Until now, the industry has ridden the crest of the post-pandemic wave, with the outlook as chancellor Jeremy Hunt made his announcements late last month remaining positive, albeit with some agents feeling it will take another year for the industry to fully recover from Covid.

The picture is so far, so good, with travel bucking spending trends in other sectors. In October, retail sales fell by 0.3% to their lowest level since February 2021, with the Office for National Statistics citing cost of living pressures and a stretch of poor weather for the setback.

This came despite inflation falling to 4.6%, down from 9.6% a year ago, meaning potentially more disposable income for consumers than in 2022. Some of that disposable income will have gone travel’s way, with post- pandemic demand still evident.

“I think the travel industry has been insulated from the cost of living crisis so far,” said Mark White, managing director, Ocky White Travel. “We’ve probably seen a slight decrease in enquiries in November, but there are still lots to keep us going.”

He is still enjoying the post-Covid spending bubble. “We’ve got 18 months of unparalleled desire and urge to travel. I can’t say I’ve seen any downturn attributable to cost of living yet.”

However, he cautioned: “I am expecting this post-pandemic boom to gradually even itself out, with us getting back to more normal or traditional booking patterns – peaks in January and February, then a slight slowdown in the spring and a strong lates market. But who knows? The market is difficult to predict.”

Leanne Williams, Travel House head of retail, is another optimist. “Touch wood, we haven’t seen an impact from the cost of living crisis yet,” she said. “I’ve had a couple of cancellations because of the time of year, but nothing due to the economic situation.

“November is down compared with October, but that is to be expected. We’re currently 42% up on last year’s bookings at this stage, and Tui launching its 2025 offer has helped business.”

For Williams, there are clear signs there is money around. “We’re still seeing a number of high-end bookings trickling through for destinations including South America and Dubai – just last week, we did a £52,000 booking with Gold Medal to Dubai,” she added.

The wealthy are generally insulated from any economic downturn or cost of living squeeze so the potential worry, come January, is the mainstream market. Joanne Dooey, Love to Travel owner, said trading had “definitely quietened down” in November and with a marked shift in spend.

“We’re finding that our bookings are higher value. We had a lot more high- end bookings in November – mainly for cruise and long-haul,” she said. “We haven’t seen a lot of mass market bookings, especially from families and younger people, but we’ve seen couples booking holidays further out, with city breaks becoming extremely popular.”

There may be trouble ahead in 2024 when it comes to these mass market bookings. Energy prices are set to rise by 5% (around £94 per household) in January, pushing the average bill towards £2,000, although some of this will be offset by a fall in the rate of National Insurance contributions from 6 January, which will save an average worker £37 a month.

The independent Office for Budget Responsibility (OBR) forecasts households’ real disposable incomes will be 3.5% lower in 2024/25 than pre-pandemic levels, not returning to normal until 2027/28.

The good news is that Britain is forecast to avoid recession, albeit narrowly. The OBR predicts the UK economy will grow by 0.6% this year. However, the 2024 outlook has been cut from its previous growth forecast of 1.8% to just 0.7%.

Back to reality?

All this means potential clouds on the horizon for an industry still licking its wounds from the ordeal of the last three years. “We’re still trying to recover,” said Michele Dance from cruise specialist Ocean World Travel. “One year doesn’t make up for Covid so we still need another good one. The wash-up from Covid is still very much on us.”

However, Dance said she is enjoying it while it lasts, adding her sales over the past six months “have not been this buoyant for about eight years” and are around double the level they were this time last year.

Fingers crossed, this trend will continue throughout January. The outcome afterwards looks a little less certain, with an impending election, downgraded economic forecasts and a potential squeeze on bookings as people’s pandemic savings run out.

This year has been an exceptional one for many agents, but if the trade is hoping 2024 will be another humdinger, the indicators from economic experts after the Autumn Statement are that it may have to revise its expectations.