Table of Contents
Executive Summary
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- Impact of COVID-19 on travel money
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- Figure 1: Short, medium and long-term impact of COVID-19 on travel money, February 2021
- The market
- Brits’ spending abroad collapsed due to COVID-19
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- Figure 2: Market size and forecast for travel money, 2015-25 (prepared on 1 March 2021)
- COVID-19 restrictions continue to hold back summer plans
- Companies and brands
- COVID-19 has prompted a change in channel focus
- The consumer
- Cash is the top choice for overseas spending
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- Figure 3: Preferred methods of spending money abroad, December 2020
- In-store purchases remain the top choice for arranging travel money
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- Figure 4: Preferred ways to arrange travel money, December 2020
- Two thirds would prefer to get travel money in the fortnight before departure
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- Figure 5: Preferred timing of arranging travel money, December 2020
- Exchange rates and security are the top factors when choosing travel money
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- Figure 6: Important factors when choosing a payment method for spending money abroad, December 2020
- Costly overseas foreign exchange is the most common annoyance
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- Figure 7: Difficulties faced when using/arranging travel money in the past, December 2020
Issues and Insights
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- COVID-19 could threaten preference for cash payments abroad…
- …but non-cash options have security concerns to overcome
- Online channels have been boosted by the pandemic but stores retain value
The Market – Key Takeaways
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- Brits’ spending abroad collapsed due to COVID-19
- Europe continues to dominate spending by region
- COVID-19 restrictions continue to hold back summer plans
- Sterling performed well against the Dollar in 2020
Market Size and Forecast
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- COVID-19 travel restrictions removed most demand for travel money
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- Figure 8: Short, medium and long-term impact of COVID-19 on travel money, February 2021
- Overseas expenditure plummeted in 2020
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- Figure 9: Total annual expenditure on overseas trips by UK residents, 2014-20*
- Demand for travel will drive up spending, but expenditure will remain subdued
- COVID-19 will dictate the pace of the recovery
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- Figure 10: Market size and forecast for travel money, 2015-25 (prepared on 1 March 2021)
- Figure 11: Market forecast for travel money, 2020-25 (prepared on 1 March 2021)
- Overseas spending on holidays set to reach £41 billion in 2025
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- Figure 12: Market size and forecast for travel money – holidays segment, 2015-25 (prepared on 1 March 2021)
- Figure 13: Market forecast for travel money – holidays segment, 2020-25 (prepared on 1 March 2021)
- Market drivers and assumptions
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- Figure 14: Key drivers affecting Mintel’s market forecast, 2015-25 (prepared on 5 March 2021)
- Learnings from the last recession
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- Figure 15: Total annual expenditure on overseas trips by UK residents, 2007-12
- Forecast methodology
Market Segmentation
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- Europe dominates overseas spend
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- Figure 16: Annual expenditure on overseas trips by UK residents, by region of visit, 2010-20*
Market Drivers
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- COVID-19 restrictions continue to hold back summer plans
- Brexit brings new rules for travel to the EU
- Overseas trips fell by two thirds in the first half of 2021
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- Figure 17: Number of overseas trips by UK residents, by purpose of visit, 2016-20
- European destinations will continue to dominate post-Brexit
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- Figure 18: Number of overseas trips by UK residents, by destination, 2016-20
- Sterling performed well against the Dollar in 2020
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- Figure 19: Spot exchange rates, monthly average, US Dollar-Sterling and euro-Sterling, January 2016-January 2021
Companies and Brands – Key Takeaways
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- COVID-19 has prompted a change in channel focus
- Reassurance is a valuable marketing message
Competitive Strategies
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- COVID-19 prompted trade suspensions and store closures…
- …and saw advertising effectively stop
- Refund guarantees promoted to offer reassurance against cancellation…
- …and clean money services can ease hygiene concerns
- Travelex saved by restructuring deal
- Familiarity will be highly valued after the pandemic
- New Monzo accounts offer boosted overseas ATM allowances
- Currensea completes full launch and moves into SME space
- bidwedge launches online service to sell leftover currency
The Consumer – Key Takeaways
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- Preference for cash contrasts with COVID-19 concerns
- Online channels and later purchases
- Exchange rates and security are the top factors when choosing travel money
- Costly overseas foreign exchange is the most common annoyance
Impact of COVID-19 on Consumer Behaviour
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- Holiday bookings have been depressed throughout the pandemic…
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- Figure 20: Actual and planned holiday booking activity in the past/next three months, January 2016-January 2021
- …and most are waiting to make holiday plans for this year
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- Figure 21: Booking intentions for main holiday, 21-26 January 2021
- Strong consumer confidence should boost recovery in travel
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- Figure 22: The financial confidence index, January 2016-January 2021
- Hygiene concerns are pushing people away from everyday cash use
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- Figure 23: Impact of COVID-19 on cash use, April 2020-January 2021
Preferred Methods of Spending Abroad
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- Cash is the top choice for overseas spending
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- Figure 24: Preferred methods of spending money abroad, December 2020
- Monzo et al remain Millennial favourites
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- Figure 25: Selected preferred methods of spending money abroad, by generation, December 2020
- Most plan to use two or more spending methods on their next trip
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- Figure 26: Number of payment methods that people are likely to use on their next trip abroad, December 2020
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- Figure 27: Preferred methods of spending money abroad, by number of payment methods that people are likely to use on their next trip abroad, December 2020
Preferred Channels for Arranging Travel Money
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- In-store purchases remain the top choice for arranging travel money…
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- Figure 28: Preferred ways to arrange travel money, December 2020
- …but online holds mass appeal
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- Figure 29: Preferred ways to arrange travel money (NETs), by area, December 2020
Preferred Timing of Arranging Travel Money
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- Two thirds would prefer to get travel money in the fortnight before departure
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- Figure 30: Preferred timing of arranging travel money, December 2020
- Prioritise at-destination services for younger travellers
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- Figure 31: Preferred timing of arranging travel money, by age, December 2020
Factors Affecting Overseas Payment Method Choice
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- Just a fifth are influenced by refund guarantees
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- Figure 32: Important factors when choosing a payment method for spending money abroad, December 2020
- Value and security offer opportunities and challenges
- Preferential rates for repeat customers would be a major incentive
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- Figure 33: Selected important factors when choosing a payment method for spending money abroad, by whether people have been on holiday abroad in the last two years, December 2020
Travel Money Experiences
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- Costly overseas foreign exchange is the most common annoyance
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- Figure 34: Difficulties faced when using/arranging travel money in the past, December 2020
- One in 10 under-35s have suffered debit/credit card theft abroad
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- Figure 35: Difficulties faced when using/arranging travel money in the past, by age, December 2020
- Negative experiences prompt people to hedge their bets
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- Figure 36: Difficulties faced when using/arranging travel money in the past, by number of payment methods that people are likely to use on their next trip abroad, December 2020
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Total market forecast
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- Figure 37: Worst case and best case market forecast for travel money, 2020-25 (prepared on 1 March 2021)
- Holidays segment forecast
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- Figure 38: Worst case and best case market forecast for travel money – holidays segment, 2020-25 (prepared on 1 March 2021)
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