Growth has returned to the UK holiday market but package sales may have peaked. Ian Taylor reports
Mintel forecasts “steady year-on-year growth” for UK holiday sales over the next five years. The market-research firm’s annual UK Holiday Review predicts UK consumers will take more than 100 million holidays, overseas and domestic, in 2017 – up from 94 million last year.
However, it suggests recent growth in package sales will go into reverse.
The report, published this week, notes: “Economic recovery and improved household finances should see the overseas market enjoy steady growth, although a recovery to 2008 levels is unlikely.”
Mintel forecasts UK households will take almost 41 million overseas holidays by 2018, up from 36 million last year.
But it suggests that while consumer attitudes are “bullish towards taking a holiday”, the recovery is unlikely to draw in new consumers. Instead, says Mintel: “Economic recovery is likely to result in existing holidaymakers upgrading holidays, spending more on each trip and taking multiple trips each year.”
The report says a “significant” proportion of consumers who identify themselves as “struggling financially” intend to take an overseas holiday. Research for Mintel suggests 29% of this group took a holiday abroad in 2013.
Mintel suggests the biggest growth will be in independent bookings.
Research over the past year suggests 58% of UK holidaymakers booked their last holiday independently, although this includes domestic as well as overseas bookings.
The report says: “The long-term shift towards independent bookings halted during the recession and the package segment even clawed back market share [and] saw growth in all-inclusive products . . . as consumers sought to control their expenditure.
However, the shift towards independent bookings is set to resume.”
Mintel suggests this will be “driven by increasing smartphone and tablet penetration” and “increasingly powerful price comparison and prediction tools”.
This suggests growth could come in areas priced lower than packages, despite Mintel’s conclusion that total spending will rise at double the rate of bookings, because package holidaymakers are almost twice as likely to spend £2,000 or more on a booking as independent travellers.
Mintel’s research found 19% of package holidaymakers spent £2,000 or more and 47% £1,000 or more on their last holiday, compared with 11% and 27% respectively among independent bookers – although the findings cover domestic as well as overseas holidays.
The report notes all-inclusive packages are most popular among people with annual household incomes above £50,000, while non-all-inclusive packages are most popular among lower-income households, but both “are significantly more popular among holidaymakers with children”.
The Mintel research found half (52%) of 2,000 respondents took an overseas holiday in the past year.One in two (49%) who took their last holiday in Europe booked a package and one in three (33%) all-inclusive, against 46% who booked ‘independently’.
Two in five (42%) who travelled beyond Europe booked a package and 38% all-inclusive.
One in five (22%) who had a UK holiday booked a package.
The Mintel research was conducted in November among 2,000 UK internet users aged 16 and over, and identified 1,576 who had taken a holiday in the UK or overseas in the previous 12 months.
The Mintel Holiday Review – UK, January 2014, is available from Mintel. Email: travel@mintel.com
Early bookings: Operators ‘need to push value of booking in advance’
Consumers hold conflicting views on the value of booking early, says Mintel, and companies need to persuade last-minute bookers they are missing out.
Research for Mintel’s Holiday Review UK, published this week, found: “The longer in advance a respondent booked their last holiday, the more likely they are to agree they book in advance to get value for money.” At the same time: “Last-minute bookers are more likely to do so to get good value.”
Mintel suggests: “Brands need to persuade last-minute bookers that it is financially beneficial to book well in advance.”A study of 2,000 respondents found more than half who took a holiday – in the UK or abroad – booked less than two months in advance: 30% booked less than four weeks ahead and 15% less than two weeks; 44% booked more than two months in advance.
The report says: “The perception that booking at the last minute is a way to save money is a key driver behind short lead times.” It suggests: “One way to encourage early bookings would be to offer time-sensitive or limited-quantity deals and flash sales, fuelling perceptions of value for money.”
The report also forecasts a reversal in expectations of a boom in holiday spending by pensioners. Mintel warns: “Brands that target older people with extended holiday products are set to come under pressure.”
It suggests: “Affordable, bite-sized products such as mini-cruises are set to grow in popularity as retirees seek to emulate the lifestyles enjoyed by previous generations but with lower spending power.”
The report foresees general growth in short breaks to Europe “as increased spending power encourages consumers to supplement their main holiday with mini-breaks”.
Domestic sector: UK breaks ‘will rise but boom is over’
The UK domestic holiday market is growing but “the staycation boom is over”, according to Mintel.
The market researcher’s latest Holiday Review forecasts the number of domestic holidays and short breaks will increase
from 58 million last year to more than 61 million by 2018. Yet it concludes: “The boom years enjoyed by the domestic holiday market are arguably over.”
Mintel notes the domestic market “enjoyed a boom from consumer efforts to reduce expenditure” during the recession.
Now, it says, domestic growth has slowed and the sector “has emerged as a more mature market with broader appeal”.
The report expects average spending on domestic breaks to rise “as premium domestic holidays maintain their appeal”. It suggests this will be at the expense of “cut‑price alternatives” to travel overseas.
Mintel says: “Cheaper domestic holidays will likely see their share eroded as improving household finances see customers go back to taking holidays abroad.”
It adds: “Domestic holidays are significantly more likely to be short-notice, low-value impulse purchases than holidays overseas.”