Package vs Independent Holidays - UK - April 2015

OVERVIEW
What you need to know
Products covered in this report
EXECUTIVE SUMMARY
A robust forecast for overseas holidays
Figure 1: Best- and worst-case forecast for volume of UK overseas independent holidays, 2009-19
Figure 2: Best- and worst-case forecast for volume of UK overseas package holidays, 2009-19
Independent holidays are the most popular regardless of destination
Figure 3: Holiday destination by holiday type, November 2014
The top two market players improve their market share
Figure 4: Holiday type booked by affluent holidaymakers, November 2014
Consumers continue to look for good value despite a healthier economy
Figure 5: Percentage of holidays booked as a package, November 2014
ISSUES AND INSIGHTS
The Package Travel Directive will pose new challenges for online operators
The facts
The implications
Short-hop holidays are on the rise as consumers compromise on length of stay to maximise their holiday budget
The facts
The implications
Holidays with a purpose will be a growing trend in 2015
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Improved confidence to boost holiday spend in 2015
PTD could make life difficult for companies
Strong pound encourages trips abroad
APD reform to boost long-haul market
Short-stay Euro breaks growing
Cruise market activity indicates a positive 2015
Consumers look to friends and family/review sites for recommendations
MARKET SIZE AND FORECAST
Growth is forecast for both package and independent overseas holidays
Figure 6: Forecast volume of UK overseas (independent and packaged holidays), 2009-19
Figure 7: Forecast value of UK overseas (independent and then packaged holidays), 2009-19
Economic and regulatory factors combine to boost the overseas market
Forecasts
Figure 8: Forecast volume of UK overseas independent holidays, 2009-19
Figure 9: Forecast volume of UK overseas package holidays, 2009-19
Figure 10: Forecast value of UK overseas independent holidays, 2009-19
Figure 11: Forecast value of UK overseas package holidays, 2009-19
SEGMENT PERFORMANCE
Holidaymakers fall back in love with city breaks…
…but exotic destinations are also looking attractive
Figure 12: Package vs independent overseas holidays, by long-haul vs short-haul, 2009-14
Air travel outperforms the rest of the market
Figure 13: Package vs independent overseas holidays, by transport method, 2009-14
European short-hop destinations grow in popularity…
…as do the USA and Mexico
Figure 14: Top 10 overseas package holiday destinations, by volume, 2013 and 2014
The Caribbean continues to be a package holiday hot spot
Figure 15: Top 10 overseas package holiday destinations, by market share of package bookings, 2013-14
Short stay UK holidays will perform better than long stay in 2015
Figure 16: Short vs long holidays in Great Britain, by volume, 2009-14
Figure 17: UK domestic holidays, by holiday type, November 2014
MARKET DRIVERS
UK economic health will boost holiday spending
Scrapping of top two APD bands will provide a boost to long-haul
Figure 18: Air Passenger Duty (APD) rates April 2012-April 2015
The Package Travel Directive makes its way through the EU parliament
Online search will push consumers towards independent holidays
Figure 19: Holiday research sources used for holidays taken in the last 12 months, September 2014
KEY PLAYERS – WHAT YOU NEED TO KNOW
TUI and Thomas Cook maintain market dominance…
…but are trumped by Trivago on adspend
2014 sees specialist activity resort launches
P2P providers to boost independent market
Luxury segment expansion
Technology provides cross-selling opportunities
MARKET SHARE
The top two tour operators take a 44% share of the top 10
Figure 20: Passengers licensed under ATOL protection, by top 10 ATOL holders, 2012-14
Large tour operators continue to invest in online
Figure 21: ATOL tour operator failures/closures in the UK, march 2013-January 2015
BRAND COMMUNICATION AND PROMOTION
Independent holiday services dominate advertising spend
Figure 22: Main monitored media advertising spend on travel*, by top 10 advertisers in 2014, 2012-14
TV takes over half of advertising budgets
Figure 23: Main monitored media advertising spend on travel*, by media type by top 10 advertisers 2012-14
LAUNCH ACTIVITY AND INNOVATION
Travel with a purpose
Curated authentic experiences
Holiday memories as a service
Social media selling
Luxury package brands may struggle to find their market share
Figure 24: Destination of holiday, by household income level, November 2014
Cruise operators banking on growth in 2015
Technology enabled package holidays
THE CONSUMER – WHAT YOU NEED TO KNOW
UK trips largely independent with overseas trips evenly split
Families hit the city as well as beach
Value perceptions drive both main booking methods
Location first for independents
Package profile skews to middle-income consumers
Potential pent-up demand among 35-54s
Long-haul travellers less likely to be inspired by agents
HOLIDAY BEHAVIOURS
Over half of UK holidaymakers book holidays independently
Figure 25: Method of booking for holidays taken in the UK or abroad, November 2014
31% of those aged 35-54 did not take a holiday last year
Figure 26: Holiday destination, by age group, November 2014
Figure 27: Type of holiday booked, by age group, November 2014
City breaks are almost as popular as beach holidays for families
Figure 28: Type of holiday booked, by age of children in the family, November 2014
Figure 29: Type of holiday taken, by age of children in the family, November 2014
ATTITUDES TO PACKAGE HOLIDAYS
Value for money is the top reason for booking package holidays
Figure 30: Package holiday booking - attitudes and habits, November 2014
Relaxation holidays are more likely to be booked as a package
Figure 31: Type of holiday taken in the last 12 months (UK or abroad), by method of booking last holiday abroad, November 2014
Middle income households are more likely to book package holidays
Figure 32: Type of holiday abroad booked, by household income, November 2014
ATTITUDES TO INDEPENDENT HOLIDAYS
Independent holiday bookers focus on location first
Figure 33: Independent holiday booking - attitudes and habits, November 2014
Figure 34: Independent holiday booking – attitudes and habits, by holiday type, November 2014
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Data sources
Abbreviations
Fan chart forecast