As the world cottons on to the concept of quality tourism, we also need to ask what happens to the low-cost tourism sector now.
In recent weeks, we have featured the shifting scene in both low-cost aviation and budget hospitality, the changes driven by evolving consumer preferences on top of socioeconomic issues affecting the global economy as well as tourism in general.
Given the ongoing scramble to cope with changes in terms of both aviation and hospitality, what could this mean for global tourism, particularly its low-cost segment?
One thing is for sure: current circumstances aren’t heralding the end, but serving more as a harbinger of change.
Key issues affecting the sector
In November 2024, experts at Simon-Kucher asked the question about whether or not we are seeing the end of the low-cost tourism era.
Their study revealed that the answer was more complicated than a simple yes or no.
The shift in travellers’ priorities paired with soaring inflation has made the bottom of the barrel costing model significantly impractical, for one.
Labour costs, in particular, have become the largest expense for many airlines, both full-service and low-cost, over the past couple years.
Both higher hiring and staff retention costs were among the reasons why a carrier like Spirit Airlines found itself in bankruptcy in 2025, and its labour issues were compounded further by sustainability mandates which called for adjustments regarding fuel use and the way the rising cost of fuel continues to drive up ticket prices.
Airlines are also challenged by the ongoing aircraft shortage which could run for another three years on top of unresolved supply chain issues from well before the pandemic.
In terms of hospitality, the biggest challenge involves regulatory matters in light of the way tourist-dense cities are clamping down hard on the short-term rental sector but have not necessarily made things easier for named hospitality providers and their smaller independent counterparts.
Low-cost tourists are also rethinking travel as some countries like Japan, Indonesia, and Spain have begun to charge doubled, even tripled, travellers’ taxes to counteract the adverse effects of overtourism.
Possible directions for 2026
Low-cost tourism operators, like the rest of the industry, need to adjust to the changing tides, so to speak.
In which case, such adjustments are currently taking the following forms:
- Stabilised pricing Experts say that base fares for many airlines will see stabilisation throughout this year after significant spikes between 2022 and 2025. But we will also be seeing a shift away from bundled pricing, giving travellers a better look at what they are or are not getting from the price of their airline ticket or their room rate;
- Personalised retailing With personalisation becoming the buzzword for 2026 within the global travel industry, options are skewing towards more personal and flexible offers, enabling travellers to pick and mix into their flights, stays, and itineraries to suit specific tastes and needs; and
- The shift towards secondary destinations While countries like Japan and Thailand will always have a following, those on a budget are setting their sights on destinations that are less popular but are certainly just as interesting. We are looking at a shift towards Eastern Europe among travellers, along with a boost in popularity for countries like Vietnam and even Laos in Asia; all of which are characterised by excellent options for both adventure and cultural tourism
All things considered, we are certainly not seeing an end for low-cost tourism; rather, we will be seeing a difference face and dimension to it moving forward.
