The economic fundamentals for travel remain positive in the UK but the sector faces some major challenges, the 14th annual Barclays Travel Forum was told.

Alistair Pritchard, partner and head of travel at Deloitte, said a widely-expected slump after the 2016 Brexit referendum failed to materialise.

And he said although the UK economy is not growing as strongly as before the referendum it was still growing and other factors like wages, inflation and employment were positive.

However, he said concern about staff shortages, rising costs from business rates, auto-enrollment pensions and an increased in the national living wage is “squeezing margins” in the sector.

Pritchard also said unforeseen issues like the drone situation at Gatwick, and other airports, and the grounding of the world’s fleet of Boeing 737 Maxs are causing uncertainty.

However, quarterly analysis by Deloitte into consumer sentiment in the leisure sector shows that consumers continue to prioritise travel on which to spend their discretionary income.

“One of the things that’s come out of our work since 2016 is consumers continue to prioritise spending on holidays, which is fantastic news.

“The other thing it tells us is that what’s really important to consumers is the experience. The travel industry provides great experiences, so that’s really important.”

Pritchard said at the end of 2018 the sector was on a high having seen a record year with overseas bookings up 12% and the domestic market “in rude health”.

But then followed a “pretty challenging quarter”, he said, with the focus on Brexit contributing to a “really tough booking period”.

“When we got to April and there was a delay announced people thought that might spur a boost and in certain niches we saw that. But generally we have not seen that spike yet come.

“The consumer fundamentals are still pretty string and consumers still tell us they want to go on holiday. I’m an optimist that we will see a stronger booking pattern over the next few months.

“What I cannot tell you is whether that’s going to be domestic or overseas. That’s largely down to what the UK weather is like.”

Pritchard said a number of areas like adventure and solo travel, luxury, experiential and family friendly holidays are poised to grow as consumer demand rises.

And he said consumers are returning to the travel expert for advice and recommendations. “We have become used to researching and booking our own holidays.

“But we also feel we are overloaded with huge amounts of information and negotiating through that minefield is challenging.

“When you look at the businesses that have done well over the last few years what they have in common is the way that they provide expertise to the traveller.”

More from Barclays Travel Forum:
Industry has role to play in 737 Max reassurance

Fear over impact of discounts and zero deposits