The warning was issued by Deloitte’s Chief Economist Debo De during Abta’s annual Travel Matters conference in Westminster.

In a presentation examining the current global economic challenges, De noted: "US stocks are now about as overvalued as they were at the peak of the dot-com boom, and well above levels of overvaluation that we saw on the eve of the great crash of 1929."

"This will also mean there'll be greater investor pressure and scrutiny on tech businesses and on how they're monetising AI. So if you're running pilots in your own businesses, and you've got specific cost assumptions, you should probably account for significant rises to those in the coming years."

It came as De acknowledged that while the Iran conflict represented an unprecedented supply shock, the global economy – and the travel sector – was showing unexpected resilience.

"As the IEA [International Energy Agency] says, this really is the largest supply disruption in the history of oil markets… But the surprising thing to me is actually oil prices haven't risen as much as you would expect, given the scale of the shock that we've seen."

"We've also now got quite significant strategic stockpiles... Netherlands has enough oil stockpile to actually last it an entire year of imports. We run small stockpiles, but we can cover about three months of disruption in the UK. These didn't exist during the shocks of the ‘70s."

De also admitted his initial predictions for a catastrophic hit to airline schedules were wrong, praising the travel industry's supply-chain management.

"I used to say it's going to be aviation fuels, that's the frontier for the West. But it looks like the sector's done pretty well in sourcing aviation fuel… I'm amazed that at least in the UK, there doesn't seem to be material [hits] to schedules by a lot of these businesses."

However, he warned that a fresh wave of inflation was likely to flatline the recent era of real wage growth, directly hitting consumer wallets.

"[This energy shock] will essentially put an end to what has been close to three years of real wage growth in this country...This will impact both consumer spending power, and it will impact consumer sentiment.

"The expectation is that inflation rises to just under 4% by autumn, and then continues falling back down to the bank's 2% target by the end of next year,” he explained.

'Demand distruction'

De also referenced a risk of “demand destruction”, arguing that “central banks are likely to pause interest rate hikes because the real threat to the economy is no longer just rising prices, but a complete drop-off in consumer spending”.

And he warned: "If we don't see a kind of easing of, or at least a resumption of trade through the Strait of Hormuz by the end of July, then we would probably see some of the demand destruction that we're seeing in Asia feed through to the west..."

De’s concerns about consumer spending were echoed by James Bland, Commercial Director, Leisure, Hospitality and Travel at Ipsos. 

He used consumer spending data from Barclays which he said indicated a worrying shift. "For the first time, since they published this chart, we saw that drop by almost 6% on travel... Discretionary purchases, which includes travel, are down."

And he urged the travel industry to reconsider who it views as competitors, noting a “consistent and sustained year-on-year growth in spending on digital content and subscription”.

“Your competitor is not actually the person sitting next to you, your competitors are digital content. Consumers are staying at home or watching movies or whatever and using this to entertain rather than travel."