Technology spending in the UK travel sector set for record high in 2022

Technology spending in the UK travel sector set for record high in 2022

Spending on IT this year by the UK travel sector is projected to hit £1.98 billion, the highest level seen in data analysed covering the last 15 years for the Travolution Innovation Report  

UK travel sector spend on technology is forecast to hit record levels in 2022 having bounced back from a slump during the COVID pandemic.

According to latest government data analysed by Travel Weekly sister title Travolution for its annual Innovation Report the sector will increase IT budgets this year by 44% on 2021.

This will take overall spending on technology to £1.98 billion, the most in the 15 years for which the Travolution report has been compiling data, dating back to 2008.

At the height of the pandemic in 2020 IT budgets in travel were slashed by 28% to £1.33 billion and in 2021 recovered only marginally by 4% to £1.4 billion.

Previous spending highs by travel were seen in 2016 and 2019 when annual industry spending hit £1.84 billion.

The Travolution Innovation Report analyses Office for National statistics data for IT spend in five sub-sectors of travel: Travel Agents, Tour Operators, Hotels, Air Transport and Water Transport.

The data also covers budgets in five categories of IT spend: Hardware, Software, Telecom Services, IT Staff, and Computer Services, including outsourcing, consultancy, training and support. 

The Hotel sector overtook Travel Agents as the industry’s second-largest IT spender in 2021 as it benefitted from a domestic travel boom to recover earliest from the COVID pandemic.

Hotels’ £349 million outlay accounted for a quarter of travel’s total expenditure, while the Travel Agent sector’s £314 million spend accounted for 23%.

The 23% uplift in Hotel IT spend last year was by far the biggest in travel, although Travel Agents are forecast to mount a fightback this year with a 70% increase compared with Hotels’ 35%.

In 2021, Air Transport consolidated its position as travel’s biggest spending sector with 33% of the total, up from 29% in 2020. However, its £454 million outlay was a 6% year-on-year decrease.

Comparing 2022’s forecasts with pre-pandemic 2019 IT spend reveals the Hotel sector will see the biggest rebound with spending up 22%. No other sector records double figures. 

The Travel Agent sector’s 1% increase underlines how it is only regaining lost ground. Air Transport and Tour Operators are on 8% and 7% respectively and Water Transport remains in reverse at -5%.

The 4% growth in travel IT spend in 2021 lagged the national average of 8%, but the 44% predicted for travel this year is well ahead of forecast UK IT growth of 12%.

A digital version of the Innovation Report is available to download for free.