Some UK domestic holiday and accommodation providers have increased prices exponentially throughout 2021 amid soaring ‘staycation’ demand, which could deter British tourists in 2022.

This will result in a lost opportunity for many UK tourism companies, that had a prime opportunity to increase competitiveness and add value that could have attracted domestic tourists for years to come. Instead, overinflated prices have effectively priced them out of the market for summer 2022 and beyond, when UK travelers are more likely to venture abroad again.

Current pricing strategy is not sustainable

With many tourists needing to reconsider their budgets due to the financial burden of the pandemic, summer 2021 was a prime opportunity for domestic holiday providers to add value to their offerings. Many could opt for the cheaper package holidays abroad in 2022, while some will choose not to travel, further pushing the need for domestic providers to increase customer loyalty this year. According to GlobalData’s Q2 2021 UK consumer survey, 26% of respondents cut out certain products from their budget due to the pandemic. Furthermore, in a in the same survey 36% of UK respondents said they were ‘extremely’ or ‘somewhat’ concerned, about their financial situation, highlighting the travel industry’s need for competitively priced products.

Throughout 2021, some UK domestic holiday and accommodation providers have been ridiculed by the British press, with some investigations reporting a 100% Year-on-Year increase in prices. Many would-be domestic tourists have compared costs to all-inclusive European package holidays, finding international holidays, which often includes flights, accommodation, transfers, food, and drink, often cheaper for the exact dates. Numerous companies have been in the eye of the storm regarding outrage over price increases which range from 12 to 100 percent, with popular brands Sykes Cottages, Center Parcs and Haven Holidays named in the British media.

While it has been a relief for the UK tourism industry to see domestic tourism pick up, it is disappointing to see companies cash in on short-term rewards rather than looking at the long-term stability of the UK domestic tourism industry. There was a major opportunity for companies to create a unique British holiday experience and add value in the process. Unfortunately, this opportunity has been lost for many staycation providers due to an over-exploitive attitude towards traveler demand.

Staycation providers need to understand outbound travel is still a competitor

With parts of Europe opening to tourists again, travelers are comparing prices. Ultimately, businesses inflating prices are pricing themselves out of the travel market which is self-destructive and not viable in the long-term. Domestic holiday companies need to understand the competitive nature of outbound travel operators and the fierce competition they create. Jet2holidays and TUI lead the way in offering package holidays as they have substantial control over their supply chain, passing savings on to the traveler in the form of competitive prices.

On reflection, UK domestic holiday providers’ aggressive ‘cash-in on-demand’ approach appears naive and short-sited and outbound tour operators are likely to win back old customers quicker than expected.