UK Travel Spending Grows for Second Month as Confidence Recovers

A second month of growth, with conditions attached

British travel spending grew again in September. That makes two consecutive months of year-on-year gains after a spring when the Middle East conflict pushed the sector into reverse. Barclays' latest Consumer Spend Report shows consumers spent 2% more on travel than a year earlier and 3.2% more with travel agents. The number of travel transactions rose 1.1%, and agent transactions rose 5.5%.1 Airline spending kept the gains it made in August, rising 2.2% year-on-year after a 3.5% increase the month before.1 Hotels, resorts and other accommodation, which Barclays tracks outside its travel category, recorded spending up 2.7% and transactions up 0.4%.1

On the surface this is a recovery. Barclays' survey of 2,000 UK adults found that 67% felt confident about their household finances, the highest share since February. Another 73% said they were confident they could live within their means.1 The bank's spend insights head credited the gains in hospitality and leisure partly to warm weather. He also said value-seeking and careful decisions were still shaping behaviour ahead of the Budget.1

The headline growth needs a correction for inflation. Overall card spending rose 2% in September, close to the 2.1% in August and 2% in July. All three figures sit below the 3.1% CPIH inflation rate.1 Travel spending grew at the same 2% pace, so in real terms Britons probably bought slightly less travel than a year ago, even while paying more for it. My reading is that the sector has stopped falling rather than started growing. That is still significant given how 2026 began.

How the year went: from a spring slump to staycations

The base being compared against was badly damaged. Barclays data showed travel spending fell 3.3% in March, the first decline since pandemic restrictions ended in 2021. Spending with travel agents dropped 4.6% and with airlines 4.1%.21 The war involving the US, Israel and Iran began in February. It pushed up oil and holiday prices and made people unsure whether their flights would run.23 In April the head of the International Energy Agency warned that Europe might have only about six weeks of jet fuel left.23

The large outbound operators took the hit as the summer booking season began. Tui said revenue from UK customers' summer bookings was down 10%, and that demand was moving from Eastern to Western Mediterranean destinations.25 The group cut its full-year operating profit guidance to €1.1bn–€1.4bn, from €1.5bn–€1.6bn.28 EasyJet said in May that overall summer bookings were behind the previous year, although late bookings had been strong since the conflict began.22

The coverage agrees that demand was delayed and redirected, not destroyed. Abta found that 38% of potential holidaymakers had put off booking their summer trip.24 An analyst at Hargreaves Lansdown said holidaymakers seemed to be booking later rather than giving up their plans altogether.25 Butlin's said the share of customers booking in the final four weeks before arrival had roughly doubled from its usual 15% to 20%.21

Much of that delayed demand ended up in domestic holidays. Holiday park operator Lovat reported summer bookings up 35% on the previous year.24 Awaze, which owns the Cottages.com and Hoseasons brands, described a "stampede" for UK properties near water.24 Booking.com said UK travellers' searches for domestic summer trips were up 10%.24 Mintel expected the domestic holiday market to grow about 7% this year to close to £14bn, faster than overseas travel.21 The EU's new entry-exit border system added to the shift. Mintel found 39% of consumers said it had put them off travelling in Europe.24

Against that background, September's 5.5% rise in agent transactions stands out.1 It fits the idea that worried travellers now value the protection of a package or an agent. Tui's chief executive made a similar argument in May, calling package holidays the "gold standard" in turbulent times.28 The data does not prove that link, but the timing is consistent with it.

Airfares are the main source of travel inflation

In the US, the most visible story is price. September consumer price data put airline fares 22.4% higher than a year earlier and 1.2% higher than August on a seasonally adjusted basis. Overall CPI rose 3.7%.16 Jet fuel prices averaged about 16% more in September than in August, according to the U.S. Travel Association.11

The sources explain the fare increase somewhat differently. CNBC reported that economists see fuel as the main cause but also point to strong consumer demand for travel.14 NerdWallet adds a supply factor: Spirit Airlines shut down abruptly in May, giving the remaining carriers more room to raise prices.12 I think fuel explains the size of the increase. Weaker competition and steady demand probably explain why airlines have been able to pass the cost on without losing passengers.

One caveat matters for travellers. The government fare index mostly samples discount leisure fares. It includes taxes and fuel surcharges, but it leaves out carry-on fees and charges for extra checked bags.16 The index measures a trend. It does not tell any one traveller how much more their ticket costs.

Hotel rates are rising, but not as fast

Lodging prices rose too, though the monthly figures depend on the source. The U.S. Travel Association reported a 2.3% increase from August and a 4.3% increase year-on-year.11 KPMG and TD Economics both put September's increase in hotel room rates at 2.0%.1318 NerdWallet's tracker, which uses a different comparison, showed a 0.6% monthly decline but the same 4.3% annual rise.12 All sources agree that hotel rates are about 4% above last year, which is far less than the jump in airfares.

The longer-term comparison is more favourable for travellers. U.S. Travel says that after adjusting for inflation, airfares, lodging and recreation costs are still about 8%, 13% and 5% below 2019 levels.8 Its Travel Price Index rose 2.1% in September, the biggest monthly increase since March, and is now 8.7% above a year earlier. That is more than twice the rate of overall inflation.8

Confidence is moving in opposite directions in the UK and the US

The sharpest disagreement in the coverage is over consumer sentiment. Confidence among British households improved.1 In the US it fell. The Conference Board's index dropped 6.7 points to 81.9 in September, and the expectations measure declined for a third month in a row.5 Future Partners found that American travellers' household financial confidence had fallen for a third straight month. Recession expectations rose to 48.5%.4

Even so, Americans are still travelling. Future Partners found 57.3% of respondents had taken an overnight leisure trip in the previous month, compared with 49.6% a year earlier.4 The share of consumers planning a vacation in the next six months edged up to 42.6%, although the increase came entirely from domestic trips.5 U.S. travel spending rose 2.5% year-on-year in August to $116.6 billion. Spending has grown every month this year.34

The US data shows two kinds of pressure. One is income. Travellers earning $200,000 or more reported average annual travel budgets of $13,600, compared with $2,008 for those earning under $49,000.4 The Federal Reserve's October Beige Book said high-income households were driving consumer spending in more than half of its districts.6 The other is fuel. Of the travellers surveyed, 32.7% said gas prices had kept them from travelling more, more than double the share a year earlier.4 Real average hourly earnings fell 0.5% in September as price increases outpaced pay.13

What the forecasts expect

Forecasters still see growth, but slow growth. U.S. Travel's spring forecast projects inflation-adjusted travel spending up 1% in 2026, accelerating to about 3% in 2027 and 2028. Total spending is forecast at $1.37 trillion this year.31 Hotels have done better than expected: CoStar and Tourism Economics raised their 2026 RevPAR forecast to +2.8% from +0.6%.36 Forward corporate hotel bookings were running 5.2% ahead of last year for October and 11.2% ahead for December.34 AirDNA expects short-term rental demand to soften for the rest of 2026 and then recover in 2027 as inflation eases.36

The main risk is interest rates and inflation. KPMG expects at least two more Federal Reserve rate increases by early 2027.13 UK consumers are also cautious: 68% told Barclays they were worried about what the Budget would mean for their finances.1

On both sides of the Atlantic, demand has proved more resilient than sentiment. People are still taking trips, but they book later, stay closer to home and pay more. September's UK figures confirm that recovery is under way. They also show that rising prices, rather than more travel, account for much of the higher spending.