Travel & Entertainment

Travel industry bucks trend to show increased spend in first quarter

Mike Glegg
6 minute read

The travel industry has shaken off stagnation, showing growth in the first three months of this year according to new data from digital advertising platform, Cardlytics.

New spend data from over 24 million UK bank accounts for the period 1 st January to 31 st March 2023 has revealed that spend on flights and holidays has risen 27% in the first three months of this year compared with 2022, an increase of 40% from pre-pandemic levels.

For airlines, the number of transactions rose by 36% year-on-year between 1 st January and 31 st March 2023, while bookings for package holidays were up by over a quarter (27%) over the same period.

However, as consumers continue to feel the impact of rising inflation, there are signs that people are seeking out budget-friendly options. Low-cost airlines saw spend rising at a faster rate than the rest of the industry, up 42% year-on-year in Q1, compared with a 29% increase for other airlines.

At the same time, the number of people redeeming discounts and offers through their bank accounts for travel purchases rose sharply at 79% year-on-year as customers look for deals and offers to mitigate the impact of rising prices.

Whilst spend is on the rise, average transaction values have grown at a slower rate than inflation, indicating that consumers are seeking out cheaper alternatives for holidays and looking for lower-cost deals. The average amount people spent on standard flights fell by 2% year-on-year to £342.69, while spend on budget airlines grew by 12% to £137.50. Package holidays grew by 7% year-on-year to an average of £538.68 per transaction.

Shifting away from pandemic habits

Last year’s travel disruption has left an impact on consumer purchase habits with cancellations and refund difficulties, leading to the number of travel purchases made through comparison sites falling 12% in 2022. Whilst aggregators have seen a slight recovery in the first quarter of 2023, transactions are still down 2% on pre-pandemic figures.

In contrast, direct bookings through providers have increased compared to pre-pandemic levels, with transactions directly through airlines increasing 50%, while package holidays have seen a 41% growth in transactions since 2020.

The pandemic saw the rise of the domestic holiday – quickly dubbed the ‘staycation’ – and transactions at UK holiday providers such as Parkdean, Centreparcs, Butlins and Haven Holidays peaking last year, with 692,000 transactions in the first three months of 2022. In contrast, this year transactions on such trips fell by 23%. International package holidays grew by 27% over the same period, as people swapped local breaks for more exotic destinations.

Mike Glegg, VP of Sales at Cardlytics, commented:

“The travel industry will be buoyed by strong consumer spend in the first quarter of 2023 following a turbulent few years of lockdowns, cancellations and delays.

“It’s encouraging to see increased confidence in bookings despite tighter budgets and rising prices, but aggregators will now be looking to capitalise on this and win-back trust from their customer base after last summer’s disruption.

“Travel brands will now need to consider how to reward loyal customers and continue winning new segments of the market. Investing in discounts and loyalty programs will be critical to achieving this, demonstrating their value for consumers, particularly as rising prices continue to constrict budgets.”

Travel & Entertainment
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