How rising costs and lower confidence are changing how, when and where people travel

The current conflict between Iran and the United States is already having broader economic effects, particularly through rising oil prices, higher costs and growing uncertainty.

For tourism, the impact isn’t about where the conflict is happening.
It’s about how it affects confidence, spending and travel decisions.

It will change how people book, what they spend and how confident they feel about committing to a trip.

What’s changing in travel demand

International travel is often the first to be affected when uncertainty increases.

Rising fuel costs, pressure on airline pricing, and general instability tend to reduce demand, particularly for long-haul travel. At the same time, households begin to reassess spending, especially on higher-cost trips.

This doesn’t mean people stop travelling.
But it does mean they start to think more carefully about how, when and where they go.

What this means for the UK domestic market

At first glance, this kind of situation can support domestic tourism.

If overseas travel becomes more expensive or uncertain, some people will look closer to home. That can increase interest in UK holidays, particularly for shorter breaks or flexible trips.

However, that’s only part of the picture.

The more significant impact is the return of cost pressure.

Rising fuel prices feed through into everyday costs. Household budgets tighten. Confidence drops. And that affects all travel decisions, including domestic trips.

In practice, people respond in different ways:
• Some switch to UK holidays
• Some delay booking altogether
• Some still travel but spend less

So, demand is still there — but it becomes more difficult to convert into bookings.

This was already happening.  It’s now accelerating

Many of these patterns were already emerging.

Shorter booking windows, increased price sensitivity and more selective decision-making have all been evident in recent years. Research from the Moffat Centre and wider industry data for 2026 points to a market that is still travelling, but with a greater focus on value.

The current situation doesn’t change that direction.
It accelerates it.

What tourism businesses should focus on now

This is where it becomes practical.

1. Pricing needs to be right

In a more cost-conscious market, pricing is under greater scrutiny.

That doesn’t mean discounting.
But it does mean being clear, competitive and realistic about what the market will pay.

Properties or experiences that are overpriced for what they offer will struggle more quickly in this type of environment.

2. Clarity matters more than ever

People are comparing more carefully.

They want:

• clear pricing.
• clear information.
• and a straightforward understanding of what they are booking.

Uncertainty in the wider market increases the need for certainty at the point of decision.

3. Expect later bookings

As confidence tightens, booking behaviour shifts.

Expect:

• shorter lead times.
• more last-minute decisions.
• and less willingness to commit far in advance.

This has implications for pricing, availability and how you manage your business across the year.

4. Focus on your core market

Not everyone is affected in the same way.

Older domestic travellers, particularly those in the 50+ market, are more likely to continue travelling, yet remain value-conscious and selective.

Understanding who your business is for and ensuring your offer aligns with that market becomes even more important.

5. Domestic demand is not guaranteed

This is the key point.

An increase in domestic travel does not automatically translate into bookings for every business.

Visitors still make choices.

They will choose:

• the property that is clearly positioned.
• the one that offers value for money.
• and the one that gives them confidence at the point of booking.

The reality

Tourism does not operate in isolation.

Global events quickly translate into changes in cost, confidence and behaviour.

For UK tourism businesses, there may be an opportunity in a shift towards domestic travel. But it comes alongside increased pressure on pricing, demand and decision-making.

The businesses that perform well will be those that understand these shifts and respond to them clearly.

Not with more activity but with better decisions.

That might mean reviewing pricing, rethinking your offer, or being clearer about who you are trying to attract.

If you’re making those decisions just now, it’s worth taking a step back and looking at them properly.