UK holiday demand may have peaked amid cost of living squeeze

Holiday demand in the UK may have reached its peak as the cost of living squeeze prompts more people to cut back on foreign travel, the travel industry has warned. Research from industry body Abta shows that 88% of Britons took a holiday this year, matching the pre-pandemic peak of 2019. But almost one in three people are planning to spend less on travelling abroad next year, and fewer are willing to reduce spending on phones or other gadgets than on holidays.

Shifting travel habits and confidence

The annual Abta report, released on Tuesday, found that holidays at home and abroad continued to rise, with a new high of 74% of Britons taking a domestic break and 62% going abroad. Yet the annual holiday is no longer sacrosanct for many households. Late bookings and shorter city breaks are becoming an increasing feature of holidays through 2026, as people wait and see before committing.

Travel confidence dipped slightly year on year, with Abta’s confidence index falling to +50, which measures the net proportion of people who felt secure going abroad versus worried. The score has rebounded since fears over jet fuel shortages and flight disruption faded following the start of the US-Israel war with Iran in February, and concerns about the EU entry/exit system eased. Abta chief executive Mark Tanzer called it a tough year for the industry but said demand has held up well. “It’s been a stop-start year but the market did come back in the summer,” he told the annual Abta travel convention in Madeira. “We saw people switching their holiday plans and booking later, waiting and seeing – maybe hoping for better deals but also managing the uncertainty.”

Tanzer said the industry will continue to lobby ministers hard to reduce aviation taxes and increase help in the switch to sustainable aviation fuels, aiming to cut costs and support an industry that contributed £57bn to the UK economy. “The pressures of the last few months are not going to go away in the next 18 months,” he warned. Spain has increased its dominance of the British outbound market, with 36% of respondents saying they visited the country this year, up four percentage points. Portugal moved up to sixth in popularity. But for next year, only 26% are planning to visit Spain, while Japan and Norway were cited in the top 10.