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According to travel company On the Beach, holiday bookings for three-star destinations have started to decline due to a reduction in households suffering a life crisis amid rising bills.
The online travel retailer said that while premium bookings by deep-pocketed consumers were proving “resilient”, holidaymakers who had traditionally booked cheap trips had been forced to rein in their spending.
“People booking holidays for £600-800 per person and above are proving more resilient than those booking holidays for £300-500 and below. So it tends to be the difference between three-star and five-star [destinations]”said Simon Cooper, chief executive of On the Beach.
He said: “So it will be – potentially – a demographic that will be squeezed more by the pressures of living costs, and who will potentially have less savings.”
The headline rate of consumer price inflation rose to 11.1% in October – its highest level since 1981 – due to rising energy and food bills. The rising cost of essential goods has reduced the spending power of UK households, some of whom have subsequently returned to overseas holidays.
But On the Beach still reports lower-cost destinations like Turkey, where consumers can get more for their money, have grown in popularity. Cooper said Turkey was “very affordable”, offering premium locations and “well-equipped hotels” at low prices.
However, the depreciation of the pound and the rise of the US dollar affected bookings for destinations such as the Caribbean. “And yet even against that backdrop, we’ve again seen very strong sales for long-haul destinations, perhaps as a result of pent-up demand coming out of Covid.”
It came as On the Beach returned to profit for the year on September 30, reporting a pre-tax profit of £14m. That compares to a loss of £18m logged in 2021, when pandemic travel restrictions were still largely in place.
Cooper said that compared to the disruptions the company faced during the pandemic, the planned strike by workers, including Border Force staff, was not particularly concerning. “We’re not seeing any immediate impact from those strike headlines,” Cooper said. “We have managed a significant level of disruption over the last two and a half years and we will continue to do so.”
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