Fewer trips, bigger splurges: small travel firms squeezed as bookings fall

Brits are tightening their belts—and holidays are taking the hit. Travel spending has fallen for the first time in five years as rising living costs and global tensions push families to cut back on trips abroad. While big-ticket luxury breaks are still booming, it’s small travel agents, B&Bs and tour operators feeling the pinch as bookings dry up and competition heats up. The great getaway isn’t over—but for many small businesses, it’s getting a lot harder to stay afloat.

Travel spending is another victim of the conflict in the Middle East as consumers cut travel spending for the first time in five years. Worries about the rising cost of living and saving for bigger energy bills are having a knock-on impact on micro travel agencies, independent tour operators, and small B&Bs that depend on multiple short‑break bookings.

According to data from Barclays travel spending fell by 3.3% last month, the first decline recorded by the lender since March 2021, as people postponed trips abroad, opted to holiday domestically, or spent more time at home.

People spent less at travel agents last month (down 4.6% annually), airlines (-4.1%) and public transport (-2.9%). Spending on hotels, resorts and other accommodation went up by 1.2% amid a preference for UK-based outings and a rise in domestic bookings during the Easter break.

Fewer trips and lower booking volumes are affecting many in the travel business. AlixPartners reports that 33% of UK households are cutting back on travel, mainly due to reduced disposable income: with 3 in 10 reducing the number of trips they take and 4 in 10 spending more time at home during time off.

The volume of bookings for airlines, hotels, travel agents, and tour operators is falling with more competition for each booking, higher marketing and acquisition costs, and pressure on smaller operators which rely on repeat, high‑frequency travel.

Spend per trip is holding up though, as consumer protect the quality of their holidays. That favours premium operators, high‑end tour operators, and quality‑focused travel groups, making those more resilient. It’s the budget operators that feel the squeeze as consumers take fewer low‑cost trips. Small luxury travel businesses may see stable or even rising revenue per booking. This creates a polarised market: fewer trips overall, but strong spending on the “big” holiday.

On top of that corporate travel has been down, hurting small businesses in events, hospitality, and business travel. Deloitte’s Travel Weekly Annual Report shows that corporate travel hasn’t recovered to pre‑pandemic levels. Small conference venues see fewer bookings; independent hotels lose midweek business; small travel‑management companies face lower volumes; catering and events microbusinesses have seen reduced demand.

The part of the industry rejoicing in higher sales has been the cruise and high‑value travel which have been outperforming the rest. Deloitte highlights a “remarkable transformation” in the cruise sector and strong demand for high‑value travel meaning that small specialist cruise agents and niche tour operators offering experiential or luxury travel have been more resilient. Businesses offering personalised, high‑touch service are outperforming budget competitors. However those annual figures may reflect a further change in the direction of travel when the conflict in the Middle East is factored in.

Travel businesses must adapt to the new demand. Consumers are taking fewer trips, but spending more on each one. This means travel businesses need to focus on value and quality, not just price and Improve personalisation and customer experience.

• Target higher‑value segments

• Reduce reliance on high‑frequency, low‑margin bookings

• Strengthen digital marketing and loyalty strategies

The travel sector isn’t collapsing, yet. At the moment it’s rebalancing. Consumers are travelling less often, but they’re still spending on the trips that matter. The question is whether or not the smaller operators can survive the rebalancing and will things revert after the war is over? Only time will tell.