A combination of economic factors is likely to prevent the UK tourism sector from recovering for at least five years, according to a new report from Mintel.

Higher fuel prices, pushing up the cost of flights, and a rise in VAT scheduled for January 2011 will both hit demand, says the British Lifestyles 2010 report.

According to the Mintel research, the overall spend on overseas holidays by British holidaymakers will to rise by 17 per cent over the next five years.

However, while this is significantly more than from 2005 to 2010, the rise will be driven by higher holiday costs.

“In constant price terms, expenditure on holidays will decline by 1.6 per cent between 2010 and 2015,” the report argued.

“Changing exchange rates and higher fuel costs will play a major role in holiday prices in the coming years and higher prices will limit volume growth.”

One Big Holiday

Despite David Cameron’s plea for Brits to take more domestic holidays earlier this month, overseas holidays and short breaks are predicted to grow at the expense of domestic trips and longer holidays.

The demographics of those taking such holidays is also likely to change, finds Mintel, with consumers spending between £1,000 and £3,000 on their holidays likely to be hit hardest.

Those spending more than £3,000 have been less affected by the recession.

“Holidays are now seen as a luxury item of spending by almost half of adults, which compares to just 38 per cent having this view before the recession in 2007,” the report adds.

“Less than one in five adults see holidays as a necessary spend or a ‘right’.”

Despite the falls the holiday sector was worth £32.3 billion in 2009, equivalent to just over £10 per person per week.

The report concluded: “In the coming years, while beach and family holidays will continue to dominate the market, more diversification will be seen in holiday types,” claimed Mintel.