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UK consumers are feeling more confident about their finances and want to spend more on holidays when able.
Consumers are feeling much more positive about their financial position than six months ago, with spending money on holidays one of their top two priorities – this was one of the most encouraging findings in the latest research conducted by PwC.
The survey of 2,000 consumers in March found 41% planned to increase their spending on holidays over the next year compared with the previous 12 months, with only 15% saying they would be spending less on breaks. The only category that ranked higher for consumers was eating out, with 46% planning to spend more on visiting restaurants.
This illustrates the priority consumers now place on taking a holiday as the Covid-19 crisis finally abates. These findings represent a complete turnaround from the last study in October, when just 10% of consumers said they planned to spend more on holidays, and 45% saying they intended to spend less on travel.
Consumers also seem to have an increased appetite for resuming travel more quickly than they did last year – both for domestic UK and international holidays. This is particularly true for younger people, aged from 18 to 34, although all age groups are showing more willingness to resume travel. The roll-out of coronavirus vaccines is clearly helping to significantly boost this desire among older age groups to travel in the near future.
“What has changed since October is increased willingness to travel among older age groups”
“Younger people are more likely to travel imminently, but there is willingness to travel at all age groups,” said David Trunkfield, hospitality and leisure leader at PwC. “Younger people being more willing to travel reflects their lower concern over catching the virus and also relative optimism in the outlook for their financial situation versus older age groups.
“That has been common across our surveys through the pandemic. What has changed since October is increased willingness to travel among older age groups – likely due to the vaccine roll-out giving more confidence on the safety of travelling.”
Domestic holidays unsurprisingly lead the way for all age groups and social classes who were willing to travel “imminently”, with travel intention reducing slightly as the generations go up the age scale. UK and Europe almost completely dominate holiday planning with 42% and 24% of consumers planning to stay close to home this year, with North America the top long-haul option among 5% of consumers.
“UK-based holidays are better positioned to recover first, with more caution over international trips. This reflects both the restrictions on international travel and perceived safety of travelling on planes and to overseas destinations,” added Trunkfield. “We are likely to see a bumper domestic holiday year, at least for the parts of the season that are open for business. But being closed for Easter will be a big hit to the sector.”
Beach holidays remain the most popular type of breaks for summer 2021 and are closely followed by visiting friends and family, which ranks higher than in pre-Covid surveys and is not surprising given that so many families have been separated for a year or more due to the pandemic.
Consumers are also looking for a wide range of accommodation, with hotel stays ranking just ahead of caravan parks and campsites, cottage/villa rental and even Airbnb properties. Just 6% of people are considering a cruise, although this should be weighed against the fact that cruise only represents about two million of the 40 million holidays taken by Britons each year.
“We are likely to see a bumper domestic holiday year, at least for the parts of the season that are open for business”
“Beach holidays come out higher than city breaks, which could be that cities are seen as less safe,” said Trunkfield. “People seem willing to use a range of accommodation options – hotels, Airbnb, cottages, caravans – and are likely selecting them based on perceived safety as well as level of service offered.”
The encouraging thing for the industry is that consumers clearly have a greater expectation of more normality in the coming year, which can only help to boost travel bookings, despite mixed messages from governments both here and overseas.
Of course, barriers to travel remain for consumers, with the biggest concern being the UK government actually allowing travel, closely followed by the fear of getting Covid at the destination and the potential of having to quarantine both when they return to the UK and at their destination.
“The top barriers to people travelling remain restrictions to travelling (either in the UK or the destination), the need to quarantine and fear of catching Covid. That means a lot has to happen for travel to resume en masse,” said Trunkfield. “The vaccine roll-out in the UK will help, but lags in other countries, and the rise of new virus strains will continue to hamper a return to international travel.”
Although fear of catching Covid while on holiday still ranks highly as a barrier, it has reduced significantly from the results for summer 2020 travel, when fear of getting the virus at destination or while travelling was seen as a barrier by 50% and 51% of consumers respectively; these figures have now dropped to 29% and 28% respectively for summer 2021.
Interestingly, the requirement to take a Covid test before travel was a relatively low barrier (at just 14%) for consumers. This further illustrates the importance of lobbying the UK government to get rid of quarantine requirements entirely and replace them with a testing regime as a crucial component to a successful bounce back in 2021.
Any requirement for travellers to prove they have been vaccinated against Covid does not seem to be much of a disincentive either (14% said it would be a barrier to travel). Indeed, the majority believed a vaccine passport or certificate should be required for flights and for accommodation both in the UK and overseas once everybody has been offered a vaccination. These figures were even higher for those aged over 55.
Given all these ongoing uncertainties, the industry is likely to have to accept that bookings are going to continue to be much later than in normal years. Just less than one-fifth of consumers had already made a booking for summer 2021, with 8% having already shifted a booking from 2020 and 11% making new bookings this year.
Only 5% of consumers expected to make a summer booking in March or April, with this number increasing to 9% in May and June, and up to 10% in July and August, adding extra credence to the expectation that there could be an exceptional “lates” market this summer, as consumers wait for more certainty about which destinations they can travel to, as well as the restrictions and requirements they may face both on their holiday and on their return home.
“Many people are as yet unsure if they will take a summer holiday given how much uncertainty there is over if and when people will be able to travel,” said Trunkfield.
“It is therefore likely that more people will book last minute than in a typical year, waiting to see what happens to restrictions, travel corridors and virus prevalence. This presents challenges to tour operators in managing capacity and yield.”
These findings show that the trade will have to play a waiting game to eventually cash in on growing consumer desire to take that much-delayed and needed holiday.
“Many people are as yet unsure if they will take a summer holiday given how much uncertainty there is”
