Travel Money

The Cost of Living Crisis – Why Brits Keep on Travelling and How

The rising cost of living has reshaped spending habits in the UK. Household budgets are stretched by high inflation, increased energy bills, and persistent price hikes across everyday goods and services. Yet, despite this, many UK residents continue to book holidays abroad.

Holidays have become more than part of an annual routine – they represent an important antidote to the pressures of everyday life, and a way to help support good mental health. Many people will sacrifice other expenditure to protect the non-negotiable holiday. And it has become more common to adjust travel choices rather than giving up trips entirely. This article explores how inflation has influenced travel patterns and what independent currency exchangers can learn from these trends.

The Impact of Inflation

Since 2020, supply chain disruptions, energy price surges, and global economic uncertainty have eroded purchasing power and driven inflation. UK inflation peaked at 11.1% in October 2022 before gradually easing, with forecasts suggesting a peak of 2.7% in 2025 before returning to about 2% by the year end. However, inflation is cumulative — any rise in 2025 builds on previous increases. Between May 2021 and May 2024, UK consumer prices rose by 20.8%. so, while headline inflation rates have moderated, the lasting impact on the cost of living and consumer spending remains significant.

Inflation in the Travel Sector

General inflation figures mask sector-specific price surges. Travel costs have risen more sharply than overall inflation. Airfares in 2022 increased by 44% year-on-year as demand rebounded post-pandemic, outpacing broader price growth. Package holidays followed a similar trend, with prices rising 12% from 2022 to 2023. Accommodation, fuel, and service charges have all contributed to rising holiday costs, with many destinations now significantly more expensive than before the pandemic.

Cost of Living Impact on Travel Bookings

Despite these cost pressures, UK demand for overseas holidays remains high. Industry data evidences strong holiday bookings for 2023 and 2024, with most holiday operators also being optimistic about 2025. For many destinations, prices remain high, partly because capacity has not yet kept up with demand.

And people do shop around. Plus, rather than cancelling trips, travellers are adjusting their choices:

• Package holidays and all-inclusive resorts offer predictable costs and better value.
• Short-haul destinations have gained popularity as a way to reduce expenses.
• Cheaper accommodation options are increasingly favoured over premium hotels.
• Multiple short breaks instead of one long holiday provide flexibility and spread costs.
• Tighter budget control while abroad helps travellers manage their spending without sacrificing trips altogether.

Why Foreign Currency Matters

Managing travel costs does not stop at booking. Spending money efficiently is a crucial part of a holiday budget and using cash is a well-established way to manage spending. However, the effectiveness of this approach depends on securing a favourable exchange rate before departure.

For years, UK holidaymakers have turned to supermarkets and the Post Office for travel money. While convenient and competitive by virtue of their buying power, these outlets do not always offer the best deals. Brand recognition can be as important as pricing advantages. Independent currency exchangers, with the right tools, can provide a better alternative—offering localised, competitive rates that attract cost-conscious travellers. Money4Travel does exactly that.

How Money4Travel Can Help Independent Currency Retailers

Money4Travel, from foreign exchange specialists Essiell, provides a way for independent currency exchangers to attract new business and grow their local market share. The service ensures that customers receive the best exchange rate within a ten-minute drive of their postcode, making it a hyper-local, community-focused alternative to major retailers.

For independent currency exchangers, this system levels the playing field, allowing them to compete effectively with supermarkets and large financial institutions. Benefits include:

• Guaranteed best local rates to attract customers actively searching for travel money.
• Same-day or next-day currency availability, ensuring convenience.
• A straightforward subscription model starting at £6.95/month, making it cost-effective for retailers.
• Integrated compliance tools, including built-in anti-money laundering screening.
• Next-day settlement of transactions via instant bank transfer, improving cash flow.

 

This model enhances customer acquisition and builds long-term loyalty. Additional benefits, such as a buy-back guarantee and a loyalty scheme for future discounts, reinforce consumer trust and repeat business. By being genuinely competitive, independent currency exchangers can thrive in a market traditionally dominated by larger players.

Consumers have become skilled at managing Cost of Living Pressures

Inflation has reshaped the way UK residents travel. But it has not stopped them going abroad. Instead, travellers have adapted—seeking value through package holidays, budget accommodations, and strategic spending. In many ways this is the perfect opportunity for independent currency exchangers. With Money4Travel, they can provide competitive rates that attract cost-conscious holidaymakers and establish a loyal customer base.

In a world where travel remains a priority despite rising costs, offering the best local exchange rates could be the key to sustained business growth.

 

By Declan Morton, writer and editor at Money4Travel – the online service for foreign currency sales in the UK. More about the author.

 

For reference: Inflation in the UK: Economic indicators, Research Briefing, House of Commons Library, 19^th February 2025; Rising cost of living in the UK, house of Commons Library, Research Briefing, July 11^th 2024; TTG – Travel industry news, January 2023 – Air fares rose by a record 44% last year, ONS figures reveal; TTG – Travel industry news, June 2023 – Package holiday prices rising faster than inflation, data finds