The research found that the vast majority (86%) of Brits believe the cost-of-living crisis will have some impact on their ability to travel, with younger consumers the worst affected. Within that younger consumer cohort, 60% aged 18-24 report they will now travel overseas less frequently and at lower cost, with 20% in that age group travelling far less or not at all. Furthermore, affordability is now the second highest barrier to travel – only after cancelled or delayed flights.
In terms of spending, more than a quarter (26%) of consumers reported expecting to have to spend more on their next trip, while average spend per holiday is at its lowest ever (£799 a trip). Credit card usage to book trips and accommodation is considerably higher than 2021, whilst debit card usage is down.
Furthermore, consumers report they are spending less time abroad than they were last year – the number of trips longer than a month has halved since 2021, while the number of trips lasting three day or less is up 30%.
The research has also highlighted British holidaymakers’ payment preferences when they travel abroad, with cash remaining by far the most popular payment method abroad, despite the UK’s move towards a cashless society.
The vast majority (80%) of travellers report using cash to make a purchase last time they travelled – almost double the amount that used a debit card (42%) or credit card (41%), with reliability of cash and excessive card fees, cards not being accepted and foreign ATM security the key drivers of cash usage. This is despite domestic use of cash in the UK plummeting, with cash set to account for only 6% of UK payments by 2031.
The use of digital products for travel cash – such as debit, credit and prepaid travel money card including the Travelex Money Card – is growing however, with prepaid cards in particular increasing in popularity: 40% of consumers are likely to use a prepaid card on their next journey, and 89% of travellers that have used a prepaid card were satisfied with their experience.
Simon Jackson, Chief Customer Officer, Travelex, said: “The cost-of-living crisis is having a clear impact on British holidaymakers, meaning transparency over foreign money conversion and support with budgeting are more vital than ever before. Meanwhile, demand for travel cash remains strong, driven by reliability and its use for smaller, informal payments.
“Consumers do increasingly want a card or digital form of payment to compliment note and coin too, however, and the challenge to the FX industry throughout this period is to ensure consumers are afforded both choice of product and transparency. Our aim is that, by commissioning this research, we can better understand our customers and develop the products that best meet their needs.”
