Soaring fuel bills will mean less disposable income for consumers and potentially put the brakes on holiday spend, although some may well decide a month in the Canaries is cheaper than heating their homes next winter.

Thorne Travel has two shops in Ayrshire. Owner Shona Thorne said rising fuel prices were already an issue for clients. “It’s very much a case of people looking for alternatives and seeing if they can make changes to the holidays they’ve already booked,” she told TTG.

“They’re worried about the spare cash when they get back. The heating will come on shortly and it’ll be horrendous.”

The agency has already started advertising “Beat the Gas Bill” long-stay packages, one example being a 35-night stay in Fuerteventura for £1,200. “We are absolutely targeting these markets and it’s working well for us,” she said.

Calm before the storm

Mark White, managing director of Haverfordwest’s Ocky White Travel, said that while the crisis was yet to impact customers, he was wary of what was to come. “I don’t think it has really hit home yet, but I am fully expecting things to slow down once we get into September, October, November, when it really starts to hit people,” he said.

“My gut feeling is people haven’t felt the full force yet, but that’s what I’m expecting will come ahead of peaks.”

There is a sense of the calm before the storm among agents. Andrew Earle of Andrew Earle’s Holidays runs three shops in the Hull area and said cost of living was not yet an issue, but could be soon. “People are still buying what they want,” he said. “It may well impact when the weather changes, but we’re not seeing it yet.”

Besides any effect on consumer demand, there is also the increased cost of running a shop for agents to worry about. There has so far been no government support akin to that given to households to help with
fuel bills.

The Federation of Small Businesses has called for an extension to the energy price cap for businesses, as well as a VAT cut on fuel from 20% to 5% and for any unused Covid grants to be repurposed.

Some have already taken matters into their own hands. Thorne has installed air source heat pumps in both branches providing hot and cool air, slashing monthly bills. The agency was paying £890 a month for gas and £250 for electricity for the two shops, but has now reduced this to £320 for both branches.

“It was a £20,000 investment, but I believe we’ll make that back in 18 months,” said Thorne. “It is gobsmackingly cheaper, cleaner and greener, and easier to control the temperature.”

Ocky White is also concerned by rising costs. “We’re a small office so our energy bills are all relatively small anyway,” said White.

“But I’m starting to see the increases on the monthly bills throughout the summer when it would normally be very low. Those are obviously only going to increase dramatically. We know it’s coming, but we haven’t really felt it yet. We might be looking at different business models.”

‘Less scope to upsell’

Those with a wider view are also worried. Kelly Cookes, Advantage Travel Partnership chief commercial officer, said agencies were “definitely” more conscious of avoiding costs like investing in technology or recruitment. “They want to see what autumn and winter look like,” she said, adding winter bookings were “very slow”.

“Due to cost of living concerns, agencies are more reluctant to take on new staff as they don’t want to be in a position later in the year where they have to scale back again,” she continued. “But we are also seeing members bring in staff to facilitate enquiries and bookings so it is a really mixed bag.”

Cookes added: “The general feeling is cost of living is a factor for clients but not affecting bookings just yet. I think an interesting question is will peaks happen for next year?”

Claire Moore, managing director of Peakes Travel Elite in Shrewsbury, senses more caution among clients amid spiralling costs. “We had one couple who paid £1,700 for a holiday a few years ago – the same holiday this year was £2,500.

"They initially went for it, but came back half an hour later and said they couldn’t commit. They didn’t specifically attribute the decision to the cost of living crisis, but it does indicate some people are being more cautious with spending or are unwilling to pay so much for holidays.

“Like-for-like prices are so much higher, there may be less scope to upsell. We’re having conversations with people where we’re asking, ‘what do you feel the holiday is worth this time?’.”

‘What if?’

Haslemere Travel owner Gemma Antrobus added that while her team hadn’t yet seen any significant caution on the part of their clients, she would guard against complacency.

"We don’t know whether behind the scenes they’re giving different budgets," she said. "At every level of the market, clients want good value, but we are perhaps a bit more protected at the luxury end as commissions are generally higher."

Antrobus explained higher holiday prices were driving up commission and therefore revenue, which was helping offset some increases in utility costs.

"We’re still very lean as a business following the pandemic though, which has put us in a good position," said Antrobus. "At the moment, our profits aren’t impacted. But we will probably remain lean for a while because of the ever-present ‘what if?’."

Abta told TTG it has frozen its minimum subscription fee, and is allowing members to pay this year’s subscription in two instalments. Advantage is also allowing members to pay in two instalments “to assist members with cash flow”, while Aito has introduced a payment plan allowing operator and agents members to pay over a 10-month period based on 2019 fees.

Abta is also signposting cost-saving and energy reduction resources on its Member Zone, as well as the support provided by Abta LifeLine.