How long will the travel boom last?

REVENGE HOLIDAYS are in full swing and the travel industry is cashing in. After a rocky few years, the urge to splurge on airline tickets and hotels is set to bring in bumper earnings. Tour operators are inundated with bookings; hotel chains are raking in record profits. EasyJet has raised its earnings forecasts twice this year; IAG and Ryanair have both returned to profit for the first time since the start of the pandemic, and Singapore Airlines is handing out some of its record profits as bonuses worth eight months’ salary. With air fares rising faster than inflation, global airline bosses now expect $9.8bn in net income this year, more than double the amount initially forecast, according to the International Air Transport Association, an industry body.

The holiday boom has lifted the outlook for international travel. Worldwide tourist arrivals this year are expected to reach up to 95% of pre-pandemic levels, up from 63% in 2022, estimates the UN’s World Tourism Organisation. Share prices of travel companies, which tumbled in early 2022 amid fears of rising inflation and a looming recession, are soaring again (see chart). High prices have not deterred sunseekers so far. “People are prioritising travel over other discretionary spending,” says David Goodger of Oxford Economics, a consultancy. Still flush with cash saved during lockdowns, many are splashing out on holidays, even as they trim spending on clothes or dining out.