Cardlytics State of Spend Report April 2024: UK Dining Trends

Introduction 

Cardlytics helps brands understand and respond to the biggest trends in consumer behaviour, supported by spending insight from over 20 million UK bank accounts. 

In this report, we have analysed eating and drinking habits to understand how restaurants, from quick-service to fine-dining, as well as lunch spots, coffee shops and casual chains, have been impacted by the prolonged high cost-of-living. Are we still a nation addicted to coffee? Are pizza shops still hitting the spot with consumers? Are bakeries and burger chains suffering as many consumers look to embrace healthier choices??    

To help brands better understand how consumers are reacting to this extended period of high inflation, we’ve tackled all of these topics, analysing Cardlytics purchase intelligence data and providing insight and advice for brands on supporting and continuing to attract customers in today’s operating environment. 

Pizza shops getting the chop as consumers shift to alternative fast-food options   

Takeaway pizza chains are losing ground in the quick service restaurant (QSR) sector, as consumers continue to move away from pizza in favour of alternative fast-food options. 

Despite the average transaction value (ATV) at pizza restaurants increasing by only 11% between 2022 and 2024 (compared to a 21% rise in chicken shops and 18% at fast-food restaurants), diners have cut the number of visits to popular pizza takeaway chains by 20% over the same period.

This is significantly greater than the 4% reduction in visits to fast-food restaurants and 7% drop seen by chicken shops during the same period. It shows that, despite the widely reported impact of inflation on spending habits and a general rise in ATV across the QSR sector, consumers haven’t been entirely deterred from discretionary spending on the odd takeaway.

In fact, fast-food restaurants saw a 13% rise in spending between 2022 and 2024, whilst chicken shops saw an 11% increase. Comparatively, takeaway pizza restaurants saw a reduction in spending by 12%.

It appears, therefore, that despite tightening purse-strings, consumers are reluctant to forgo spending money on fast-food and chicken shops but are willing to sacrifice the occasional pizza. 

Why might this be? Perhaps it’s due to the increasing availability of similar quality products at more affordable price points in supermarkets, or it could be as a result of a growing variety of fast-food and chicken shop chains in the UK market. In any eventuality, pizza shops face a unique set of challenges that they must overcome, if they are to regain market share in the QSR sector. 

Cardlytics analysis

For pizza brands, there is a clear task at hand to ensure that they remain competitive in an increasingly busy QSR sector.

Consumers are faced with a growing number of takeout options to choose from, with chicken shop and fast-food chains from around the world recognising the opportunity available in the UK market. The rollout of up-and-coming fast-food restaurants is a clear indication of the growing choice consumers have from chains that,  when compared to 10 years ago, had little to no market presence in the UK.

In tandem, established players in the QSR sector are recognising the need to deploy more creative and effective marketing campaigns to gain a competitive edge and drive engagement amongst consumers. This has been the case amongst fast-food and chicken shop chains, where spending amongst consumers has continued to increase despite rising inflation, whereas pizza chains have suffered a significant reduction in footfall by 20%.

The data shows that, despite the macroeconomic headwinds, there is a sustained appetite for takeaway food in the QSR sector. Marketers should therefore emphasise rewarding consumers with the best possible deals to gain a competitive advantage in what is, and continues to be, a heavily saturated market. 

Coffee and quick ‘city lunch’ culture on the wane, while on-the-go bakeries see boost as cost-of-living continues to bite

As the cost-of-living continues to remain high, and disposable incomes still stretched due to unrelentingly high-interest rates, many commuting office-goers are being forced to modify their spending habits.

In fact, the broader macroeconomic challenges have had a significant impact on ‘city’ lunch brands, causing prices to hike. The knock-on effect of this on consumers is clear to see, with the average costs per transaction up 5%. This has caused consumers to seek cheaper alternatives, leading to a 9% reduction in the number of transactions made across the year, whilst overall spending has reduced by 4%. 

A similar trend can be seen in spending at high-end coffee shops, a sector which saw a 14% drop in visits. This is a higher figure than the 9% drop in visits to chain coffee shops – which saw a 5% reduction in total customer spending.

Interestingly, this is not a trend that has affected the on-the-go bakery sector, with companies such as Greggs experiencing a 4% rise in spending for the year. This did not correlate with a proportionate increase in trips to such bakeries, which saw a 1% rise. This suggests either loyalty to the brands as a result of their consistent pricing, or perhaps resulting from customers shifting from the more expensive coffee or city lunch spots to more cost-effective alternatives. 

When considered together, these trends tell an interesting story of consumers becoming increasingly conscious of their spending and subsequently moving away from more costly options to more affordable choices. 

It is certainly feasible these statistics reflect a wider shift in habits, with many commuters now opting to bring in their own lunches and source cheaper coffee options (perhaps within their offices), and typically buying food and drink at more affordable dining spots where necessary. This remains a key trend to keep an eye on as the post-covid, hybrid working era is challenged by ‘return to the office’ protocols introduced by companies and the public sector. 

Cardlytics analysis

Commuters and city workers are key consumers for coffee shops, inner-city lunch spots, and on-the-go bakeries, so it’s important to keep an eye on how these trends continue to develop and what impact these changes may have. 

Crucially, for these brands – who regularly interact with their customers – data will be key. If the behaviours of their customers are changing, what do those changes look like? Are people opting only for a sandwich and sourcing their coffee elsewhere? Perhaps customers for whom a pastry was a daily purchase are now only buying them once-a-week as a treat? Looking at an individual’s data, and using that to create tailored offers, not only shows that your brand cares, but also helps to put the right offer in front of them at the right time. 

Then, by offering incentives to customers on the days of the week they are most likely to visit the store or buy a particular item, consumers are far more likely to become repeat customers. This  becomes particularly pronounced as people continue to limit their spending in the era of high inflation and an ongoing cost-of-living crisis.

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Casual and upscale dining both drop off while burger chains see a hike 

Dining out is often one of the first areas of discretionary spend households look to reduce when their finances are stretched. With interest rates still at a high threshold, disposable incomes are still being spread thin for many. 

It is with this backdrop that the number of transactions within casual dining restaurants has dropped 13% year-on-year. This followed a small 2% growth in transactions between 2022 and 2023. 

However, despite the decline in trips to restaurants this year, consumers who are eating out are spending 7% more per transaction compared with the same time period in 2023. This is likely as a result of inflation hiking prices, increasing the average spend per transaction. Overall, casual dining has seen a 7% decline in  total spend by consumers. 

As purse-strings continue to tighten, upscale dining has seen a significant decline of 11% relating to trips to restaurants. With consumers clearly being more cost conscious than in recent memory, many appear to have reduced visits to more upscale restaurants in a bid to save money.

On the flip-side, burger chains – such as Honest Burger, Patty & Bun and Byron – have seen a massive 17% hike in transaction volume in the last 12 months. This has coincided with a 6% growth in the amount spent per transaction on average, contributing to an overall 12% growth in spend in burger chains this year. 

The reasons behind this could vary, numerous establishments have launched their own vegan and healthier-option burgers and  menus, for example, as well as the restaurants potentially representing a solid ‘middle ground’ for households, or an alternative between fast-food and fine-dining. 

Cardlytics analysis

The eat-in dining industry, from casual to  up-market, is still being impacted by the ongoing high cost-of-living. Whether it’s more regular purchases like a quick coffee or lunch, or something more meaningful, like a celebratory meal, customer scrutiny on spend remains high. 

For brands to continue to navigate this challenging  economic environment, clever use of data will be instrumental. This is particularly important for brands  which interact  frequently with customers,  such as coffee shops and quick service restaurants. For these brands, it is now important to  meaningfully consider what their customer data is telling them.  Which habits do their customers have? Is it a lunchtime treat every Friday? A sweet treat with their coffee as a midweek pick-me-up? 

Inspecting an individual’s data to create tailored offers shows that you understand and care about giving your customers the best  value for the brands on which they want to spend money . For most brands, the key will be offering introductory discounts to entice new customers , and longer-term personalised rewards to secure return visits.

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‍Craving more? Click through here for access to our bite size infographic

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Methodology

Cardlytics analysed spending trends based on its purchase intelligence data, which covers over 20 million UK bank accounts. The periods include January and February spending from the last four years (2024, 2023, 2022, 2021).  

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Here to stay(cation)

According to recent Cardlytics data, we found that UK staycations will be most popular among holiday makers, with nearly half (44%) of those planning to go on holiday this year opting to stay local, compared to short-haul (38%) and long-haul (24%) destinations. Holiday lettings providers like Airbnb and Vrbo have also seen increased transaction volumes maintain year-on-year. Transaction volumes a year ago (December 2022 into January 2023) hiked 54% year-on-year, reaching 60,353 transactions, with similarly high levels this year (58,562 transactions) indicating a shift from more expensive hotel bookings.

Tour de Force

Tour operator providers such as Tui, Virgin Holidays and Jet2 have seen a continuation of their post-Covid revival, with transaction volumes growing 7% year-on-year, after a massive 61% growth against the previous period (December 2021 into January 2022). This is a further indicator of travellers seeking value where they can.

Airlines take off

Alongside those seeking to stay local, airlines such as British Airways and Virgin Atlantic also saw a rise in spending, with overall spending up 13% year-on-year, and transaction volumes up 15% in the same time period. This indicates those that can afford longer-haul destinations are prioritising doing so, as the high cost-of-living shows signs of easing. Budget airlines also saw a 3% rise in spending, with the volume of transactions up 2% year-
on-year.
According to Hannah Collins, Partnership Director, Travel: “We are continuing to see the real effect the cost-of-living crisis is having on travel spending, with the increase in domestic holiday bookings demonstrating the focus on finding more affordable getaway options. “That said, people are on the hunt for their ideal 2024 holiday – they’re just seeking the best possible deals and promotions on the market. With that in mind, travel brands and booking sites need to ensure they’re offering the most targeted and personalised discounts and rewards to ensure they continue to attract and retain customers to drive incremental growth in what’s set to be another tough operating environment this year.”

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Download our infographic here.

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Cardlytics data is based on spending from over 20 million UK bank accounts. This data is based on spending between (unless stated): The four weeks leading up to 8th January of each year:

• This year (2023/24): 7th December 2023 – 8th January 2024
• Last year (2022/23): 8th December 2022 – 7th January 2023
• 2021/22: 9th December 2021 – 6 th January 2022

The poll was conducted by Opinium, based on a sample of 2,000 adults between 12-16th January 2024.

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Sleigh this Holiday Shopping Season

The 2023 holiday season is just around the corner, and this year consumers will be headed to their favorite online and in-store brands earlier than ever! 

As we gear up for the 2023 holiday season, Cardlytics' comprehensive analysis of nearly $380 billion in consumer holiday spending over the past three years equips marketers with essential insights to win more during this critical period. Access our full 2023 Holiday Infographic here. 

Decoding the 2023 Holiday Analysis

Holiday 2022 witnessed a 3% drop compared to the previous year, attributed to reduced spending per customer, fewer transactions per customer, and slower growth in average transaction size. Given the lingering economic challenges from the previous year, brands need inventive strategies to incentivize consumer spending during this holiday season.

Interestingly, a shift in spending behavior has been observed, with holiday spend moving back to brick-and-mortar retailers from online channels. This contrasts with the Back-to-School analysis by Cardlytics, which saw online spending was up for both B&M.coms and online only brands. This shift underscores the significance of an omni-channel approach, ensuring that brands are present where consumers choose to shop, whether in-store or online.

Early Birds and Mass Merchandisers

An intriguing trend emerging from the analysis is the increasing percentage of spending occurring within the initial three weeks of the holiday season year over year. Consumers are diving into their shopping lists earlier and earlier, demanding that brands engage with them during this period.

When it comes to dominating the holiday market share, Mass Merchandisers are the frontrunners, holding a whopping 58% of the total wallet share. As consumers grow more price-conscious, Mass Merchandisers are poised to leverage this shift in consumer behavior to their advantage. The Apparel category is also gaining momentum, presenting an opportunity for brands to bolster their presence and profits.

Unwrap the secret to success with Cardlytics 

Through strategic partnerships with banks, Cardlytics possesses an extraordinary advantage - access to the transaction data of over 186 million consumers. This invaluable resource empowers brands with a detailed understanding of consumer purchasing patterns, offering a holistic view of when, where, and how people shop.

The holiday season is approaching rapidly, and with it comes the opportunity for retail brands to acquire new customers and grow loyalty with existing shoppers. In this competitive landscape, making informed decisions is crucial to stand out from the crowd. That's where Cardlytics comes into play, providing real insights from real bank customers to support retail brands in navigating the complexities of the upcoming holiday season. Get started today.

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Small Bytes: Your serving of bite-sized analytics for your business

With inflation at an all-time high, have consumers shifted their dining behaviors? Cardlytics has the purchase data to uncover the most relevant insights within the Restaurant category and beyond.

Does Third Party Delivery’s continued growth indicate a more permanent post-pandemic prioritization of ease & convenience?

• Fast Casual category has been declining since their pandemic peak
• Upscale Dining is experiencing minimal decline vs. pre-pandemic
• 3rd Party Delivery is the only category with growth

Casual Dining bucks category trend when it comes to in-restaurant dining.

• While in-restaurant Casual Dining hasn't returned to pre-pandemic levels, it is the only category growing YoY (up 2.25 pts since 2021).
• Fast Casual in-person dining continues to fall; 2022 was down 3.4 pts from 2019.
• Online trip share has been growing across categories YoY – but at Fast Casual (+1.76 pts) and, interestingly, Upscale Dining (+1.29 pts) in particular.

Consumer shopping behavior is more unpredictable than ever, but restaurant brands can rely on performance marketing to help drive direct sales both online and in-restaurant. No matter where your customers are eating, Cardlytics can convert sales on behalf of your brand – and we can prove it.

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Taking a look at 2022 consumer spend patterns

With inflation at an all-time high, have consumers shifted their food shopping behaviors? At CDLX, we have the purchase data to uncover the most relevant insights within grocery and beyond.

Traditional grocers are losing share of stomach in multiple directions (-3pts vs. 2019) – act fast to retain customers.

• Restaurant captured 42% of total ‘share of stomach’ in 2022, up 1.6% from 2019
• Warehouse retailers also ended the year on a good note. Their share of stomach increased from 12.5% in 2019 to 14.5% in ’22
• Interestingly, share of trips is flat for Big Box retailers, but they have lost ground in terms of total share of stomach
• With the exception of Warehouse, which has benefited most from the inflation surge, traditional grocery appears best positioned to recapture share of stomach

Shopping channel preference varies by subcategory, so an omni-channel strategy is imperative.

Online shopping at Big Box retailers is up: 6.5% of total share of stomach in 2022, up from 2.9% in 2019 with the addition of Walmart+ and Shipt to the category.

Conversely, in-store shopping is up within Warehouse, Traditional, and Discount grocery, with increases in both trip and wallet share YoY.

Consumer shopping behavior is more unpredictable than ever, but brands can rely on performance marketing to help drive sales.

Opportunity to reclaim share exists across all grocery categories. Cardlytics can help identify and convert those audiences on behalf of your brand – and we can prove it.

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The ongoing rise in the cost of living has altered the way Brits approached spending in the last 12 months – with the Christmas period providing a clear indicator of today’s state of play. Spending year-on-year flatlined with the average transaction value sitting at around £33 for Christmas 2022 and the previous year.

Retail spending increased by less than 0.5% year-on-year in the last 11 days of 2022 –reaching nearly £442m, up £2m on 2021.

With Christmas being such a critical moment for retailers this flatline comes as a disappointment as the sector continues to shoulder the impacts of higher inflation and declining discretionary spend amongst shoppers.

That said, the Boxing Day sales provided a much-needed boost for retailers following adulled ‘Golden Quarter’. The average amount spent daily by consumers rose 18% betweenChristmas Day and New Year’s Eve last year, compared to immediate build-up to Christmas(21st -24th December 2022), with shoppers taking advantage of discounts as the cost of living continues to squeeze households.

Electricals, online fast fashion and marketplaces sales fall

Consumer spend on electricals saw a second-year of decline, as consumers reigned in their spending on big ticket items like devices, televisions and games consoles. UK electricals purchases have dropped by 20% over the last two years.

Online fast fashion retailers also experienced a slump in sales, with spend falling 42% from 2020 levels as consumers return to the high street for their wardrobe updates.

Digital marketplaces saw a 9% decline in spend year-on-year, following a period of growth between 2020 to 2021. And despite inflation hiking prices, buyers also appear to be turning away from previously loved furniture and other second-hand goods.

High street fashion, sports apparel and home improvements see gains

Despite an overall plateau in spend across the retail sector, spend in high street fashion stores, like Zara, H&M and Next, has risen 29% over the last two years – with consumers hitting the high streets to cash in on Christmas and Boxing Day deals.

Sporting goods brands - such as GymShark, Sports Direct, JD Sports - saw a 17% uptick in spend in the same two-year time period, with fitness-based new year’s resolutions fuelling prolonged sales growth.

Buyers have been turning to sales as a chance to invest in value homeware, with brands like IKEA, Dunelm and B&M recording a 12% increase on 2020 levels of spend.

While this is undoubtedly a difficult time for households - and bigger ticket purchases appear to have been put on the back-burner - consumers still want to cash in on potential deals, find ways to update their homes and wardrobes, whilst also doubling-down on their fitness goals in the new year.

As we go deeper into 2023, this is an opportunity for retailers to invest in building long-term customer engagement and loyalty. Through schemes such as rewards, discount ranges and personalised marketing, brands can deliver tailored savings and money back to their customer-base, at a time when it’s most valued. Unfortunately, the cost-of-living crisis isn’t going away anytime soon, so as belts continue to tighten, delivering savings through tailored rewards could be the difference that keeps customers engaged and onboard.

• Tighter budgets drive consumers to discounters, with spend at brands like TK Maxx, B&M and Home Bargains up 12% in the first half of this year, with transactions up 17%
• Average spend at second-hand marketplaces rises 482% between 2019 and 2022, as consumers search out second-hard bargains 
• Spend shifts from designer brands to the high street, as spend at high street brands rises 11% in 2022¹, while the number of transactions at luxury brands falls 10%

LONDON – 8th November 2022 – Cost-conscious consumers are switching to discount brands and second-hand marketplaces which saw double digit spending growth in the first half of the year, a new report from advertising platform Cardlytics finds. 

The State of Retail Spend report, based on the spending habits of over 24 million UK bank cards and the views of over 2,000 UK consumers, found that four in five (79%) consumers report spending more on day-to-day outgoings than they did a year ago, while with three quarters (72%) say they plan to cut-back on non-essential spending this year as the cost-of-living crunch sets in.  

Discount brands see boom in spend 

As costs increase and consumers look to make their money stretch further, the report found that over half (58%) of consumers plan to shop more at discount homeware and fashion brands this year.

Discount retailers such as B&M, TK Maxx, Home Bargains and Primark saw the largest increase in spend in the first half of this year, up 12% compared to 2021¹, whilst the number of transactions at these brands rose 17% in the same period.

Second-hand becomes mainstream 

The report also found that increasing numbers of consumers are turning to second-hand marketplaces in response to the cost-of-living squeeze.

Platforms like eBay, Depop and Vinted, saw a 7% uptick in spend in the first half of the year, compared to the same period in 2021, while the average number of transactions made on these platforms rose 6%.

It’s not just the number of purchases that are increasing, the amount spent per person has also risen drastically in recent years. In 2019, consumers spent £35.67 on average on second-hand marketplaces, compared with £207.63 in 2022 – a 482% rise.

That trend is set to continue as prices rise and consumers become increasingly aware of the environmental impact of buying new. The report found that one in three (34%) consumers plan to buy more second-hand items this year, while half (47%) of consumers say they plan to shop less at fast-fashion brands this year.

On the other hand, fast-fashion brands are starting to feel the impact of this mindset shift, with the number of transactions at these retailers down 16% in the first half of this year compared to 2021. 

Shoppers choose high street brands over designers 

Spend on luxury and designer brands fell 7% in the first 6 months of 2022, compared to 2021, while the number of transactions at luxury brands dropped 10% in the same period, indicating that consumers aren’t just spending less on designer and luxury goods, but are turning away from these brands altogether.

This downward trend looks set to continue into next year, with over half (59%) of consumers planning to spend less on luxury goods this year, while a further half (48%) plan on switching to cheaper brands for clothing and homeware as the cost-of-living bites.

Traditional high street retailers are already benefitting from the gap that luxury leaves, with both total spend and the number of transactions at high street fashion brands up 11% in the first six months of 2022, compared with 2021³ as consumers ‘trade down’ when shopping.

Home and garden spend dries up

The past two years saw bumper spend at home and gardens brands as lockdowns fuelled renovations, but withthree in five (61%) consumers planning to cut back on big-ticket purchases this year this upward trajectory may have reached its peak.  

The report found that consumers are still committed to improving their outdoor space, but they are increasingly looking to do so in ways that don’t break the bank. The number of transactions at garden centres rose 22% in the first 6 months of 2022, compared to the same period in 2021³, but the average transaction value fell 20%³, suggesting that consumers are continuing to shop at these brands but are spending less when they do. 

It's a similar picture for high street furniture brands who are increasingly feeling the impact of shifting consumer spending priorities. Spend at furniture brands fell 20% in the first six months of this year compared to the six months prior³.  

Dawn Reid VP Advertising Partnerships at Cardlytics said: “We know that even in times of economic downturn, consumers still want to find ways to treat themselves, refresh their wardrobes or invest in their homes. 

“But with tighter budgets than ever and the economic picture set to worsen, consumers are looking for cheaper swaps and ways to save, putting off big ticket purchases and trading down on many of their usual purchases.

“There's an opportunity for retailers to invest now, to support consumers longer term, whether through investing in price and discount ranges, value-focused marketing, or loyalty schemes, brands can put money back into their loyal customers wallets and help build longer term brand affinity. Those brands that can grow and retain their customer base now, when times are tough, will be most likely to succeed in future.”

Download the UK State of Spend report here.

About Cardlytics

Cardlytics (NASDAQ: CDLX) is a digital advertising platform. We partner with financial institutions to run their rewards programs that promote customer loyalty and deepen relationships. In turn, we have a secure view into where and when consumers are spending their money. We use these insights to help marketers identify, reach, and influence likely buyers at scale, as well as measure the true sales impact of marketing campaigns. Headquartered in Atlanta, Cardlytics has offices in London, New York, Los Angeles, San Francisco, Austin, Detroit, and Visakhapatnam. Learn more at www.cardlytics.com.

The grocery industry is undoubtedly a bellwether for the impact of the cost-of-living crisis on consumers. While costs are rising in many places, the price of everyday basket essentials remains a proxy for inflation. 

That puts grocers at the epicentre of the debate when it comes to how and whether they should be looking after their customers in such challenging times. 

Every grocer is battling rising operational costs, from the increasing energy cost of keeping freezers and fridges cold through to the price of fuel for home deliveries. How can brands still support their customer base through tough times, while still protecting their bottom line? 

Invest in essentials to support tighter budgets

Cardlytics spend data across 24 million UK bank accounts shows that since 2020 the average cost of the weekly shop has increased by 20%. The rising pressures of inflation, supply chain issues and labour shortages are all forcing the price of everyday essentials up. 

A recent Cardlytics poll of 2000 UK adults found that almost nine in ten (88%) consumers have seen a rise in their weekly shop. As wages stagnate, and bills look to skyrocket, they’ll be searching for any way possible to save a little extra cash.

Use loyalty schemes to engage customers

One option is to increase investment in the basics. Asda’s launch of a new essentials range is one example of how a brand is stepping up and keeping the price of essentials low.

But with cost now becoming a clear deciding factor in where to spend, consumers are increasingly shopping around to save the pennies. Our spend data shows that in the past year, total spend at the big four supermarkets fell 7% and spend at convenience stores fell 8%, whilst discount supermarkets managed to uphold their market share in an increasingly competitive industry.

A new basics range might help at one end of the spectrum, but if consumers are then shopping elsewhere to fill the rest of their basket, how much is it really helping?

With over 56% of consumers saying they’re looking to shop with cheaper brands to save money, grocers should consider how they can make customer loyalty the priority. Investing in loyalty programmes that help customers save money on their shop – be it offers on the items people buy most or rewards each time they shop – will go some way to help grocers hold on to their customers and attract new ones.

Cardlytics is able to provide brands with a ‘whole wallet’ view, to understand what share of a customer’s category spend they’re receiving and how much headroom a customer has to make sure they’re targeting the most relevant and valuable customers.

Invest in price, play the long game

Every grocery retailer faces an ongoing battle to support their customers, however, as the cost-of-living ramps up, it’s crucial that additional costs aren’t passed on to the consumers. Otherwise, brands risk losing their loyal customer base and may struggle to defend their market share – especially in the run up to the all-important ‘Golden Quarter’. 

By investing in price now to support customers when budgets are tight, grocers can win longer-term brand loyalty for helping customers when they needed it the most.  

Those brands that step up to support customers now, will reap the rewards in the long term. 

The travel industry has faced an uphill battle over the past few years. Covid-19, cancellations, labour shortages and rising operating costs have all beset the industry with issues. 

Many punters have in turn forgone their normal holidays abroad or ditched the business travel, swapping flights to Portugal for trains to Cornwall and face-to-face meetings for Zoom calls.  

It was therefore unsurprising that as restrictions lifted, travel spend skyrocketed as consumers made up for lost time, splashing the cash to make their next trip better than ever. 

Cardlytics spend data across 24 million UK bank accounts shows that travel brands across the sector have seen spend increase in the past year. Total spend on airlines grew 542% between 2021 and 2022 whilst package holiday’s (496%), holiday rentals (222%) and even UK retreats (111%) saw significant rises in the same period. 

However, headwinds loom. The industry is facing unprecedented staff shortages, while a cost-of-living crisis is likely to put a squeeze on the amount consumers are willing to spend on their holidays. 

Looking to the next 6 months, how can travel brands win back customer loyalty as we head towards the winter travel and January holiday booking season?

Invest in certainty

Overall spend on package holidays has increased by 171% in the past six months compared to prior same period, pointing to the fact that consumers are increasingly opting for package deals that offer more protection and support when things go wrong.  

Investing in certainty will go a long way in helping to rebuild trust and get consumers booking their trips again, whether it is offering extra protection on holidays or the choice for free cancellation, giving consumers choice and backup options will help to incentivise bookings. 

Focus on affordable getaways

Despite the post-Covid boom in bookings, the cost-of-living crisis will tighten purse strings and as consumers cut-back on non-essential spending, luxuries like holidays could be one of the first things to go. Recent Cardlytics consumer polling of 2000 UK adults shows that two in five (42%) consumers are already planning to reduce the number of holidays they take this year.

As travel brands struggle themselves with increased operational costs and inflation, prices are only set to rise. The average spend per purchase across the travel sector has already seen an increase of 26% in the past 6 months compared to the previous 6 months.

With prices increasing, consumers are likely to opt for shorter mini-breaks and more affordable destinations. For brands, this is an opportunity to offer more flexible and value driven options that suit peoples’ needs now but help to retain customers in the long term.

Reward customers and build loyalty

Disposable income is continuing to decline, leading to more consumers turning to loyalty programmes and discounts to save. Our consumer research showed that 59% of consumers are reacting by utilising discounts, rewards, and offers by searching for more discount codes online before they make a purchase.

Travel brands need to seize this opportunity to offer tailored incentives to help their customers save money but also build loyalty and ensure they keep coming back. The travel industry is renowned for its loyalty programmes, now is the time to take them up a notch. 

List with price comparison sites to increase exposure

Consumers aren’t just looking to discount codes to save their spending. Cardlytics consumer polling showed that 73% of consumers plan to shop around more this year for the best deals whilst 58% intend to use price comparison sites more. 

Brands need to tap into this savvy customer base by featuring on price comparison sites. This not only increases visibility and exposure but also makes it easier for customers to find a brand’s deals.