UK leisure travel to return to pre-pandemic levels
International leisure travel from the UK has almost returned to pre-pandemic levels, according to new research. But while the desire to see the world, or visit friends and family overseas has seen consumers increasingly return to the skies, business travel is unlikely to hit its old rates for another year – as costs continue to bite.
During the early stages of the pandemic, international lockdowns saw many airlines slip into crisis mode. With demand suddenly drying up entirely, many companies were forced to beg for state bailouts, or face collapse. In the years since, huge inflationary pressures have slowed the recovery from this – but demand for leisure travel has still been growing, thanks to the pent up demand of the lockdown months.
Now, a new study from OC&C Strategy Consultants has found that international leisure travel from the UK is finally set to hit pre-pandemic levels over 2024. And further to that, consumers expect to spend more on big ticket leisure moments and holidays in the next 12 months compared to 2023 – something which will relieve airlines whose bottom-lines have continued to be a worry over the last four years.
A survey of 2,025 people by OC&C and Harris Williams found that UK consumers intend to spend 6% more on big holidays over the next 12 months compared to last year – even as they continue to contend with the impacts of the cost-of-living crisis. It seems they intend to pay for this spending by cutting back on other areas: in particular, homeware, and hobbies and sport, both of which will see 10% reduction in spending – and apparel and beauty, where the reduction will be 17%.
Mohsin Saleh, an associate partner at OC&C, said, “This demand is a fantastic opportunity for the travel industry. With supply and operational challenges receding and cost inflation becoming more stable, the industry should be looking to capture demand by ensuring they are offering value-additive travel, adapting their offers for younger travellers, and ensuring they continue to focus on sustainability. AI also has a role in improving the customer experience and reducing operating cost. After a turbulent few years for the travel and leisure industry, there should be calmer waters ahead for the sector.”
However, this does not mean that it’s all plain sailing for airlines at the moment. Business travel – which is generally a more important line of revenue for the industry – is still a year away from recovering its 2019 revenues. This means that in the meantime, there is also more pressure to keep consumers happy when it comes to leisure travel; and that may become increasingly difficult in one particular area.
As is the case in every other industry, the travel trade has spent the last decade treating sustainability measures as a ‘premium product’. Rather than gradually adapting their business models to be less environmentally destructive, they have rolled out offsetting schemes and other products of debatable use – and sought to charge conscientious consumers for the privilege. The problem is that while that might have been somewhat effective in more stable economic times, consumers have had their spending power slashed dramatically in the last two years.
At present this means that 56% of UK travellers note that sustainability issues influence their travel and vacation decisions. Globally, this rises to 58%. However, only 9% of consumers now say they are “willing to pay more for travel experiences in line with my ESG values”. That means that airlines are expected to do something positive about the environmental crisis the world faces – in part because of the industry’s own huge emissions legacy – but believe it is an expense airlines should not be passing on to them.
Failing to do this could mean that airlines begin to miss out on a growing number of consumers. Indeed, 26% of global respondents already use the train or the bus wherever possible. And this is not an area where the airlines can afford to think returning business customers will soon offset this loss either – because these emissions are increasingly coming into the equation when firms measure up their Scope 3 responsibilities, on their net-zero journey. Looking ahead, then, there may well be further turbulence on the horizon for airlines – even as they expect revenues to return to former levels.