Volume XXV, Issue 34 |

With the holiday market in remarkably good shape, the forecast is fair for travel in 2023.

Decline in the travel industry was a very clear and obvious symptom of the Covid-19 pandemic. Closed borders and locked-down households disrupted holiday plans, leaving travel businesses across the industry struggling in 2020 and 2021.

Fortunately, 2022 featured a welcome recovery in spending, with Barclaycard data showing growth at 116% of the previous year’s spending. Reopening borders was a major impetus for this recovery, but inflation clearly played a part too, and overall volumetric levels do remain below pre-pandemic levels in 2019. 

See our UK Travel Trends Infographic for greater insight into the positive outlook for the 2023 UK holiday market.

This reality leaves recovery fragile and potentially hostage to the impact of the ongoing cost-of-living crisis. Rising prices are forcing consumers to make significant cuts to both discretionary and essential spending, and non-essential travel is under pressure as a relatively large discretionary spend category. Recent data from an October 2022 Post Office poll highlights a noteworthy 42% of consumers believing that the rising cost of living will impact their holiday plans with cuts to their budgets and bookings to cheaper destinations.

Nonetheless, sentiment is changing fast, and newer data paints a more encouraging picture, with a survey commissioned by Hilton indicating that a sizeable majority of Brits — 59%  — plan to travel more in 2023 than they did in 2022. At the close of 2022, TUI forecast sales for 2023 would hit 2019 levels. A poll by EasyJet indicates that 70% of UK consumers are ready and willing to prioritise vacations over other spending, signifying a growing trend for consumers to regard holidays as an increasingly essential part of their discretionary spend.

This re-prioritisation of holidays is occurring across the industry, where strong trading data supports the trend. UK travel company Travel Counsellors reported January 2023 sales of £114m, its highest ever for the month and a noteworthy 50% increase on pre-pandemic levels in January 2019. Ryanair delivered similarly positive news for the sector, reporting profits of €211m for October to December 2022 — almost three times the 2019 level — and a 7% rise in passenger numbers for Q4 versus the same period in 2019. 

There is good news online too, with Google searches for key holiday terms such as ‘Holiday package’ and ‘Travel supermarket’ both exceeding 2020 levels with increases of 16% and 57%, respectively (see Figure 1).

Our own research focuses on tracking five key holiday categories through the performance of the main operator brands, using web traffic as a proxy for forward bookings to assess the strength of the market. We chose to focus our analysis on January 2023: January is a seasonally important trading window for the sector and offers a comparison with the same month in 2020, just before the pandemic took hold.  

We discovered a healthier overall picture than expected, with four of our five categories analysed now trading above the 2020 level, some materially so. This was despite fears over the impact of rocketing cost-of-living and a lingering Covid ‘hangover’ effect on consumer behaviour, significant issues with staffing across the travel industry, and the slow pace of a return to growth in airline seat capacity.

How our key holiday categories are faring 

  • Sunshine
    There is a positive outlook for the European sunshine market, which saw January traffic volumes up 4% vs January 2020. Loveholidays had a particularly strong result, although performance across other brands suggests some challenges with underlying trading within the sector. 

  • Tailormade
    All players are trending in a strongly positive direction, from the depths of a Covid-19-induced hibernation. Overall, the category is up 1% vs January 2020, with the mainstream brands performing ahead of the category (+4%). This suggests a strong response from the wider market. Luxury tailormade is very slightly lagging January 2020, reflecting residual constraints on skilled holiday curation staff numbers and the late re-opening of key destinations such as Japan.  

  • UK staycations
    Closer to home, web traffic volumes are 5% ahead of January 2020 for UK staycations, but (perhaps not surprisingly) are down against a stellar 2022. Underlying this is an overall demand shift from parks to vacation rentals, with the latter performing strongly ahead of the category average vs January 2020, and with park performance suggesting some weakness in this holiday format. 

  • Older demographic
    This category, while also building back strongly, has yet to fully recover web traffic vs January 2020, perhaps reflecting the ongoing caution about group travel among older travellers.

  • Ocean cruising
    Perhaps slightly surprising given the negative PR during Covid-19, this segment of the market is strongly ahead of January 2020 web traffic, at +14%, with most (but not all) of the players performing well. Cruise agent performance lags this, although the underlying growth momentum is very positive.

A final piece of positive news for the travel industry is the impressive recovery in the volume of inbound visitors to the UK. In 2022 this figure hit over 80% of 2019 levels, and a level of 86% is expected for the current year.  

With inbound tourism levels back on track and web traffic for the majority of key outbound holiday categories now above pre-Covid levels, our own levels of optimism for the industry are high. Price inflation does remain a concern, but holidays appear to be firmly re-established within the repertoire of consumer discretionary spend as a high priority.  

The industry continues to face challenges, but these are now thankfully centred on the supply side meeting rising demand. Smart businesses are revising and rethinking propositions to keep pace with evolving consumer attitudes; staying relevant is crucial, as is recruiting skilled staff. Technology has an important role to play in shaping ever more sophisticated digital marketing capabilities, and companies need to look hard at how to make the most of the next wave of disruptive technologies.  

We look forward to supporting our clients in the travel industry as this challenging and exciting next chapter begins.  

A view from our partners 


“Looking at data from across the industry, as well as our own research findings, I’m pleased to see how positive the post-pandemic bounce-back has been. Clearly there is much work for companies to do to focus their strategies and stay ahead of changes in the sector, but with a forecast set for fair, there is plenty to look forward to in 2023.” 

Geoff Parkin, Partner 


“For any business reliant on consumer discretionary spending, inflation and a cost-of-living crisis can present serious issues. Keeping on top of the data and understanding the trends has never been as important as now. Our work in the travel sector is shining a clear light on some very positive news — taking advantage of this is a vital next step for businesses looking to thrive in the year ahead.” 

— Mark Boyd-Boland, Partner 


“To see so many of the key holiday categories recovering so well can only be good news for the travel industry. In a time when the competition for discretionary consumer spend is intense to say the least, our data signals some very positive news for travel businesses ready to keep their strategies focused and adaptable.” 

— William Tite, Partner 


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