Three-quarters of Brits believe summer holidays have become a luxury only some can afford, as household financial pressures force families to make significant sacrifices to fund annual trips, says new research. Olivia Palamountain reports

New research by Compare the Market has revealed that summer holidays are now seen as a luxury by three-quarters of Brits, as the cost of living crisis squeezes cash flow and citizens go without.

A survey of 2,000 consumers found that 56% of those planning summer holidays remain concerned about the financial cost, whilst 28% admitted feeling pressure from family and media to take holidays despite being unable to afford them.

Many respondents have reduced spending across multiple areas to fund their breaks, with 36% cutting back on dining out, 33% reducing clothes shopping, and 28% limiting social events. A quarter have postponed major purchases such as cars or computers, whilst others have reduced savings contributions (24%), cancelled subscriptions (19%), or decreased food shopping budgets (17%).

The financial strain has driven Brits to various funding methods, with 54% relying on personal savings whilst others take extra work or overtime (21%), use credit cards (20%), seek family assistance (10%) or resort to loans (5%). Some have reduced utility usage (13%) or spending on haircuts and beauty treatments (15%) to afford holidays.

Domestic tourism has gained ground over international travel, with 32% planning UK-based summer holidays compared to 29% travelling abroad. An additional 17% planned both domestic and international trips, whilst the same proportion opted against summer holidays entirely.

Cost pressures have forced itinerary changes among those finding holidays less affordable, with 47% choosing cheaper destinations and 29% shortening trip durations. Others stayed with friends or family to reduce accommodation costs (15%) or cancelled plans completely (5%).

General cost-of-living increases topped the list of factors making holidays less affordable (72%), followed by higher travel costs (55%) and increased accommodation prices (44%). Additional concerns included financial uncertainty (28%), reduced household income (22%) and unfavourable exchange rates (15%).

The research highlighted significant generational differences in financial confidence and spending patterns. Only 16% of over-55s felt more optimistic about their finances compared to the previous year, substantially below the cross-generational average of 36%.

Less than one in ten over-55s (9%) found holidays more affordable than last year, contrasting sharply with 66% of 25-34-year-olds reporting improved holiday affordability. Despite financial constraints, younger adults spent most on summer holidays, with 25-34-year-olds averaging £2,287 in 2024 compared to the general population average of £2,005.

The younger demographic is expected to maintain higher spending levels, with projected 2025 expenditure of £2,440 versus the population average of £1,962. This pattern suggests different financial priorities and circumstances across age groups despite widespread economic pressures.

Sajni Shah, money expert at Compare the Market, notes that the findings reflect broader cost-of-living pressures affecting household budgets. The research underscores how discretionary spending on holidays has become increasingly challenging for many families navigating persistent inflation and economic uncertainty.

The shift towards domestic tourism represents both a practical response to financial constraints and potential opportunities for UK tourism operators. However, the pressure many feel to maintain holiday traditions despite financial difficulties highlights the social and cultural expectations surrounding annual breaks.