BUSINESS NEWS COMMENT: Inflation will affect some consumers’ holiday choices, says Mintel’s Paul Davies


Travel remains a priority despite rise in living costs


The Consumer Price Index (CPI) is at its highest level in almost 30 years. It reached


5.4% in December, mainly driven by increases in food, clothing, footwear and energy prices. As businesses face higher costs


over the coming months, the Bank of England doesn’t expect things to get any better soon. The CPI rate is forecast to exceed 7% in April. Holiday costs have so far had little


impact. Mintel’s Covid-19 Tracker on January 18-22 found just 14% of consumers had been impacted by the higher cost of holidays in the previous two months while more than four times as many had been impacted by rising food and drink prices (61%). This is likely to change as demand recovers. Travel will remain a consumer


priority, but some will be forced to compromise. Many consumers have been able to top up their savings during the pandemic and travel will be one of the main areas to benefit from pent-up demand for experiences off limits for so long. That said, the increased cost of living will lead the most-affected


attract value-hunters at the expense of more popular destinations such as Spain, Italy and Greece. We also saw the short-break


market take a hit as consumers sacrificed shorter holidays to ensure they could afford their main summer holiday. This pattern will play out more


Luxury property Parklane, Cyprus


groups – those on lower incomes – to watch how much they spend in discretionary areas such as holidays. In October 2020, 71% of consumers with a household income under £15,500 said they would take fewer holidays if these became more expensive, compared with 56% of those with an income of £75,000 or more. We can look to previous periods


of financial uncertainty to assess the impact on the market. During and after the recession of


2008-09, we saw more consumers substitute an overseas trip with a staycation, while lower-cost resorts in Egypt and Tunisia continued to


strongly this time around as the hassle or cost of taking Covid-19 tests when visiting some countries will remain a barrier to the short-break market. Shorter holidays, such as city


breaks and special-interest holidays, will be hit most. Family and beach holidays, which tend to be longer, should prove more resilient. One holiday type that will


undoubtedly benefit from the income squeeze will be camping and caravanning. The domestic camping segment gained momentum during the pandemic as consumers favoured outdoor, socially distanced breaks. Now its strong budget appeal is likely to attract financially constrained households, providing a strong


platform for growth. Q Paul Davies is Mintel leisure, travel and foodservice category director


Mintel’s advice for travel businesses


Mintel recommends that travel companies: Q Focus on the opportunities: while some consumers will be


forced to cut back on holiday expenditure, focus on how to attract consumers who are able to absorb price rises. Many have been able to increase their savings through the pandemic and are keen to splash out.


Q Learn from the past: short breaks and more-expensive destinations tend to suffer during periods of economic


uncertainty, meaning companies should widen or diversify portfolios to ensure they are not too exposed.


Q Promote escapism: emphasise wellness elements and features that appeal to those wanting to get away from the stresses of daily life. Mintel’s UK Luxury T


ravel Market Report 2022 and


Camping and Caravanning UK 2022 reports are available from: store.mintel.com/industries/holidays-and-travel


Paul Davies


‘Target better-off customers as they are least-affected’


The travel sector holds one big advantage amid financial uncertainty. Holidays represent escapism, a chance to get away from gloomy headlines and day- to-day life – something never more applicable than now. While the industry needs


to respond to the financial constraints on some consumers, Mintel’s research shows how polarised sentiment is when it comes to people’s finances. A survey in December found


59% of those with a household income of £50,000 or more were ‘pretty confident I will be OK’ financially over the next year. The good news for the


industry is that the same survey found 85% of those in the £50,000 and above bracket plan to take a holiday in 2022. This presents an opportunity


for brands to ‘premium-ise’ holidays to appeal to those able to afford it. The release of lockdown savings provides opportunities to promote five-star accommodation, private luxury amenities and wellness treatments.


travelweekly.co.uk


10 FEBRUARY 2022


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PICTURE: matthewshaw.co.uk


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