David Trunkfield, hospitality, travel and leisure leader at PwC, said: “It’s not been plain sailing, but now there’s great optimism again – similar to what we saw in October’s survey. Things are moving in the right direction. It’s encouraging the lead time for getting back to 2019 levels is also shortening and they’re not continuing to push out this timeline, although operators are still wary about the impact of more waves of the virus.”

Nearly a fifth of operators (18%) saw a significant surge in enquiries beyond 2019 levels, while the majority saw some growth but still lagged behind the pre-Covid year. Booking patterns also illustrate the continuing trend for late sales, with 57% of firms seeing most sales for winter or spring 2022, while only 32% saw the highest proportion of bookings for this summer.

Omicron did cause some disruption to marketing plans at the start of peaks; 61% of firms reduced their planned spending in January, with around half also delaying advertising campaigns. On a more positive note, the trade now expects both prices and margins to be higher this year, with increased confidence prices will hold. Most operators (82%) expect higher prices this year, while 65% predict margins will be “slightly” or “significantly” higher.

“Prices are going up and the increasing expectation is that they will stick,” said Trunkfield. “Operators think they won’t have to discount to fill capacity later in the season. This will translate into higher margins – another really positive sign for the industry.”

TTG+ members can read the TTG-PwC Agenda 2022 report here, while the full Agenda 2022 seminar can be watched on-demand here.

Challenges remain for the trade, of course, which include dealing with staff shortages and international travel restrictions, as well as concerns about the longer-term outlook for consumer spending, cash management and upcoming Atol renewals.

Recruiting and retaining staff remains the top concern for travel firms, with 36% of operators saying this was the biggest issue they faced.

Cash flow was the top worry for 11% of operators in the next few months, with 57% expecting their “key cash period” to fall within the first half of 2022. Despite this, the survey revealed that only 25% of respondents were currently considering new funding options.

’Step change’

Many of these positive trends were also reflected in PwC’s accompanying survey of 2,000 UK residents. Although Omicron “dampened” consumer confidence, demand for travel has remained strong, including the intention to spend more on holidays than pre-Covid.

The survey found 27% of consumers plan to spend more on travel in the next 12 months, compared with 21% who intend to reduce holiday spending. This positive intent ranked only behind grocery shopping across major consumer categories.

Eleanor Scott, director, travel and leisure, at Strategy& for PwC UK, said: “This is a step change on the same time last year and we’ve seen a bigger rise for holidays than other spending categories.”

Scott added there was more “excitement” about travelling again, with 34% planning to go on more trips in 2022 than in 2019. This was particularly true for younger age groups and more affluent consumers who were generally “more positive” about travel.

People who have travelled abroad during the pandemic were also more enthusiastic about taking overseas holidays this year, compared with those who did not travel in the past two years – many of whom remain worried about catching Covid.

With many consumers still cautious about travel, this is expected to lead to another strong year for UK holidays, with Europe also benefiting from a more “conservative” attitude by holidaymakers towards their choice of destination.