market outlook


THE UK’S outbound travel sector enjoyed such a strong 2023 that there was a degree of caution heading into 2024 as to how strong trading and pricing would be after leading tour operators put on substantial additional capacity. But demand remained buoyant. Deloitte lead partner for travel and


aviation Alistair Pritchard noted: “Most airlines had a strong year, arguably the strongest some have ever had. “Cruise lines lagged the recovery from


the pandemic in 2023 and operations in the Far East were impacted by a slower lifting of restrictions, but 2024 was a real success story for cruise, with very strong pricing and occupancy. The quality of the cruise product, the facilities and experience versus the price, is highly appealing compared with land holidays. Booking levels going into 2025 were at record levels. “UK operators also performed strongly.


The three biggest performed very well and, despite the extra capacity, prices held up reasonably with strong demand in the lates market. The market across


THE CORRELATION between overseas holiday demand


and economic growth is clear (Figure 5), but weak GDP


growth in 2024 appears not to have had a great impact


FIGURE 5: OUTBOUND HOLIDAYS & GDP, 2007-25 UK overseas holidays


10 20 30 40 50 60


0 -1.1% -4.8% -11% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 54.4m 45.4m 45.5m 41.2m 41.4m 42.7m 41.7m 43.1m 45m 48.5m 50.8m 57.3m 58.7m 45.6m 55.5m56.7m*


Strong demand amid slow economic growth forecast


There are plenty of reasons for optimism but also many uncertainties looking to the next 12 months


Europe wasn’t without its challenges, with the failure [of FTI Touristik] in Germany. But 2024 overall was a good year for the sector and most businesses went into 2025 with some optimism.” That optimism was somewhat out of


kilter with overall business confidence in the UK. Debapratim De, Deloitte director and senior economist, pointed out: “The UK recovery has lost steam. After a surprisingly strong start to 2024, the economy entered 2025 with faltering growth, weakened business sentiment and concerns about inflation. The latest GDP data show the economy grew in just two of the six months to November. Headline inflation is up from the September lows, and business and consumer confidence weakened over the winter.” But he said: “Despite this, we think


there will be a modest pick-up in growth in 2025. Our forecast is for 1% growth this year, up from 0.8% in 2024, driven by three factors, although I should point out we’re slightly below the consensus which expects about 1.2% growth this year. “The primary driver will be the fiscal


easing announced in the autumn Budget. The government’s day-to-day spending is set to rise by just under £50 billion in the coming financial year. That is a significant jump IURP WKH DYHUDJH DQQXDO ULVH RI e


bELOOLRQ


between 2010 and 2019. The bulk of the additional spending should go towards wages and employment, which will bolster household consumption and demand. “Monetary easing should also help.


7% 14.2m 1.5% 1.3% 0.4% 0.8% 1.5% 2.1% 1.6% 0.9% 1.1% 0.6% 0.7% 8.9m 4.3% 0.3% 0.9%** 1.6%***


-12 -10 -8 -6 -4 -2 0 2 4 6 8


*12 months to June 2024 **Forecast annual rate ***IMF forecast Source: ONS/OBR/IMF


Despite the rise in headline inflation, the measures of underlying price pressure continue to moderate, and this should maintain room for further rate cuts by the Bank of England. Third, wage growth remains strong and should continue to outpace inflation through this year. That should drive a broad-based recovery in consumer spending by the end of 2025.” De noted: “Despite a full year of


real wage rises and relatively low unemployment, consumer demand remains


8 Travel Weekly Insight Report 2025


GDP % change YoY


Holidays (million)


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