The escalation of war in the Middle East appears to be affecting consumers’ desire to travel, as more than half (56%) say they are concerned about potential disruptions to their travel plans this year, a new Barclays survey reveals.
The biggest concerns are related to energy costs, with four out of five consumers worrying that the war will lead to an increase in fuel prices (82%), energy bills (81%), and inflation (78%). While food prices (76%), supply chain disruption (70%), and economic slowdown (69%) are also areas of concern and worry.
Consumers are changing their behavior
In response to the new crisis, almost half (46%) take action, such as trying to reduce energy consumption (16%), reducing discretionary spending (13%), saving (10%), and postponing major spending decisions (10%).
Additionally, 1 in 10 (9%) are re-evaluating their future travel plans, indicating that geopolitical developments may also affect the demand for travel and vacations.
Meanwhile, confidence in the UK economy fell two percentage points last week to 23%, from 25% at the end of February.
The findings of the research came as Barclays reported a 1% increase in card spending last month, up from 0.8% in January, but below the latest inflation rate of 3.2%.
Total non-essential spending reached its highest level in six months at 1.8% in February.
What’s happening in the tourism sector
According to Barclays data, travel agencies recorded a 7% monthly increase in spending – a 1% increase compared to January – with the number of transactions increasing by more than 16%.
On the other hand, airlines saw a 6.9% drop in expenses, with transactions decreasing by 5.1%.
Card spending across the entire travel sector saw a slight increase of 1.9%, while the number of transactions decreased marginally (0.5%).
Investing in experiences
Despite the uncertain economic environment, entertainment spending increased by 9.9% in February, reaching its highest level in the past 11 months, with live performances and concerts contributing the most, up 14%. Transactions peaked on January 30, when tickets went on sale for Harry Styles’ Together, Together tour.
In total retail trade, clothing (3.7%), retail stores and markets (4.6%), as well as pharmacies, health, and beauty (6.4%) saw an increase in spending, while spending on digital content and subscriptions also followed the same trend, reaching the highest level since August 2021 (12.2%).
Demand once again demonstrated the value consumers place on investing in memorable experiences, according to the bank.
In statements, Karen Johnson, Barclays’ head of retail, said: “February’s data highlights the delicate balance between rising living costs and the desire to consume that shoppers are being asked to manage.”
“While there is an insatiable desire to spend in categories such as entertainment and wellness, achieving value for money and prudent spending will remain at the forefront in the coming months,” he added.
