Holiday Planning and Booking Process: Inc Impact of COVID-19 - UK - July 2020
Overview
 
What you need to know 
21% of consumers are planning to book a holiday in the three months following late June 2020. While this figure is still well down on pre-COVID levels, confidence is gradually returning to the market. The biggest rise in confidence has been noticed amongst older consumers; however, overall interest levels remain higher amongst younger people, who are less concerned about any perceived risks of travelling. 

Demand for flights, cruises and city breaks will be heavily impacted due to consumers’ wariness of being in enclosed/indoor spaces with unfamiliar people. Holiday types and destinations that limit potential exposure to the virus, such as self-drive holidays and rural locations, are expected to prove popular. Travel brands will be challenged to demonstrate what they do to keep travellers safe. Some brands have introduced pledges and holiday promises supported with videos to show they are ready to welcome holidaymakers back. 

Consumers are not only concerned about their physical wellbeing; many are also worried about their financial prospects as a result of COVID-19. Favourable cancellation policies and flexible payment schemes will be essential in order to encourage bookings. 

Social media continues to be an important source of inspiration for travellers. This channel will play a more important role than ever before in influencing holiday bookings and helping to restore consumer confidence in taking holidays. Travel brands, destinations and resorts could take the opportunity to run competitions that encourage consumers to upload photos or videos of their holidays to help kick-start the recovery of the holiday market. 

Key issues covered in this Report
●	The impact of COVID-19 on the holiday market.
●	How COVID-19 will change the way consumers’ plan and book holidays in the short-, medium- and long-term.
●	How the recovery of the domestic and overseas travel market is expected to play out over the next five years.
●	Consumers’ perceptions of seven key players in the holiday market.
●	Consumers’ typical holiday planning and booking behaviours.

Products covered in this Report
For the purposes of this Report, Mintel has used the following definitions: 

This Report examines the behaviours and attitudes of UK adults concerning how they research and book domestic and overseas holidays. A holiday is defined as including at least one overnight stay. The business travel and VFR markets are not included in this Report.

An adult, for the purposes of Mintel’s research, is anyone aged 16 or over.

For the purposes of this Report, Mintel asked a number of questions to UK adults about the ‘main holiday’ they had taken in the last 12 months. This was defined as the holiday on which they had spent the most in terms of travel and accommodation. Mintel has categorised the following types of holidays:

Package holiday: a package holiday is considered to be a holiday in which a return fare and accommodation are purchased from one provider for a single price. Other elements, such as meals or excursions, are not essential to the definition of an inclusive tour. This definition is in conjunction with the IPS.

Independent holiday: the traveller organises and books transport and accommodation from separate sources, or books with the same retailer but more than 24 hours apart.

Linked travel arrangements: An example of a linked travel arrangement is when someone purchases a flight on an airline’s website and subsequently clicks on a link that redirects them to a separate accommodation site. If the customer books accommodation either immediately or within 24 hours, without their details being transferred, then this is classed as a linked travel arrangement. Since 1 July 2018, these arrangements have offered financial protection, although at a lower level than package holidays.

Mintel’s consumer research does not establish whether or not services purchased via separate sources were classed as linked travel arrangements. Therefore, these bookings are defined as independent holidays for the purposes of this research.

For standard travel and tourism definitions, see Appendix – Data Sources, Abbreviations, and Supporting Information.

COVID-19: Market context
The first COVID-19 cases were confirmed in the UK at the end of January, with a small number of cases in February. The government focused on the ‘contain’ stage of its strategy, with the country continuing to operate much as normal. As the case level rose, the government ordered the closure of non-essential stores on 20 March. 

A wider lockdown requiring people to stay at home except for essential shopping, exercise and work ‘if absolutely necessary’ followed on 23 March. On 10 May 2020, the Prime Minister announced revised guidance, recommending that people who could not work from home should return to the workplace, and giving people more scope to spend time out of the home. Further relaxations to lockdown rules were announced in the week of the 23 May, including gradual re-opening of non-essential retailers, and increased opportunities for social interaction across households. 

On 23 June 2020, the Prime Minister announced that pubs, restaurants, accommodation and most leisure facilities and tourist attractions are allowed to re-open on 4 July 2020. Businesses are allowed to reduce the social distancing rule to one metre where it is not possible to keep two metres apart. Meanwhile, travellers can stay overnight with no more than two households together. 

Initially, all international arrivals except Ireland, the Isle of Man and the Channel Islands had been required to self-isolate in their accommodation for 14 days on arrival into the UK from 8 June 2020 onwards. However, on 3 July 2020, the UK Government announced the so-called travel corridors, which allows travellers from England to travel to over 70 countries or territories without having to self-isolate upon arrival in the UK from 10 July onward. 

Economic and other assumptions
Our economic assumptions are based on the illustrative scenario included in the Bank of England’s Monetary Policy Report, released 7 May 2020. The scenario suggests that UK GDP could fall by 14% in 2020, recovering by 15% in 2021, and that unemployment will reach 8% by the end of the year, easing slightly to 7% by the end of 2021. The current uncertainty means that there is wide variation on the range of forecasts, however, and the numbers presented in the BoE’s illustrative scenario are at the more pessimistic end of the spectrum.

We are working on the assumption that a vaccine will be available by mid-2021, but that there will be continued disruption to both domestic and global markets for some time after that. 

As long as there is not a second wave of infections, social distancing measures should be relaxed gradually throughout 2020, but we do not expect industries such as spectator sports, tourism or foodservice to return to any kind of normality until a vaccine is introduced. In the meantime, the economic disruption will mean that many operators will be forced out of the market, hitting capacity. In markets which were already in decline, we expect this reduction in capacity to be permanent.