29 January 2025
What are the consumer trends for travel in 2025?
Demand for both domestic and international travel is reaching new heights as holidays emerge as a top priority for consumers in 2025.
According to our latest Consumer Outlook report, travel continues to be a cornerstone of consumer spending, with holidays ranking among the last areas where individuals are willing to cut back.
Our hotels, travel, and tourism outlook for 2025 delves into evolving consumer preferences and explores key industry performance indicators for the year ahead.
The rise of international travel
The appeal of international travel continues to strengthen across all age groups, with more consumers planning extended trips abroad in 2025.
According to our latest findings, 41% of consumers intend to take an overseas holiday lasting longer than five days, a notable increase from 35% in 2024.
Shorter trips abroad are also gaining traction, with 30% of consumers planning weekend breaks overseas, up from 24% last year.
Data from the Office for National Statistics (ONS) underscores this upward trend. In Q2 2024 (April to June), residents of Great Britain made an estimated 25.3 million trips outside of the UK, compared to 23.4 million visits abroad in the same period of 2023.
Airfare inflation at -26% in December2024 leaves prices lower compared to the same time last year. This is likely to stimulate demand for international travel given that inflation has grown at 2.5% over the year, making airfares relatively cheaper. While this may mean prices will rebound in January, consumers who were previously deterred by high prices may seize this opportunity to book flights, especially for last-minute trips or early 2025 travel.
Domestic holidays gaining ground
While international travel is back on the consumer agenda, domestic holidays are also on the rise. The staycation market is set for growth, with 28% of consumers planning long-stay UK holidays in 2025.
Short domestic getaways are also holding steady, with 33% of respondents planning a weekend trip within the UK this year.
Consumers are demonstrating a clear desire to prioritise holidays, whether exploring destinations abroad or enjoying the comforts of homegrown retreats.
How consumers are driving a shift toward luxury and mid-market hotels
The RSM Hotels Tracker highlighted a trend of consumers "trading up" in their choice of accommodation in 2024, with demand for luxury and mid-market hotels on the rise, while budget hotels experienced a decline.
The occupancy rates for luxury and mid-market hotels increased year-on-year in August, reaching 76% (up from 73%) and 82% (up from 80%), respectively. In contrast, budget hotels saw occupancy drop from 83% to 80%, reflecting a move away from cost-saving accommodations toward more premium options.
The increased demand for higher-end accommodation drove significant growth in average room rates. Luxury UK hotels saw rates rise from £333.33 in August 2023 to £380.30 in August 2024. Mid-market hotels also saw modest rate increases, from £131.89 to £136.33, while budget hotels edged up slightly, from £101.49 to £103.94.
In 2023, budget hotels were the go-to option for many cost-conscious travellers, squeezing the mid-market the most. In 2024, we saw clear signs of reversal, with more travellers opting for luxury and mid-market options as they felt more confident in their financial position.
The 2024 trend of "trading up" reflects an increasingly optimistic consumer mindset and highlights opportunities for hotels in the mid and upper tiers to capture value through enhanced offerings and strategic pricing. However, with economic uncertainties still on the horizon, it remains critical for hotels across all segments to remain agile and consumer-focused in 2025.
What are the disruptors for the travel industry?
Travel disruptions, ranging from flight cancellations to geopolitical unrest, are expected to continue shaping consumer behaviour in 2025. With global travel increasingly interconnected and sensitive to external shocks, travellers are becoming more adaptive but also more demanding when it comes to flexibility and reliability in their plans.
Geopolitical tensions have emerged as a significant factor in the decision-making process for travellers. Heightened awareness of safety and risk is prompting consumers to reassess their options, with many willing to alter their plans or switch destinations even after bookings are made.
Similarly, the impact of flight disruptions or cancellations on consumer behaviour has intensified. This year, 36% of respondents said they would alter their travel plans due to flight issues, an increase from 27% in the previous year. This sharp rise reflects a growing demand for reliable travel arrangements and highlights the importance of contingency planning within the industry.
Flight cancellations and delays remain a key pain point. In 2025, operational challenges in the airline industry, ranging from skills shortages to weather-related issues, are expected to contribute to continued uncertainty.
As consumers prioritise safety and flexibility, travel providers must adapt by offering clear communication, responsive customer service, and flexible booking policies to meet these evolving expectations.
Technology will play a pivotal role in managing disruptions in 2025. AI-powered chatbots, real-time updates on travel conditions, and predictive analytics for identifying potential delays or cancellations will become indispensable tools. Tech-driven solutions will enhance transparency and streamline the resolution process, helping to mitigate frustration.
Sustainability and the rise of the conscious traveller
Sustainability is set to remain a significant focus for the hotel, travel and tourism sectors in 2025, driven by the growing demand for environmentally responsible options among consumers.
Overall, 32% of consumers agreed that their travel plans are influenced by their impact on the environment and 36% reported they would pay more for environmentally friendly hotel options, up from 31% last year.
Millennials and high-income households (earning over £80,000 annually) are emerging as key demographics shaping this trend. These groups are not only more likely to prioritise sustainability in their purchasing decisions but also extend these behaviours to their travel choices.
According to our report, 43% of Millennials state that environmental impact influences their travel plans, a notable increase from 38% last year. For high-income households, this figure rises to 52%.
The willingness to pay more for sustainable accommodation further highlights this trend.
Among Millennials, 46% agree they would spend extra to stay in a sustainably operated hotel, while this sentiment is even stronger among high-income households, with 57% expressing a willingness to pay a premium.
Challenges ahead for the travel sector
While the outlook for 2025 showcases the UK travel sector's resilience and adaptability, several challenges are poised to test the industry throughout the year.
Operational costs are expected to rise, driven by increases in employer National Insurance contributions (NICs), higher minimum wage thresholds, and escalating property rates.
Skills shortages remain a persistent hurdle, impacting both service delivery and operational efficiency. Adding to the complexity, geopolitical tensions and shifting global economic conditions are likely to influence travel trends and consumer behaviour, creating an unpredictable market landscape.
These factors could strain profit margins, prompting hotel operators and investors to sharpen their focus on productivity, technology, and strategic investments.
Advancements in technology and increased use of AI will be game-changers for the travel industry in the year ahead. Using AI-powered tools to optimise pricing strategies and predictive analytics to enhance forecasting accuracy will help businesses to allocate resources more efficiently.
AI will also revolutionise guest experiences, personalising interactions at every touchpoint and streamlining back-office operations, such as inventory management, energy usage optimisation, and workforce scheduling, significantly reducing overhead costs.
One of the most transformative forces in the year ahead will be advancements in technology, particularly the integration of artificial intelligence (AI). AI-powered tools will redefine pricing strategies through dynamic adjustments based on real-time demand, while predictive analytics will deliver precise forecasting, enabling businesses to optimise resource allocation.
Beyond operational efficiencies, AI promises to elevate guest experiences to new heights. From personalising customer interactions at every stage of the journey to automating routine back-office tasks like inventory management, energy usage optimisation, and workforce scheduling, AI will help streamline operations and cut overhead costs.
To discuss this analysis further, or to explore how we can help your business navigate the challenges and opportunities in 2025, please contact Chris Tate or your usual RSM contact.



