Insight Report 2025

Executive Summary:

Travel on track for a sustainable and prosperous future

The travel industry has experienced a resurgence since the pandemic, with a rise in demand for experiences fuelling growth. Key indicators such as air passenger numbers and hotel revenue per available room have not only recovered but have, in many cases, surpassed 2019 levels.

Travel providers, online platforms, and destinations are continuing to invest heavily to attract holidaymakers and users. This period of growth has also allowed the industry to invest more in innovation and address existing challenges.

However, economic forecasts paint a mixed picture for the UK, as despite a weakening economy in the second half of 2024 with business and consumer confidence falling, modest growth is expected in 2025. Although consumers remain prudent, seeking value‑for‑money options or shorter breaks, they have continued to ring‑fence their travel budget by compromising elsewhere. Corporate travel, particularly for large corporations, is expected to remain below pre‑pandemic levels as cost control and sustainability remain top priorities.

Sustainability is no longer a buzzword but a core business imperative. Consumers are increasingly demanding sustainable travel options and investors are prioritising businesses with strong environmental, social and governance (ESG) credentials. The aviation and cruise sectors, in particular, face significant pressure to reduce their carbon footprint by investing in alternative energy sources and technologies. Hotels are also embracing sustainability initiatives, and certification schemes are gaining traction.

The hospitality, aviation and cruise sectors face an assortment of challenges and opportunities in 2025

Atol reform, when it comes, will likely reshape the financial framework for package holidays, strengthening consumer protection but potentially increasing businesses’ compliance costs. Any changes to the Package Travel Regulations will require careful navigation. The Digital Markets, Competition and Consumer Act 2024, now in effect, will continue to reshape the industry’s approach to pricing and customer interactions. And the CMA’s enhanced enforcement powers demand greater compliance, particularly regarding drip pricing and the use of fake reviews.

Two years of experimentation with artificial intelligence (AI) has started to highlight the most promising short‑term applications for this technology. AI is rapidly transforming the travel experience, from hyper‑personalised marketing and dynamic pricing to optimised operations and enhanced customer service. However, ethical considerations and data security remain paramount.

The hospitality, aviation and cruise sectors face an assortment of challenges and opportunities in 2025. To remain competitive, hotels are focusing on enhancing the guest experience, while airlines and cruise operators face geopolitical uncertainties. Sustainability is a key theme for all three sectors, with hotels implementing energy efficiency measures, waste reduction programmes and responsible sourcing practices; airlines grappling to meet SAF usage targets; and cruise lines investing to reduce their carbon footprint.

Although the travel industry is expecting another year of strong performance in 2025, it needs to keep pace with the evolving economic and regulatory landscape, technological advancements and an ever more demanding new generation of travellers. This report provides a comprehensive analysis of the key trends shaping the travel landscape in 2025, offering insights and recommendations to help businesses thrive in this dynamic environment. By embracing innovation, prioritising customer experience and navigating the regulatory landscape effectively, the travel industry can ensure a sustainable and prosperous future.

Consumer research for this report suggests outbound travel businesses can expect a strong 2025. The survey, conducted in early January, suggests three out of five UK adults (59%) intend to take an overseas holiday this year, nine percentage points up on a year ago in what proved a record year.

More than half those likely to book an overseas holiday expect to spend more than last year. However, concerns about the cost of travel come through strongly. Half the respondents said they are more concerned about the price of holidays this year than previously, putting a premium on value for money. Two out of three, including 63% of parents with children, said they would look to travel outside peak season – which might result in a lot of term-time fines.

Research highlights conflicting consumer attitudes to sustainability and climate change

Half those with children and almost three out of five adults planning a holiday said they plan a main break of less than seven nights, while demand for all-inclusive accommodation appears at an all-time high with 59% saying they plan to book all-inclusive, nine points up on 2019.

Alongside strong intent to travel and cost concerns, the research highlights conflicting consumer attitudes to sustainability and climate change. Half those planning a holiday admit to concern at how hot their destination might be, and two-thirds of parents suggest they may choose a cooler destination or time to travel. But one in three admit to ‘no concerns’ about sustainability when on holiday.

Chancellor Rachel Reeves’ backing for a Heathrow third runway and expansion at Gatwick and Luton, confirmed in January, will ensure the sustainability of flying remains high up the political agenda. There has been progress on addressing the need to decarbonise travel with the government’s SAF Mandate. But we await a step change in progress and any fall in travel’s total emissions.

Concerns about overtourism, brought sharply into focus by protests in some destinations last year, appear also likely to grow, alongside the imposition of tourism taxes. The industry’s default position towards taxes on tourism has been hostile. This may have to change. Thoughtful use of tax revenues may be a way to make high-volume tourism more sustainable.

Concerns about overtourism appear likely to grow, alongside the imposition of tourism taxes

The digitisation and use of biometrics in border processes moved forward with the UK extending its Electronic Travel Authorisation (ETA) system to visiting nationals from 54 countries in January and due to extend it to European arrivals from April. The government’s decision to hike the ETA fee to £16 was, unsurprisingly, poorly received.

EU roll-out of its Entry/Exit System (EES) and European Travel Information and Authorisation System (ETIAS), which UK nationals will need to enter the EU, remained stalled as this report was finalised but the EES will surely be in place before the year is out.

Travel retail remains strong, but we look in this report at retail more generally to see what if any lessons it might provide.

I am indebted to Service Science for the research and to Deloitte and the many Deloitte contributors for their time.

Bringing insight and expertise together

Service Science is a market research agency specialising in the hospitality, leisure, tourism and travel sectors. We work with clients to bring actionable findings, from their customers, people and supply chain, to help improve the customer experience.

We have four practice areas:

● Think Like Your Customers: using behavioural science techniques, qualitative and quantitative, we provide insight to help understand and influence customer behaviour.

● Online Reputation Management: through the monitoring and management of online reputation we provide the means to increase loyalty and maintain clients’ competitive edge.

● Strategic Online Data Intelligence: using multiple sources we unlock the power of online data to provide insights and travel intelligence tools to destination managers, tourist organisations and operators.

● Service Quality Measurement: through mystery shopping, brand standards audits and survey tools we ensure clients deliver exceptional service.

Clive Nicolaou
managing director,
clive@servsci.com

Service Science was founded in 2010 by Clive Nicolaou, a market researcher with 30-plus years’ experience in the hospitality, leisure and tourism sectors.

Prior to that Clive was head of hospitality and leisure at Kantar TNS having previously been a successful operator in the hospitality sector.

He is a fellow of the Institute of Hospitality and a member of the Market Research Society.

Tom Costley
associate director
tom@servsci.com

Tom is the most experienced researcher in the team with more than 40 years’ experience in market research from both a client and agency perspective.

He has wide-ranging experience but especially in travel, transport and tourism research. Prior to joining Service Science in 2018, Tom headed the travel and tourism team for Kantar TNS, the UK market leader in travel, transport and tourism.

His client portfolio included national tourism organisations, leading operators, airlines, hotel groups and travel firms. He is a fellow of the Tourism Society.

The team works across the globe on complex, major programmes and projects for some of the industry’s largest companies. Our dedicated team offers a range of integrated services ranging from audit and tax advice to more specialised advisory, corporate finance, strategy, technology and operations excellence, blending deep industry knowledge with core methods and techniques.

Our team provides insight and understanding of the challenges of today’s environment and the ever‑changing travel and aviation landscape. We work with most of the world’s leading companies and provide an outstanding service – with a focus on maximising value for our clients and enabling them to make informed decisions.

If you would like to discuss any of the topics in this report, or our services, please contact one of our travel and aviation specialists.

🔗 Deloitte - Transportation, Hospitality & Services

Contributors