Travel & Entertainment

Here to stay(cation)

According to recent Cardlytics data, we found that UK staycations will be most popular among holiday makers, with nearly half (44%) of those planning to go on holiday this year opting to stay local, compared to short-haul (38%) and long-haul (24%) destinations. Holiday lettings providers like Airbnb and Vrbo have also seen increased transaction volumes maintain year-on-year. Transaction volumes a year ago (December 2022 into January 2023) hiked 54% year-on-year, reaching 60,353 transactions, with similarly high levels this year (58,562 transactions) indicating a shift from more expensive hotel bookings.

Tour de Force

Tour operator providers such as Tui, Virgin Holidays and Jet2 have seen a continuation of their post-Covid revival, with transaction volumes growing 7% year-on-year, after a massive 61% growth against the previous period (December 2021 into January 2022). This is a further indicator of travellers seeking value where they can.

Airlines take off

Alongside those seeking to stay local, airlines such as British Airways and Virgin Atlantic also saw a rise in spending, with overall spending up 13% year-on-year, and transaction volumes up 15% in the same time period. This indicates those that can afford longer-haul destinations are prioritising doing so, as the high cost-of-living shows signs of easing. Budget airlines also saw a 3% rise in spending, with the volume of transactions up 2% year-
on-year.
According to Hannah Collins, Partnership Director, Travel: “We are continuing to see the real effect the cost-of-living crisis is having on travel spending, with the increase in domestic holiday bookings demonstrating the focus on finding more affordable getaway options. “That said, people are on the hunt for their ideal 2024 holiday – they’re just seeking the best possible deals and promotions on the market. With that in mind, travel brands and booking sites need to ensure they’re offering the most targeted and personalised discounts and rewards to ensure they continue to attract and retain customers to drive incremental growth in what’s set to be another tough operating environment this year.”

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Download our infographic here.

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Cardlytics data is based on spending from over 20 million UK bank accounts. This data is based on spending between (unless stated): The four weeks leading up to 8th January of each year:

• This year (2023/24): 7th December 2023 – 8th January 2024
• Last year (2022/23): 8th December 2022 – 7th January 2023
• 2021/22: 9th December 2021 – 6 th January 2022

The poll was conducted by Opinium, based on a sample of 2,000 adults between 12-16th January 2024.

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• The cost-of-living crisis sees the return of the staycation with spend up 20% on domestic holidays
• Tighter budgets have seen travellers swap to budget airlines with the number of trips for these brands increasing 23% year-on-year
• Brits have been looking for ways to save with a massive 50% increase in offers and rewards claimed on travel purchases compared to last year

Consumers haven’t cut back on their holidays but are looking for cheaper options and deals as the cost-of-living crisis takes hold, according to new data from advertising platform Cardlytics.

The data, based on transactions from over 20 million UK bank accounts, shows that the number of holidays booked between April and June increased 7% on last year. However, average spend on travel across the board has flatlined. With just a 1% increase in average transaction values year-on-year, it seems that consumers are looking for ways to get away without breaking the bank.

For many this means holidaying closer to home, with staycations on the rise as domestic holiday spend increases 20% year on year. After a boom during the pandemic, UK-based getaways are back on the map with the number of trips up 40% when compared to the first quarter of this year, and up a further 4% on the same time period in 2022.

For those looking to go further afield for less, budget airlines have been the way to go. Average spend at these airlines has increased by 3% compared to last year. Whilst some of this can be attributed to increasing prices, the number of trips people have booked with these brands has followed a similar trajectory, rising a massive 23% compared to 2022. As travelers trade down, long-haul airlines have seen slower growth in the number of bookings at just 2% increase year-on-year. Whilst average spend with these brands has seen an uptick of 6% since last year, the lower number of trips indicates this increase is likely due to fuel increases and inflation leading to increased costs.

Getting the best rewards and discounts is top of mind for consumers looking to save on their summer travel, as cashback redemptions on these purchases see a 50% increase between April and June compared to last year.

Many holidaymakers have turned to package deals for not only value but convenience. Whilst average spend is down 2% year-on-year, the number of package holidays booked is up 13% on last year showing that consumers are still purchasing these deals, but they’re looking for the cheapest options.

Reinforcing that trend, online travel agents have also seen growth, with the number of trips booked up 22% on last year. This is coincided with a 5% rise on average transaction values, with inflation likely the cause behind this.

Hannah Collins at Cardlytics said: “With the summer break well under way, we are now starting to see the real effect the cost-of-living crisis is having on consumer travel spending. Whilst it’s positive that people are still booking getaways, price is becoming an increasingly important differentiator. Travel brands need to show they understand customer needs with tailored discounts and rewards in the channels they use most to encourage spend. This will be key in attracting those seeking a last-minute summer deal or a cheaper Autumn break.”

Methodology

Cardlytics data is based on spending from over 20 million UK bank accounts. This data is based on spending between (unless stated):

• 30th March – 29th June 2023
• 31st March – 30th June 2022

About Cardlytics

Cardlytics (NASDAQ: CDLX) is a digital advertising platform. We partner with financial institutions to run their banking rewards programs that promote customer loyalty and deepen banking relationships. In turn, we have a secure view into where and when consumers are spending their money. We use these insights to help marketers identify, reach, and influence likely buyers at scale, as well as measure the true sales impact of marketing campaigns. Headquartered in Atlanta, Cardlytics has offices in Palo Alto, New York, Los Angeles, and London. Learn more at www.cardlytics.com.

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The travel industry has shaken off stagnation, showing growth in the first three months of this year according to new data from digital advertising platform, Cardlytics.

New spend data from over 24 million UK bank accounts for the period 1 st January to 31 st March 2023 has revealed that spend on flights and holidays has risen 27% in the first three months of this year compared with 2022, an increase of 40% from pre-pandemic levels.

For airlines, the number of transactions rose by 36% year-on-year between 1 st January and 31 st March 2023, while bookings for package holidays were up by over a quarter (27%) over the same period.

However, as consumers continue to feel the impact of rising inflation, there are signs that people are seeking out budget-friendly options. Low-cost airlines saw spend rising at a faster rate than the rest of the industry, up 42% year-on-year in Q1, compared with a 29% increase for other airlines.

At the same time, the number of people redeeming discounts and offers through their bank accounts for travel purchases rose sharply at 79% year-on-year as customers look for deals and offers to mitigate the impact of rising prices.

Whilst spend is on the rise, average transaction values have grown at a slower rate than inflation, indicating that consumers are seeking out cheaper alternatives for holidays and looking for lower-cost deals. The average amount people spent on standard flights fell by 2% year-on-year to £342.69, while spend on budget airlines grew by 12% to £137.50. Package holidays grew by 7% year-on-year to an average of £538.68 per transaction.

Shifting away from pandemic habits

Last year’s travel disruption has left an impact on consumer purchase habits with cancellations and refund difficulties, leading to the number of travel purchases made through comparison sites falling 12% in 2022. Whilst aggregators have seen a slight recovery in the first quarter of 2023, transactions are still down 2% on pre-pandemic figures.

In contrast, direct bookings through providers have increased compared to pre-pandemic levels, with transactions directly through airlines increasing 50%, while package holidays have seen a 41% growth in transactions since 2020.

The pandemic saw the rise of the domestic holiday – quickly dubbed the ‘staycation’ – and transactions at UK holiday providers such as Parkdean, Centreparcs, Butlins and Haven Holidays peaking last year, with 692,000 transactions in the first three months of 2022. In contrast, this year transactions on such trips fell by 23%. International package holidays grew by 27% over the same period, as people swapped local breaks for more exotic destinations.

Mike Glegg, VP of Sales at Cardlytics, commented:

“The travel industry will be buoyed by strong consumer spend in the first quarter of 2023 following a turbulent few years of lockdowns, cancellations and delays.

“It’s encouraging to see increased confidence in bookings despite tighter budgets and rising prices, but aggregators will now be looking to capitalise on this and win-back trust from their customer base after last summer’s disruption.

“Travel brands will now need to consider how to reward loyal customers and continue winning new segments of the market. Investing in discounts and loyalty programs will be critical to achieving this, demonstrating their value for consumers, particularly as rising prices continue to constrict budgets.”

The travel industry has faced an uphill battle over the past few years. Covid-19, cancellations, labour shortages and rising operating costs have all beset the industry with issues. 

Many punters have in turn forgone their normal holidays abroad or ditched the business travel, swapping flights to Portugal for trains to Cornwall and face-to-face meetings for Zoom calls.  

It was therefore unsurprising that as restrictions lifted, travel spend skyrocketed as consumers made up for lost time, splashing the cash to make their next trip better than ever. 

Cardlytics spend data across 24 million UK bank accounts shows that travel brands across the sector have seen spend increase in the past year. Total spend on airlines grew 542% between 2021 and 2022 whilst package holiday’s (496%), holiday rentals (222%) and even UK retreats (111%) saw significant rises in the same period. 

However, headwinds loom. The industry is facing unprecedented staff shortages, while a cost-of-living crisis is likely to put a squeeze on the amount consumers are willing to spend on their holidays. 

Looking to the next 6 months, how can travel brands win back customer loyalty as we head towards the winter travel and January holiday booking season?

Invest in certainty

Overall spend on package holidays has increased by 171% in the past six months compared to prior same period, pointing to the fact that consumers are increasingly opting for package deals that offer more protection and support when things go wrong.  

Investing in certainty will go a long way in helping to rebuild trust and get consumers booking their trips again, whether it is offering extra protection on holidays or the choice for free cancellation, giving consumers choice and backup options will help to incentivise bookings. 

Focus on affordable getaways

Despite the post-Covid boom in bookings, the cost-of-living crisis will tighten purse strings and as consumers cut-back on non-essential spending, luxuries like holidays could be one of the first things to go. Recent Cardlytics consumer polling of 2000 UK adults shows that two in five (42%) consumers are already planning to reduce the number of holidays they take this year.

As travel brands struggle themselves with increased operational costs and inflation, prices are only set to rise. The average spend per purchase across the travel sector has already seen an increase of 26% in the past 6 months compared to the previous 6 months.

With prices increasing, consumers are likely to opt for shorter mini-breaks and more affordable destinations. For brands, this is an opportunity to offer more flexible and value driven options that suit peoples’ needs now but help to retain customers in the long term.

Reward customers and build loyalty

Disposable income is continuing to decline, leading to more consumers turning to loyalty programmes and discounts to save. Our consumer research showed that 59% of consumers are reacting by utilising discounts, rewards, and offers by searching for more discount codes online before they make a purchase.

Travel brands need to seize this opportunity to offer tailored incentives to help their customers save money but also build loyalty and ensure they keep coming back. The travel industry is renowned for its loyalty programmes, now is the time to take them up a notch. 

List with price comparison sites to increase exposure

Consumers aren’t just looking to discount codes to save their spending. Cardlytics consumer polling showed that 73% of consumers plan to shop around more this year for the best deals whilst 58% intend to use price comparison sites more. 

Brands need to tap into this savvy customer base by featuring on price comparison sites. This not only increases visibility and exposure but also makes it easier for customers to find a brand’s deals.

Memorial Day weekend historically marks the unofficial start of summer travel. But this year, it also served as a bellwether of whether consumers would be ready to travel again. Our purchase insights show that, in the near term, travel post-COVID may be considerably changed.  

Consumers still want a change of scenery, but they are turning to more regional and local destinations. Airline and cruise spending were still significantly down compared to this time last year— -77.6% and -85.8% respectively, but we’re seeing signs of return in other travel categories. 

As further evidence of the shift toward local and regional travel, customers are rapidly returning to car rentals. Car rental spend increased +30.8 points to –42.7% after hitting a low of -73.4% year over year in early April. This suggests that customers are once again taking summer road trips to driver-friendly destinations. 

At first glance, hotels & lodging recovered the most by Memorial Day weekend, but within the aggregate figures is an important shift. Spend increased +38.1 pts from a low the week of 4/2 (this category is now pacing at –47.8% from a low of -85.8% YOY). However, most of these gains were driven by alternative lodging and homestay brands – not traditional hotels.  

Alternative lodging leads the path forward

Alternative lodging spend is now showing a positive increase of +16% year-over-year, surpassing even last year’s Memorial Weekend spend. In comparison, traditional hotel brands remained down -61.6% year over year. Because alternative lodging is typically paid for in advance, it can serve as an early indicator of upcoming travel spend. However, the dramatic recovery of this category has significantly outpaced the slower turnaround of other industry spend for many weeks and seems to indicate an accelerated adoption of vacation rental disruptors.

Actionable tip: minimize the impact of disruptors

COVID-19 has changed consumer behavior. Across the board, disruptors are rapidly gaining a foothold over their traditional counterparts. We’ve seen the shift in spend toward e-Commerce retailers, online grocery, third-party restaurant delivery, and now, alternative lodging.  

Prior to COVID-19, hotel spend was growing so quickly that it allowed for the expansive growth of alternative lodging without significantly impacting the growth prospects for the major hotel brands.  But with alternative lodging and homestay brands devouring summer leisure travel demand again while traditional hotel spend remains in steep decline, this represents a more significant threat. Hotels and other impacted categories need to act quickly to bring their customers back before they’re lost for good. 

Drive growth with our trusted, fraud-free ad platform

Using purchase insights, Cardlytics can identify customers who have started to resume spending in relevant categories and engage them with highly targeted offers in our 100% brand-safe and fraud-free ad platform. These offers reach real customers in their online and mobile banking channels while they’re thinking about how to spend their money. Our campaigns minimize the risk associated with returning to marketing with a pay-for-performance model. We drive proven results and positive cashflow with no upfront costs.

Want more actionable insights?

With insight into 50% of US transactions, Cardlytics puts purchase insights into action every day for advertisers in banks’ digital channels. Whether marketers are experiencing ups or downs in consumer spend, we're here to help our clients navigate the curve and drive measurable sales. Contact us for an analysis and campaign strategy customized for your brand.

These insights were recently featured in our State of Spend report, which follows important shifts in consumer spend and track early signs of recovery. Download our latest State of Spend Report today and be sure to check back for the next issue.

Analysis in this report is based on data derived from the Cardlytics platform between March 5th and June 3rd. While analysis is representative of purchase behavior, it does not include every customer or every financial institution on the Cardlytics platform.