Travel bosses are concerned that yesterday’s spring statement by Chancellor Rachel Reeves will make consumers less confident about booking holidays.
Shortly before the Chancellor laid out further welfare cuts, the government spending watchdog halved its economic growth forecast for 2025 from 2% to 1%.
Advantage CEO Julia Lo Bue-Said this could ‘potentially trigger discussions about a downturn, which would impact consumer confidence’.
“The last thing our industry sector needs right now is talk of a recession – particularly in the short term – as businesses already face imminent cost increases, and household finances continue to come under additional pressure.”
Not Just Travel founder Steve Witt said he expects to see people waiting till later to book, combined with a rise in demand for all-inclusive packages.
“We may not all love the current Government, but we do all love our holidays. So, no matter what Rachel Reeves said today, we’ll all still be packing our cases very soon,” said Steve.
“What does change is when people book their holiday. We expect to see an increase in last-minute bookings and a focus on all-inclusive this summer, as families in particular look to maximise their budgets.”
At a media briefing last week, TUI UK & Ireland Managing Director Neil Swanson warned operators have a lot of summer holidays left to sell, which he said could depress margins as the season progresses. Jet2holidays put on 10% more seats this year, while easyJet holidays added 30%.
Blue Bay Travel CEO Alistair Rowland, who is also ABTA Chair, agreed that Rachel Reeves’ announcement won’t help boost travel. “The spring statement will do little to settle the nerves of the UK travelling public making a commitment beyond a low deposit for a holiday this summer,” he said.
“The vertically-integrated operators having more capacity to sell in a soft market should help, as holidays are likely to remain part of mainstream advertising for longer this year, but travel businesses, particularly SMEs need to be clear how they are going to offset a 10% cost increase from April, the result of a punishing Budget.”
From April, employer’s National Insurance Contributions (NIC) will increase and, at the same time, the National Living Wage (NLW) will rise.
Alistair added: “The new ‘business rate’ cost arrived this week, and the new NIC rate and NLW movements will be visible from April. It’s unlikely normal trading and pricing will deliver a 10% increase at margin level to allow agencies and operators to stand still, so everyone needs to focus on the ‘how’ or they’ll find themselves in a difficult space this winter.
ABTA said the spring statement was ‘indicative of an economy that’s not as strong as many would like’, but Director of Public Affairs Luke Petherbridge said its data indicates travel growth is continuing to outpace the general economy.
He said: “ABTA’s research shows that people are willing to ringfence spending on holidays as much as they can and cut back on other areas first.
“It’s important the Government avoids future policy decisions that restrict the sector and looks at ways it can support businesses to grow, including, for example, by exploring a youth mobility agreement with the EU and progressing with reform of business rates to promote high street businesses.”
UKinbound CEO Joss Croft described the Chancellor’s announcement of a rise in visa costs, from 9 April 2025, as ‘deeply disappointing’.
“Inbound tourism has the potential to help deliver the government’s growth objectives but this decision flies in the face of that,” he said.
“Our inbound tourism industry already battles with sky-high costs and increasing visa fees further makes the UK even less competitive for international visitors. We have already seen costs for ETAs increase by 60% and this is the third rise in visa costs in 18 months.
“We urge the government to review all UK tourism costs and taxes as part of its planned Tourism Strategy and to focus on removing this competitive disadvantage that holds back growing international visitor numbers and stifles economic growth across the whole of the United Kingdom.”
