British holidaymakers are trading longer beach vacations for shorter city breaks this summer to save money as they struggle with high inflation and rising interest rates.
Thomas Cook, an online travel agency, said city break bookings for August are a third higher than in the same period in 2022. Visits to cities tend to be a cheaper option because they usually last just a few days and involve less travel.
Those who still plan a European beach vacation are also picking cheaper destinations, or even dropping from 5-star hotels to 4-star ones. Lloret de Mar in Spain has jumped from the 15th most popular last year to fifth place this year, Thomas Cook told Bloomberg News.
“Shorter city breaks to popular but affordable places like Krakow and Budapest are particularly popular this summer with customers who may have opted for a sun-soaked getaway at a cheaper time of year but still wanted a summer trip,” the holiday firm said.
Ryanair Holdings Plc has similarly seen increased demand for city trips to destination like Barcelona, Budapest, Lisbon and Rome, as well as the cheaper, once-popular Costa Brava and Costa Dorada resorts in Spain, according to an e-mailed statement.
Families are feeling the pinch as soaring mortgage costs add to the burden of higher food and energy bills. In the first quarter, UK residents made 8.6 million holiday trips abroad, 12% fewer than in the same period of 2019, the Office for National Statistics said Thursday. Britons increased foreign travel after pandemic restrictions were lifted in 2021. However, they are now having to budget as wages fail to keep up with inflation.
Home-loan payments have risen for roughly 4.5 million households since the Bank of England began raising interest rates in December 2021, and 1 million face a £6,000 ($7,855) annual increase over the next three years, the BOE has calculated. To make ends meet, families are trading down to supermarket own brands and putting fewer items in their shopping baskets.
The preference for shorter breaks has emerged over the past year. Not only do many people lack the funds for extensive long-distance trips, but many long-haul destinations such as China were off limits until recently due to Covid restrictions.
More than four in five holidaymakers, 82%, said the cost of flights was a factor influencing decisions over where to go, compared with 76% last year, according to the UK Post Office’s Holiday Money Report. The cost of meals abroad, meanwhile, influenced 77% of decisions versus 68% in 2022.
Low-cost airlines such as Ryanair, EasyJet Plc and Wizz Air Holdings Plc have seen an increase in demand from better-off customers, particularly in the South East, “as even the reasonably affluent trade-down,” said Conroy Gaynor, Bloomberg Intelligence’s travel analyst.