Long haul travel is the surprise driver of post-pandemic travel spend in the UK and Europe, with the picture for the future seeing continued growth, albeit at a slower pace.
That was the view of David Goodger, Managing Director EMEA of Tourism Economics, an Oxford Economics company, speaking at the Annual Hotel Conference in Manchester on 11 September.
In his overview of travel trends for the remainder of 2023 and into next year, Goodger said that this trend is benefitting the UK particularly over some other European markets, with 33% of travellers coming to Britain from long haul destinations compared with 17% to Europe as a whole. While other European markets have seen rapid recovery, this has mostly been from short haul travel, he said.
The top source markets to date have been the US, China, India and the UAE.
“Looking at the recent past, revenge travel is clear in 2022 and 2023. We are pretty much back to pre-pandemic levels of demand, just slightly lagging 2019 in international and domestic volumes. We have seen spikes in the summer months, and last year started a bit lower, but then a real strong recovery in domestic. This year international is converging with domestic,” Goodger said.
In the UK, even excluding inflation, most levels across travel categories are back to above pre-pandemic spending, with leisure travel leading the recovery but business travel also coming back.
“On the business side, there is a lot of positivity. Events are coming back, there are lots of positive signs,” he added.
Savings key to recovery
Goodger stressed that savings levels remain key to the ongoing spend on travel, thanks to large savings pots being built up during the pandemic.
“Although it is starting to unwind, there was a lot of money saved during that time. What people seem to want to spend it on is travel,” he said.
This has continued despite many elements of travel increasing in price increasing ahead of the inflationary rise in general goods.
“Air fares is a good example,” he said. “We had seen a lot of discounting and generally downward price pressure, generally at around a 1.5-2% decline a year in the 10 years running towards the pandemic,” Goodger said. “What we’re seeing now is an upward pricing trend, going up at least at the same speed as other categories. A lot of travel companies and airlines took on a lot of debt during the pandemic, so it’s not as easy for them to transfer on cost savings.”
In all key markets, travel share of spending has rebounded and Travel Economics expects this to be maintained or trend upwards.“This is in sharp contrast to previous downturns,” Goodger said.
UK leads travel upturn
In the UK, Goodger noted a flatter profile in terms of growth but still trending upwards.
“There was some concern that as people travelled overseas again, UK stays – which surged during and after the pandemic - would decline. But it has stayed the same. International inbound has continued to increase, and going into next year we see a slight slowdown but still gains,” he said. “Weaker sterling is playing its part as a benefit, while a lot of international travellers see a lot of value coming to the UK.”
He said that Travel Economics had experienced “quite a surprise” in terms of the source markets for travellers.
“Domestic demand led the recovery and then we saw short haul starting to lead change, which was the picture we had expected to see. But if we look at 2023, it’s long haul that has come back much quicker. Some of this talks to value, but it’s also about people really wanting to get out and travel from all markets,” he added.
Goodger said that overall he viewed the immediate future as showing a “pretty robust picture”, with slowing growth moving into 2024 but a positive outlook.
“We had seen a lot of travel towards more rural and coastal areas during the pandemic. But when we look at international travel since, it’s focused on the cities. We’re looking at London leading the way as a key leisure hub, while Manchester really stands out for business travel,” he said.
“We do see this growth continuing, driven by longer haul travellers who stay longer and spend more, with cities once again gaining prominence.”
David Goodger was giving a key note session at AHC on September 11, 2023, entitled Revenge Travel or Dampening Desire? The Travel Trends Affecting Destination UK