Holiday travel remains a top financial priority for consumers, even as economic uncertainty and rising living costs continue to squeeze household budgets. Speaking at the Barrhead Travel conference in Dubrovnik, Alistair Pritchard, lead partner for travel and aviation at Deloitte, revealed that many people are deliberately cutting back on essential spending in order to afford holidays.

“We live, unfortunately, in a hugely uncertain and volatile world,” Pritchard said. “But every bit of consumer research we do shows that people want to continue to travel and go on holiday. It is by far the number one way people spend – not only discretionary spend – but in some cases, it’s way above some areas of essential spend. People cut essential spending in order to make sure they can go on holiday.”

Pritchard described this behaviour as both a challenge and a “huge opportunity” for the travel industry, urging agents and operators to help customers navigate uncertainty with confidence. “You shouldn’t be afraid of all this change,” he said. “You should embrace it and be the people that can help those customers.” He noted that 2024 has been a strong year across the sector, with travel demand remaining resilient despite inflation and wider global instability. However, he warned that the industry operates in an increasingly fast-changing environment shaped by shifting consumer priorities, climate pressures, and rapid technological development.

The Forces Shaping Travel’s Future

According to Deloitte’s latest research, six major forces are influencing the future of travel: consumers, society and culture, technology, industry upheaval, climate and environment, and shifting economics, policy and power. Within these, Pritchard said Deloitte has identified more than 250 emerging trends that are “converging and happening at pace.”

One of the most significant demographic shifts is Europe’s ageing population, alongside the rise of Generation Alpha – those born in the past 15 years. “They have huge amounts of spending power from the Bank of Mum and Dad,” Pritchard said. “The estimated impact they’re going to have on the economy is greater than millennials and Gen Zs added together.”

He also highlighted the rapid growth of specific travel segments, including accessibility travel, now worth over $60 billion, and wellness tourism, which is expected to reach $1.3 trillion this year. Multigenerational travel is another growing trend. Pritchard suggested that potential changes to inheritance tax could encourage grandparents to pass on wealth through family holidays, saying: “How might grandparents be even more willing to pay for multigenerational holidays in future?”

Shifting Lifestyles and Spending Priorities

Pritchard pointed out that lifestyle and housing trends are influencing how people value experiences over possessions. “In 1997, fewer than one in 10 people aged 35 to 44 rented their home – now nearly one in four in that age group are renting,” he said. “People want experiences. They want service. They’re investing less in buying assets or products.”

He also addressed the growing role of artificial intelligence within the travel industry, describing it as a tool to enhance productivity rather than replace jobs. “AI is there to help people in their businesses,” he said. “I don’t see it replacing people across this sector.” However, with the increasing use of digital tools and online booking systems, Pritchard warned that travel and hospitality are now among the top five industries targeted by hackers, urging businesses to strengthen their cybersecurity defences.

Climate Events Changing Travel Choices

Pritchard also noted that extreme weather is beginning to shape travel decisions. With 2023 and 2024 recorded as the hottest years on record, many travellers are reconsidering when and where they go on holiday. “People who experience a climate event – such as wildfires or extreme temperatures in southern Europe – will alter their decisions,” he said. “They may seek cooler destinations or shift their holidays out of peak periods.”

A Resilient Sector With Room to Grow

Despite global challenges, Pritchard emphasised that the travel sector remains in “great shape,” supported by consumers’ strong emotional connection to holidays and experiences. “The desire to travel is powerful,” he concluded. “Even when budgets are tight, people will find a way to make it happen.”

For travel companies, the message is clear: understanding these shifting motivations and helping customers make informed, confident choices will be key to thriving in the years ahead.