Two long-held beliefs in the travel sector are that holidays are the last thing that people cut entirely, but that they do trade down when times are tough. However, the results of our 2025 Global Consumer Outlook turn one of these conventional wisdoms on its head.
The survey, which polled more than 15,000 consumers in nine countries across Asia, North America, Europe and the Middle East, found that people are unwilling to compromise on the quality of their travel experiences. Although overall spending remains muted, and travel budgets pinched, respondents told the survey they would rather travel less often, or shorter distances, than sacrifice standards.
The results make clear that while the number of trips may tighten overall, travel experiences remain high on the agenda for constrained consumers in 2025. Even in tough times, travel spend remains protected.
When people were asked what they would do if they had extra money, travel topped the wish list across the globe. Nearly one-third of consumers – 29% – said they would allocate extra money towards travel and holidays, while 28% preferred to save the surplus. Breaking that down further, Europeans, high-income consumers and young people chose travel, while Americans, older people and low-income consumers were the savers. Consumers in Italy were the most inclined to prioritise spending on travel, with 44% aiming to channel any excess disposable income toward holidays.
The findings illustrate the profound change in consumer habits that has taken place since the pandemic, in which experiences reign supreme. And the desire to travel remains particularly strong, even as demand for other experienced-based offerings has tapered slightly.
New priorities
Globally, the survey shows that a cautious and prudent consumer outlook prevails, though not without pockets of optimism. Overall spending is trending downwards in the U.S. and Europe, while consumers in the Middle East and China are upbeat. The intention to spend more on travel in 2025 is also the strongest in China and the Middle East, encouraged, perhaps, by an expanding domestic tourism offering in both countries and its relative affordability.
One of the effects of shrinking disposable incomes is that consumers are obliged to prioritise spending. The fact that travel remains such a high priority reflects the value consumers place on experiences that enhance their happiness and wellbeing. The popularity of multi-generational family trips, outdoor adventures, and wellness retreats testifies to this trend. So too do short breaks to attend sports events or concerts. Taylor Swift's 2023-24 Eras Tour, for example, generated nearly $5 billion for the U.S. economy – a record – including $2.5 billion in travel and hospitality spend.
In fact, travel is now regarded as so essential to wellbeing that it could arguably be classified as non-discretionary spending.
There are lessons for travel operators here. The first is that, as people travel less frequently, their choice of destination matters more, and their expectations are higher. This means that travel operators must be very clear about their value proposition and market it effectively to attract the right travellers to their destination.
Partnerships also become increasingly important in this context. A hotel can be the gateway to a great city, or nothing more than a bed for a night, depending on its ability to arrange great experiences for customers – whether that is fine dining, theatre shows, sports tickets or a visit to a spa. Operators should aim to own the end-to-end travel experience.
Expectations around the quality of service are also growing – for example, demand for premium air travel has shot up since the end of the pandemic. Airlines are leaning into this trend by installing more premium seats on aircraft, upgrading waiting lounges and offering services such as priority boarding and airport transfers. Adding more premium seats is part of a broader industry strategy to find high-margin revenue streams, but it is also a response to changing consumer expectations – that holidays should begin when travellers leave their homes, not when they arrive at their destinations.
Rising expectations mean that operators need to defend customer service from ill-thought through cost cuts, even as they seek to streamline operations. With consumers unwilling to trade down, operators cannot afford to sacrifice the quality of service to protect margins. This has important consequences for investment decisions, too. IT spend, for example, should be focused on the platforms that customers see and use.
Sustainability loses its shine
Another result of the squeeze on consumer spending is that travellers are far less concerned about sustainability than two years ago. Less than half of the consumers in this year's survey are likely to consider sustainability in their travel choices. Fewer still are inclined to act on these concerns (choosing rail travel over flying, for example). Sustainable travel options that cost more money have become markedly less palatable in 2025 compared to just two years ago.
In the U.K., for instance, just over one-third of consumers are likely to factor sustainability into their travel choices, compared with 75% of consumers surveyed at the end of 2023.
Sustainability remains important for younger consumers aged 18 to 34 and/or for those with higher incomes – younger consumers are more likely than older cohorts to research policies, pay more to offset carbon and switch to more sustainable modes of transport.
However, those willing to pay more for sustainable travel remain in a minority across all age and income groups. The same is true in the U.S. Part of this reflects the general constrained spending environment, but it may also be a backlash against greenwashing, such as attempts by hotels and others to camouflage their own cost-saving measures – not changing towels daily, for example - as sustainability initiatives.
Without the ability to charge more for environmentally friendly options, travel operators face a further squeeze on margins as they comply with more stringent environmental protections and legislation to combat climate change. As of this January, for example, jet fuel suppliers in the U.K. and European Union must blend 2% of sustainable aviation fuels into their products, rising to 10% in 2030 and 22% in 2040. It is unclear to what degree airlines will be able to raise fares to reflect these higher fuel costs, particularly if incomes remain constrained.
What customers value
Automation may be helping travel operators to streamline operations, but a note of caution: human interaction remains important to consumers. In our survey, 33% of high-income consumers said personal interaction had become more important to them when they book holidays and travel. AI tools are valued for research and planning trips and for making digital payments, but in the U.K. and the U.S. there is an active dislike of chatbots, push notifications and other technologies that are seen to benefit operators, but are impersonal to the customer.
Operators should think carefully about where they deploy technology: efficiency gains should not come at the expense of customer service, particularly when expectations for great service are rising. Consumers aren't looking for cheap; they are looking for value. The winners will be the operators that can provide a great, differentiated product at the right price for their target customers, with great execution. There will be winners in every category of the travel industry, and it will be the ability to execute flawlessly that will set them apart.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
