One agent told TTG customers would book direct with the operator if they decided to pass on higher costs to consumers, creating a challenging business environment for agencies.
While the industry was spared any major changes by way of travel-specific measures in chancellor Rachel Reeves’ budget on Wednesday (26 November), agents are concerned about further rises in minimum wages, as well as the cumulative effect of higher taxes, such as employers’ national insurance, which was increased in the 2024 budget.
Karl Douglas, director and co-owner of Yorkshire-based Beverley Travel, insisted measures announced last week would cost his business the equivalent of one extra staff member. “Last year, with business rates and national insurance the increase was the same as employing two people – so that’s the cost of three people in the last two budgets,” he added.
“It’s a 20% increase in employment costs alone before you get into energy and other rises. They are making it very hard to operate as a business – it’s like death by a thousand cuts.”
Douglas said extra costs had made the business “less profitable”, and as a result they have had to “pare back” investment, including taking on new staff.
“We have to sell more with the same people and use technology to make us more efficient,” he continued. “It’s hard to justify taking on young people when for a little bit more money you can get somebody with a lot of experience.”
Jo Richards, director at Tivoli Travel, also agreed her business would be impacted by the increase in the minimum wage. “That does affect us and I’d like to upgrade all of the staff a little bit,” she added. “Generally, it might affect the industry by cutting back on staff and not hiring.”
Richards added she was still considering opening a fifth shop, but added: "It may be I hang fire and put it off for a few months."
Iain Kirkbright, managing director of Sunlounger Travel, said that the latest changes to business rate relief and bandings had “not done us any favours” and would further increase costs.
“The national insurance contributions have made the cost of doing business more expensive but with no benefits," he said. "We’ve got higher costs but we can’t pass them on to customers like the supermarkets can because people will just go direct.”
Customer resilience
Agents said clients continue to prioritise holidays, even if they have to trim their budgets due to cost-of-living pressures. “We hear customers talk about the budget – everybody has been chuntering about it," said Kirkbright. “But holidays seem to be a protected species and even as their costs go up, they don’t want to sacrifice their holidays.
“It’s very hard to judge how peaks is going to go as we’ve seen so much change in the booking patterns since Covid. November has been a really strong month for us – we’re 8% ahead of our target and sales are up by 66% compared to last November, although that does include having another store this year.”
Richards said customers still wanted to book holidays but some were reducing their budgets and the length of trips. “We are seeing more people delay their bookings, especially families, who are not looking to book so soon. That’s not so much the case with retired couples who have got disposable income,” she added.
“I’m expecting peaks to be similar to this year because you’ve still got those price hikes to electricity, gas and food. We had more bookings in February than January in 2025 but it evened itself out in the end.”
Douglas said there were signs in the run-up to the budget that clients “had decided to get on with it” and book their breaks. “We’ve had more affluent customers saying they want to spend their money before this government takes it,” he added. “Although we have seen a drop in the younger family market.”
Steve Witt, co-founder of homeworking agency Not Just Travel, said they had seen a “surge” in bookings since the budget was announced, as it helped to remove financial uncertainty for many clients following weeks of speculation.
“Just getting the budget out of the way has been good for consumer confidence,” added Witt. “That had an immediate impact on bookings as it went straight into Black Friday and pay day.
“We’ve seen a lot of offers from operators – some of the best offers I’ve ever seen. Consumers have realised they are better off booking a holiday. I also think we will have a strong peaks this year.”
