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UK consumers are determined to holiday abroad but may be reluctant to pay more to travel next year, a survey of more than 5,000 adults suggests.
Research for the latest annual Holiday Confidence Index (HCI) by foreign currency provider First Rate Exchange Services in September found a sharp contrast between consumers’ confidence to travel and a lack of confidence in the UK economy.
First Rate’s HCI report concludes: “Holiday confidence matched last year’s three-year high.” But it noted: “Negative views about the economy remain at the rockbottom rate reached a year ago.”
Fewer than one-in-five respondents (19%) expressed confidence in UK economic growth in the year ahead. The survey of 5,114 adults found more than half plan to travel abroad in the next 12 months, up one percentage point on last year at 55%. Almost half (46%) had already booked a holiday, two points up on last year.
That pushed the Holiday Intention Index to its second‑highest level since the index was launched five years ago.
First Rate also found “a swing towards packages at the expense of independently-booked trips”, with a two-point rise to 20% in consumers saying they would book a package for a first overseas holiday and a four-point rise to 18% among those planning a second trip.
However, the results suggest holidaymakers intend to curb their spending, with three indices measuring planned expenditure falling – including a two-point drop in the Cost of Booking Index, which First Rate suggests “indicates real resistance to paying more for a holiday”.
Yet, First Rate also noted: “Few holidaymakers plan to cut the length or frequency of trips.”
The Holiday Frequency Index, which measures how often people intend to travel abroad, remained steady, while the Holiday Duration Index rose a point, owing to an increase in numbers planning holidays of eight nights or more.
The numbers planning trips to the eurozone dropped two percentage points, while the proportion intending to take noneurozone holidays held steady. However, 71% of holidaymakers still plan to visit Europe.
The survey was conducted by YouGov, in partnership with First Rate and the Institute of Travel and Tourism.
Holiday Confidence Index is ‘good reason to feel optimistic’
The results of the latest Holiday Confidence Index provide good reason for the travel industry to feel optimistic, says report author Liam Hodge, head of insight at First Rate Exchange Services.
“People still want to take a holiday abroad,” he said. “They intend to cut costs – either the cost of the holiday itself or the amount of money they take. With Brexit coming, I would have thought people would be more negative.”
He noted variations in intention by age, saying: “The 55-plus population show a willingness to spend more – 18-24-year-olds are more stretched, they intend to go on holiday [but] this is the group struggling most to pay for it.”
Hodge described the finding that consumers plan no reduction in the length of holidays as “a surprise”. But he said: “People are saying what they would like to do. When they come to book they might not be willing to spend that much. We will probably see duration decrease slightly.
“People are moving to package holidays, trying to get a good deal. They say the exchange rate has not deterred consumers, but they have just accepted the rate is not as good as it was.”
The survey found a three-point rise year on year, to 37%, in the number saying they would holiday in the UK “if the weather is good”.
Key indices of Holiday Confidence Index
The annual Holiday Confidence Index was unchanged on a year ago at 50, “matching 2017’s three-year high”.
• Frequency: The proportion of adults planning just one overseas holiday rose one point to 41%, while the numbers planning two trips fell two points to 34%.
• Duration: The proportion planning trips of eight to 13 or 15-plus nights rose, producing a one-point rise in the Holiday Duration Index.
• Spending: First Rate found “resistance to paying more [and] a reluctance to take more cash away or to spend more in resort”; 40% of those with children felt rising costs could have a negative impact on their plans
The Holiday Confidence Index is produced by First Rate Exchange Services, based on an online survey of 5,114 UK adults conducted by YouGov in September. It is published in November in partnership with YouGov and the Institute of Travel & Tourism.
The report is available by email from: HolidayConfidenceIndex@firstrate.co.uk
More: Special Report: First Rate indication of sentiment in sector