Insights Article

How has COVID-19 & the cost of living crisis affected the travel industry?
23rd March 2023

There is no doubt that the travel industry was greatly affected by COVID-19 shutdowns. But, the reopening of borders and mass vaccination efforts triggered a surge of optimism and spending amongst consumers. The pent up desire for a change of scenery, along with some spare cash after months of not travelling (or going out!), reignited the demand for travel.

However, concerns about personal health have been rapidly replaced with apprehension regarding the huge increase in the cost of living, with mainstream media being dominated by conversations about increasing inflation and interest rates. So, how have UK consumer’s holiday making intentions been affected by the cost-of-living crisis?

A recent survey conducted by Clusters found that the prevailing mood amongst UK consumers seems to lean towards escapism and returning to normality. Those who are able and willing are likely to prioritise holiday travel. Our survey found that 72% of respondents said they are planning to go on holiday in the next 12 months and 39% have already booked a trip. Only 15% of respondents said they had no plans to book anything this year, falling to a mere 9% for UK consumers aged 18-39. Furthermore, 20% of respondents have already made holiday plans for 2024, suggesting a certain level of continuing optimism.

However, for those not planning to travel, 64% said that holidays were either too expensive or that rising costs have impacted their holiday budget. Coronavirus seems to be a distant memory for holidaymakers, as it was a barrier to travel for just 3% of respondents.

While intentions to travel may be high, consumers are still hoping to cut costs: 23% of respondents said that they have already reduced the amount of money they spend on holidays. A third of consumers plan to cut back on eating out and are looking to reduce costs by staying in cheaper accommodation. However, people are still determined to gain the full travel experience, with the majority of respondents saying they’re not looking to cut down on the duration of their trips or the distance they’ll travel.

The pandemic may no longer be an impediment to travel for most people, but there have been lasting effects. Almost a quarter of respondents lost money on non-refundable travel expenses because of the pandemic, with an average claimed loss of £1,374. It’s no wonder that rebuilding confidence and trust in travel providers may need some work, as 58% of respondents said that they would only use travel operators they know and trust, and 39% agree that a travel operator’s brand name is more important now than ever before.

Therefore, it’s crucial for the travel industry to understand how the key changes in consumer expectations and behaviour, both post-pandemic and in response to current economic crises, could impact their brand with regards to key metrics such as value, trust and recommendations.

At Clusters, we can help you plan and carry out research to support your business objectives, whether you’re looking to increase the number of visitors to your hotel, improve your services, increase the number of activities you offer or expand into new locations. Together, we can unearth key insights regarding your target consumer, supporting you in developing innovative targeting solutions and strategies.

Stay tuned for the next article in this series to find out how consumer segmentation can play a significant role in reaching your business goals in 2023 and beyond.

Want to learn more about how we can elevate your travel company using expert market research techniques? Check out our service page for the travel industry to find out more about the work that we’ve done and why market research is so important for this particular sector. You can also get in touch with the team at Clusters today with your enquiries.

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