Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The market
- Value of overseas spending is expected to increase from 2014
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- Figure 1: Forecast for annual spending abroad by UK residents, 2007-17
- Channels to market
- Market factors
- Overseas holiday numbers remain below peak levels
- New measures coming in at the end of 2012 following a review by the OFT
- More adults choosing to go on package and all-inclusive holidays
- Weakness of Sterling means consumers getting less currency for their money
- Companies, brands and innovations
- Post Office is the number one player in the travel money market
- Brand promotion
- Who’s innovating?
- The consumer
- Travel and holiday trends
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- Figure 2: Holidays taken in the last 12 months, August 2012
- Methods of spending abroad
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- Figure 3: Travel money usage, August 2012
- Travel money arrangements
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- Figure 4: Travel money arrangement, August 2012
- Amount of foreign currency taken
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- Figure 5: Amount of currency taken abroad, August 2012
- Important factors when arranging travel money
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- Figure 6: Important factors when arranging travel money, August 2012
- Consumer attitudes towards currency cards
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- Figure 7: Currency card attitudes, August 2012
- Consumer attitudes towards travel money
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- Figure 8: Attitudes towards travel money and spending, August 2012
- What we think
Issues in the Market
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- Have distribution channels changed in the travel money market?
- Are prepaid cards now more popular than travellers cheques?
- What are the most important factors when consumers arrange travel money?
- Can providers develop and offer bundle packages to travellers?
Trend Application
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- A one stop shop for travellers holiday needs
- Facilitating currency exchange between overseas travellers
- 2015: Access Anything, Anywhere
Market Drivers
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- Key points
- Holiday numbers remain significantly down from 2008 levels
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- Figure 9: Number of overseas visits by UK residents, by purpose of visit, 2006-11
- Europe is the most popular destination for UK holidaymakers
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- Figure 10: Number of overseas visits by UK residents, by region visited, 2006-11
- OFT’s measures to improve the foreign currency market to begin by end of 2012…
- …and should benefit overseas travellers
- Growing number of travellers taking package and all-inclusive holidays
- Increase in the number of consumers with homes abroad
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- Figure 11: Number of English households with a second home abroad (three-year moving averages), 2000/01-2009/10
- Economic uncertainty is a challenge for consumers and the travel money market
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- Figure 12: GDP quarterly percentage change, Q1 2008-Q3 2012
- Holidays are still important to consumers
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- Figure 13: What people choose to spend any extra money on, November 2012
- Holidaymakers still getting less for their money
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- Figure 14: Spot exchange rates, US dollar and euro into Pound Sterling, January 2008-November 2012
SWOT Analysis
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- Figure 15: Travel money – SWOT analysis, 2012
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Who’s Innovating?
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- Key points
- Prepaid cards expanding their services
- Promotion goes online
- Technological innovation focus on mobile apps…
- …but ‘e-wallets’ are something to watch in the future
Market Size and Forecast
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- Key points
- Overseas spending has been relatively flat over the last three years
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- Figure 16: Annual spending abroad by UK residents, at current prices, 2007-12
- Holiday visits account for around 68% of overseas spending
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- Figure 17: Annual spending abroad by UK residents, by purpose of visit, 2004-11
- Overseas spending largely channelled to European destinations
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- Figure 18: Annual spending abroad by UK residents, by region of visit, 2004-11
- Gap between the value of debit and credit card transactions is closing
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- Figure 19: Volume and value of credit and debit cards purchases outside the UK, by type, 2003-11
- Market forecast
- Value of overseas spending is expected to increase from 2014
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- Figure 20: Forecast for annual spending abroad by UK residents, 2007-17
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- Figure 21: Annual spending abroad by UK residents, at current and constant prices, 2007-17
- Forecast methodology
- Fan chart explanation
Market Share
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- Key points
- Post Office is the number one player in the travel money market
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- Figure 22: Travel money market share, August 2012
- Lloyds TSB, Barclays and NatWest are the top three current account providers
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- Figure 23: Main current account provider, by individual brand, April 2012
Companies and Products
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- American Express
- Company description
- Product range
- Key data
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- Figure 24: Key financial data for American Express Payment Services Limited, 2010-11
- Marketing and promotion
- Barclays/Barclaycard
- Company description
- Product range
- Key data
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- Figure 25: Key financial data for Barclays Group, 2010-11
- Marketing and promotion
- Caxton FX
- Company description
- Product range
- Key data
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- Figure 26: Key financial data for Caxton FX, 2011-12
- Recent activity
- Marketing and promotion
- FairFX
- Company description
- Product range
- Key data
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- Figure 27: Key financial data for Fair Fx, 2010-11
- Recent activity
- M&S Bank
- Company description
- Product range
- Key data
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- Figure 28: Key financial data for Marks & Spencer UK, 2010-11
- Recent activity
- Marketing and promotion
- Post Office
- Company description
- Product range
- Key data
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- Figure 29: Key financial data for Royal Mail Group, 2010-11
- Recent activity
- Marketing and promotion
- Thomas Cook
- Company description
- Product range
- Key data
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- Figure 30: Key financial data for Thomas Cook UK, 2010-11
- Marketing and promotion
- Travelex
- Company description
- Product range
- Key data
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- Figure 31: Key financial data for Travelex UK ltd, 2010-11
- Recent activity
- Marketing and promotion
- TUI Travel
- Background
- Financial performance and strategy
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- Figure 32: Financial performance of TUI Travel Plc, 2010-11
- Recent activity
- Marketing and promotion
Brand Communication and Promotion
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- Key points
- Adspend is significantly down from 2008/09 levels
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- Figure 33: Topline advertising expenditure in the travel money market, 2007/08-2011/12*
- The Post Office and M&S Bank account for 72% of total adspend
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- Figure 34: Top 10 advertisers of travel money services, 2007/08-2011/12
Channels to Market
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- Key points
- A large number of adults use online resources to compare the best rates
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- Figure 35: Agreement with the statement ‘I use the internet to compare the best rates’, August 2012
- Branch business is still the dominant sales channel
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- Figure 36: Sales channels used for foreign currency in the UK, 2008-10
Travel and Holiday Trends
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- Key points
- Around 55% of internet users holidayed abroad in the last 12 months
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- Figure 37: Holidays taken in the last 12 months, August 2012
- Only a small proportion of consumers take multiple holidays abroad
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- Figure 38: Number of holidays taken abroad in the last year, August 2012
- Income and socio-economic standing are highly influential on holiday trends
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- Figure 39: Holidays taken in the last 12 months, by socio-economic grouping and gross annual household income, August 2012
- Londoners are more likely to travel abroad
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- Figure 40: Holidays taken in the last 12 months, by region, August 2012
- Independent holidays are most popular with consumers
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- Figure 41: Type of holiday taken, August 2012
Methods of Spending Abroad
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- Key points
- The majority of travellers take some foreign currency when going abroad
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- Figure 42: Travel money usage, August 2012
- Currency card usage overtakes travellers cheques
- Product usage influenced by a number of factors
- Travel destination has an impact on preferred methods of spending
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- Figure 43: Methods of spending abroad, by travel and holiday trends, August 2012
Arranging Travel Money
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- Key points
- Post Office is the most popular way to arrange travel money
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- Figure 44: Travel money arrangement, August 2012
- Retailers, airports and other sources account for some business
- Travellers to Asia are more likely to purchase currency at destination
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- Figure 45: Travel money arrangement, by destination of holidays taken in the last 12 months, August 2012
- Travel agents are more popular among travellers on all-inclusive and package holidays
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- Figure 46: Travel money arrangement, by type of holiday taken, August 2012
Amount of Foreign Currency Taken
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- Key points
- One in two travellers takes between £250-1,000 when leaving the UK
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- Figure 47: Amount of currency taken abroad, August 2012
- Higher earners more likely to take higher amounts of foreign currency
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- Figure 48: Amount of currency taken abroad, by gross household income, August 2012
- Currency cards and travellers cheques more popular when taking higher sums
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- Figure 49: Travel money usage, by amount of currency taken abroad, August 2012
Important Factors When Arranging Travel Money
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- Key points
- Commission-free services and exchange rates are most important factors
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- Figure 50: Important factors when arranging travel money, August 2012
- Holidaymakers are even more likely to emphasise the importance of exchange rates
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- Figure 51: Important factors when arranging travel money, by holidays taken in the last 12 months, August 2012
- All-inclusive travellers more likely to emphasise buy back guarantee
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- Figure 52: Important factors when arranging travel money, by type of holiday taken, August 2012
- Buying currency from banks appeals to those wanting to order online
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- Figure 53: Important factors when arranging travel money, by travel money arrangement, August 2012
- Travellers taking over £1,000 most likely to seek a buy back guarantee
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- Figure 54: Important factors when arranging travel money, by amount of currency taken abroad, August 2012
Consumer Attitudes Towards Currency Cards
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- Key points
- Security and budgeting aspects of currency cards are appealing
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- Figure 55: Attitudes towards currency cards, August 2012
- Lack of awareness and perceived hassle are a sticking point
- Awareness is higher among more affluent consumers
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- Figure 56: Attitudes towards currency cards, by gross annual household income, August 2012
- Users are much more positive about currency cards
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- Figure 57: Currency card attitudes, by travel money usage, August 2012
Consumer Attitudes Towards Travel Money
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- Key points
- Majority of consumer prefer to have some foreign currency when travelling
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- Figure 58: Attitudes towards travel money and spending, August 2012
- Credit/debit cards are a convenience for some, a risk for others
- Travellers taking higher amounts are more likely to shop around
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- Figure 59: Attitudes towards shopping around for travel money, by amount of currency taken abroad, August 2012
- Buy back guarantees more important to those that exchange currency on return
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- Figure 60: Important factors when arranging travel money, by agreement with the statement ‘I exchange all leftover foreign currency when I come back to the UK’, August 2012
Appendix – Market Size and Forecast
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- Figure 61: Best and worst case forecast for total value of annual spending abroad by UK residents, 2012-17
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Appendix – Travel and Holiday Trends
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- Figure 62: Most popular holiday destinations by demographics, August 2012
- Figure 63: Next most popular holidays destinations, by demographics, August 2012
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- Figure 64: Type of holiday taken, by demographics, August 2012
- Figure 65: Types of holidays taken abroad, by demographics, August 2012
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Appendix – Methods of Spending Abroad
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- Figure 66: Travel money usage, by demographics, August 2012
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Appendix – Arranging Travel Money
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- Figure 67: Most popular travel money arrangement, by demographics, August 2012
- Figure 68: Next most popular travel money arrangement, by demographics, August 2012
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Appendix – Amount of Foreign Currency Taken
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- Figure 69: Amount of currency taken, by demographics, August 2012
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Appendix – Important Factors When Arranging Travel Money
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- Figure 70: Importance of best exchange rate when arranging travel money, by demographics, August 2012
- Figure 71: Importance of a commission-free service when arranging travel money, by demographics, August 2012
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- Figure 72: Importance of a convenient location when arranging travel money, by demographics, August 2012
- Figure 73: Importance of no minimum purchase limit when arranging travel money, by demographics, August 2012
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- Figure 74: Importance of a buy back guarantee when arranging travel money, by demographics, August 2012
- Figure 75: Importance of a free delivery service of foreign currency when arranging travel money, by demographics, August 2012
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- Figure 76: Importance of an option to order currency online when arranging travel money, by demographics, August 2012
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Appendix – Consumer Attitudes Towards Currency Cards
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- Figure 77: Agreement with the statements ‘I like the fact that you cannot spend more than the amount pre-loaded onto the card’ and ‘I like the security of using a card that is not linked to your debit/credit card’, by demographics, August 2012
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- Figure 78: Agreement with the statements ‘I have never heard of these cards’ and ‘I think that these cards are a good idea’, by demographics, August 2012
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- Figure 79: Agreement with the statements ‘I can’t really see the advantage of using a pre-paid currency card’ and ‘I think these cards are more hassle than buying foreign currency’, by demographics, August 2012
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Appendix – Consumer Attitudes Towards Travel Money
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- Figure 80: Agreement with the statements ‘I always like to have some local currency on me when I am on holiday’, by demographics, August 2012
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- Figure 81: Agreement with the statements ‘I would only buy travel money after shopping around for the best rate’ and ‘I exchange all leftover foreign currency when I come back to the UK’, by demographics, August 2012
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- Figure 82: Agreement with the statements ‘I tend to organise my travel money at the last minute’ and ‘I use the internet to compare the best rates’, by demographics, August 2012
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- Figure 83: Agreement with the statements ‘It is best to leave your debit/credit cards at home when travelling abroad’ and ‘Taking a card is more convenient than arranging other forms of travel money’, by demographics, August 2012
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- Figure 84: Attitudes towards travel money, by methods of spending abroad, August 2012
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