A typical household will now pay £2,074 a year for gas and electricity from July to September – £426 a year less than their current bill and 17% less than under the government’s Energy Price Guarantee.

It is the first time in 18 months the cap has fallen, although experts warn some households, who struggled to pay their bills over winter, will see little benefit as government support worth £400 between October to March comes to an end.

But what could this mean for travel? Will extra cash in customers’ pockets heat up the lates market? Or will ongoing financial pressures mean consumers keep their purse strings pulled tight? And given the strong demand reported for this summer, will there be anything left to book?

Miles Morgan, founder and chair of Miles Morgan Travel, told TTG there were “reasons to be cheerful” with the lowering of the price cap helping those in the price-conscious family market.

“Lates prices are high this year as demand is strong and everyone’s load factors are high,” he said. “For my client demographic, interest rates going up means they have more money because they have savings and no mortgage."

Morgan said his agencies continued to be “incredibly busy”. “We’ve been waiting for the bubble to burst for months on end and it hasn’t. May was the best by a long way ever.”
 
“It’s wonderful to see the guys in the shops with smiles on their faces doing the job they enjoy again. It’s not even like the old days, it’s better.”

Steve Witt, co-founder of homeworking agency Not Just Travel, said the news was “will have a very positive impact on consumer mood”, which in turn, would help drive up holiday spending.

“A lot of people are still yet to book their holiday this year and so it will result in higher-value bookings. The market is already strong and it’s just going to get stronger as a result.”

Shona Thorne, director of Thorne Travel in Kilwinning, did not anticipate any change in the lates market among families. “Our area has high deprivation, and for the majority it will make no difference.”

Thorne said the high cost of family holidays was a barrier this summer. “They want a 10-day package in the school holidays for £3,000. Realistically that’s not the budget this year.” Thorne said her client demographic had changed “dramatically”, with more retired people and fewer families.
 
“Our older customers have been very cautious about spending and now they are seeing bills come down they are looking at the lates market. They were worried about spending before.”
 
Increased interest rates had helped these customers, she said. “They’ve made extra money on savings and stocks and shares that they’re not going to have to spend on gas.”

Alan Bowen, advisor to the Association of Atol Companies told TTG that although he welcomed the news, he was not sure it would herald any sudden change in booking patterns – given other financial pressures facing consumers.

“I think the real issue is food inflation, which is obvious every single time customers go to the supermarket,” he said. “That isn’t coming down at all and is very much more visible than utility costs, which tend to be sucked out of your bank account by direct debit anyway.”

Sunvil chair and Aito director Noel Josephides, told TTG he thought the lowering of the price cap was “unlikely to have much, if any, effect” on the association’s “well-heeled” clients and their demand to travel.

“That said, it will no doubt help the volume operators, especially as we are now seeing very good special offers – including this bank holiday weekend and in June. In due course, these special offers will no doubt continue in July and August,” said Josephides.

Bowen said he believed this summer’s lates market could get interesting, with different approaches from the UK’s major operators around pricing and marketing.

“Tui and easyJet holidays would have you believe there are few late deals left, as everything has been sold at a high price already. Jet2 appears to have a different view and the level of marketing they are conducting suggests they may well be in a different place and agents certainly maintain they can still see capacity,” said Bowen.

He predicted the reduction in fuel bills “will become more apparent to consumers as the summer progresses” and may have more of a positive influence on winter bookings. 

“I think by this stage [of the year], most customers have already decided whether or not they are going to travel this summer, irrespective of whether they have booked or not,” he said.

“My barber takes has family to the same hotel in Kefalonia for a week just before the start of the school holidays. He told me he’s always paid around £1,600-£1,800 for the three of them. When he went to book in January this year, Tui wanted over £3,000 for the same holiday and he decided they would have to go without a holiday altogether.

“However, when I saw him two weeks ago, he had decided to return to Kefalonia but book self-catering to reduce costs, he knows the area well but has never had to either self-cater or eat out and thinks it should still be much cheaper overall. He thinks the travel industry is taking the consumer for a fool and many won’t book at all next year when the boom is over.”