Exploring the tailormade trail
How is Audley Travel embracing technology while continuing to provide unique and responsible holiday experiences?
Gearing up for blue skies?
Exploring the key forces shaping the UK travel industry.
Continued economic pressures and geopolitical uncertainty continue to affect holidaymakers and travel businesses this year – although our data shows that consumers are still prioritising holiday spend. Encouragingly, our clients tell us they’re expecting 2025 to deliver similar results to 2024, which would be a positive outcome following last year’s stellar performance.
Head of Travel, Barclays Corporate Banking
The travel sector is set for continued growth
Year on year growth for Travel sub-sectors*:
Travel Agents
6.4%
Airlines
4.3%
Cruises & Ferries
3.5%
Hotels, Resorts & Accommodation
-0.8%
*From April 2024 – March 2025
Year-on-year growth in the travel sector remains positive, despite continued high interest rates and cost of living pressures. UK consumers appear reluctant to cut back on holidays, regarding ‘getting away’ as very important to wellbeing.
Head of Client Insights, Barclays
Read our UK Consumer Spending Report to view customer transaction data which can help to inform your strategy.
What are they key trends we’re seeing with consumers?
Niche markets are on the rise
Based on recent discussions, solo travellers taking part in group trips, adventure travel, catering for the needs of digital nomads, experiential travel, and cruises for younger people are just some of the niche markets expected to continue to grow over the medium to long term.
Climate concerns
Our conversations with clients suggest that the increase in extreme weather and climate-related events – such as wildfires in the Americas, Storm Boris in Europe, and unusual rainfall in the UAE – is requiring operators to put new processes in place to manage the potential knock-on effects, such as dealing with mass re-bookings.4
Growth in international travel
The most recent data from the Office for National Statistics (ONS) suggests that more consumers are taking longer trips abroad, with UK residents making around 25.3 million trips overseas in Q2 2024, compared to 23.4 million in Q2 2023.3 Based on our consumer spend data, Europe continues to be the top pick, but more and more people are visiting Asia and Africa.1 Travel businesses may want to review their itineraries and other products to ensure they reflect consumers’ destination preferences.
Targeting the +55s segment
Older consumers are driving the most growth in terms of travel spend. Consumers in the 65+ age group had the highest spend growth in 2024, at 8.7%, followed by 5% growth for those aged 50-64. While the 16-24 demographic is experiencing some growth (2.9% in 2024), on average they only spend a third as much of consumers in the 65+ demographic . Operators may want to increase their focus on the over-55s demographic, who often have more disposable income and leisure time than the younger generations, and are demonstrating a growing appetite for new travel experiences.2
Many of our travel clients comment on the growing number of consumers who appear to treat holidays as a mandatory, non-negotiable part of their annual budget. In fact, according to our research, holidays topped the list of what consumers intend to spend their money on in 2025.
Head of Travel, Barclays Corporate Banking
M&A: still sailing but not as buoyant expected?
Regaining momentum
Merger and acquisition (M&A) activity was relatively buoyant across the sector last year, although several potential deals were delayed or put on hold due to investor caution over shifting booking patterns and broader economic and political uncertainty.5
Activity regained momentum towards the end of 2024, with a significant surge in Q4: deal volumes were up 15% on Q3 and 130% year-on-year. What’s more, valuations appear to be back to pre-COVID levels.5
2025 M&A outlook
Advisers in the market with whom we work share the sentiment that the outlook for travel M&A remains positive, although it may perhaps not be as active as initially expected. While many remain optimistic, deal volume is expected to come mainly from smaller operators. Larger transactions appear to be taking longer to complete, due to complex post-COVID adjustments in operating models. Several deals have been deferred or paused, with some operators opting to prioritise organic growth plans over M&A, while others appear to be holding out for stronger valuations.
Niche market operators, such as adventure travel, along with technology-led businesses, are expected to see more activity. Operators catering to the over-55s demographic are also garnering lots of interest.2
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Transforming the travel experience with technology
From enhancing customer experiences to optimising travel companies’ back-end processes, the role of artificial intelligence (AI) in the travel industry is widely expected to continue to grow.
Many businesses we speak to that have started to adopt AI are still in the experimental phase, with several opting to run small pilot programs to assess the impact. A handful are ahead of the curve, having built seamless, automated, end-to-end processes, with everything from booking to delivery handled through APIs and AI.
Using AI, predictive analytics and AI-powered chatbots for marketing, trip planning and booking could have a big impact on the customer experience – in fact, 73% of global travellers say they’re already using AI for tasks connected to travel.6
Despite AI’s potential to transform the industry, ethical considerations, privacy and data security remain paramount.7 To deliver its full potential, travel operators, airlines and technology providers may need to collaborate more closely to simplify processes and enhance travel experiences.8
APIs continue to drive connectivity
Application programme interfaces (APIs) – which, in essence, allow different systems to ‘talk’ to each other – are increasingly playing a key role for travel businesses, helping to streamline day-to-day operations and open up new revenue streams.
Aside from offering greater back-office efficiencies, APIs can also be used to deliver benefits to customers by enabling a more connected and seamless end-to-end booking and in-journey experience.
By leveraging APIs to facilitate connectivity between different systems, travel companies can integrate additional services with their platforms to enhance their offering – while also reducing the risk of fraud and human error.
Our API-based banking solutions can help boost efficiency, improve your treasury operations, and enhance customer interactions. Similarly, our open banking APIs enable increased collaboration with third-party providers to deliver a range of value-added services.
Keeping tabs on regulation
Regulatory reforms on pause?
The travel industry continues to await the findings of the Department for Business & Trade’s review of the Package Travel and Linked Travel Arrangements Regulations 2018, which has recently launched a second part to their consultation9.
The Civil Aviation Authority’s proposed changes to the ATOL protection scheme also remain paused for now, as the CAA and the Department for Transport continue to assess how any potential changes could impact different ATOL holders and the sector10.
Broadening choice and flexibility
The industry has benefitted from a resurgence of insurance providers, enabling travel businesses to adopt a mix of protection methods based on their business needs. The success to date of this increased choice and flexibility in the market perhaps raises questions about the necessity of further reform.
To continue to meet the needs of a rapidly changing industry, the Association of Bonded Travel Organisers Trust (ABTOT), in partnership with PT Trustees, has launched a new escrow accounts and bond hybrid solution for larger travel SMEs. This solution aims to offer ATOL holders increased flexibility when managing supplier payments11.
Although the industry is still awaiting the outcome of the CAA’s review of the ATOL protection scheme, we’ve seen a marked increase in the use of trust accounts, particularly among travel businesses that have gone through an M&A process with PE investment.
A selection of travel companies we’ve supported
How can we help?
Our dedicated and experienced travel industry team can help you navigate the opportunities and challenges facing the sector as you strive to realise your business ambitions.
We can provide a full range of transactional banking support and corporate financing solutions, including industry-specific credit support, cash management, payment and foreign exchange services and debt capital markets financing.
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1Barclays Consumer Spend Report
Barclays sees nearly half of the nation’s credit and debit card transactions, which provides us with unique insight into UK consumer spending. This stat is based on consumer card spending data from Barclays’ issuing business – i.e. Barclays debit card and Barclaycard credit card transactions.
2 https://www.clearwatercf.com/assets/PDFs/Clearwater-Travel-Sector-Update-January-2025.pdf.^
3https://www.ons.gov.uk/peoplepopulationandcommunity/leisureandtourism/datasets/estimatesofukresidentsvisitsandspendingabroad.^
4https://travelweekly.co.uk/in-depth/comment/comment-the-impact-of-climate-change-on-package-holidays.^
5https://www.grantthornton.co.uk/insights/travel-ma-review-winter-2024/.^
6https://travelweekly.co.uk/news/news/ai-adoption-identified-as-key-trend-in-post-pandemic-travel.^
7https://travelweeklyinsight.co.uk/.^
8https://www.travolution.com/news/in-depth/big-interviews/big-interview-technology-as-a-driver-of-individualised-travel-experiences/.^
9https://www.gov.uk/government/calls-for-evidence/package-travel-legislation-updating-the-framework/outcome/package-travel-legislation-updating-the-framework-call-for-evidence-response.^
10https://www.caa.co.uk/atol-protection/trade/compliance-and-regulation/update-on-atol-reform-programme/.^
11https://travelweekly.co.uk/all-content/abtot-introduces-hybrid-escrow-accounts-and-bonding-initiative.^
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