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Package vs Independent Holidays - UK - April 2017

OVERVIEW
What you need to know
Scope of the Report
EXECUTIVE SUMMARY
The market
Growth opportunities for package holidays over the next two years
Figure 1: Forecast volume of UK overseas independent holidays, 2011-21
Figure 2: Forecast volume of UK overseas package holidays, 2011-21
The consumer
Package and independent bookings remain the same
Figure 3: Package versus independent bookings, February 2017
Perceived value is the main reason for booking a package
Figure 4: Reasons for booking holiday as a package, February 2017
Value and flexibility the main driver of independent bookings
Figure 5: Reasons for booking holiday independently, February 2017
Young and affluent want to have unique accommodation
Figure 6: Package holiday attitudes I, February 2017
Consumers recognise all-inclusive can help manage their money
Figure 7: Package holiday attitudes II, February 2017
What we think
ISSUES AND INSIGHTS
All-inclusive deals likely to be even more popular going forward, but diversification is key
The facts
The implications
Young and affluent want to have unique accommodation, but many feel that packages don’t offer this
The facts
The implications
Customisation is key for younger consumers
The facts
The implications
Customisation via B2C live chat messaging apps could help encourage younger consumers to book packages
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
2015 and 2016 were strong growth years for packages
Package market share is expected to grow over the next two years
Cheaper airfares have fuelled independent bookings…
…but package bookings likely to increase in market share with the launch of Ryanair Holidays
Spain, Greece and France are the top pakcage destinations
MARKET SIZE AND FORECAST
Growth opportunities for package holidays over the next two years
Figure 8: Forecast of UK overseas volume, package and independent holidays, 2010-20
Figure 9: Forecast volume of UK overseas independent holidays, 2011-21
Figure 10: Forecast volume of UK overseas package holidays, 2011-21
Figure 11: Forecast of UK overseas value*, package and independent holidays, 2010-20
Figure 12: Forecast value of UK overseas independent holidays, 2011-21
Figure 13: Forecast value of UK overseas package holidays, 2011-21
Brexit and the travel market
MARKET SEGMENTATION
Cheaper airfares driving independent bookings
Figure 14: easyJet’s pay day notification
Package bookings likely to increase in market share with the launch of Ryanair Holidays
Figure 15: Package versus independent overseas holidays, by transport method, 2010-16
Spain, Greece and France are the top pakcage destinations
Figure 16: Top 20 destinations for Package Holidays ,  Q3 2015 to Q3 2016
Figure 17: UK Foreign Office travel advice for Turkey, March 2017
Top 20 destinations for package bookings
Figure 18: Top 20 countries for package bookings, Q1-Q3 2015 versus Q1-Q3 2016
Top 20 destinations for independent bookings
Figure 19: Top 20 countries for independent bookings, Q1-Q3 2015 versus Q1-Q3 2016
MARKET DRIVERS
Inflation rises while the Pound remains low
Figure 20: Pounds versus euro and US Dollar, March 2016-March 2017
Oil is cheap compared to 2013/14 but has increased in price recently
Figure 21: Brent Crude Oil prices in US Dollars, 2013 average – January 2017 average
Despite negativity surrounding Brexit, demand for holidays is still high
Figure 22: percentage of the UK population that plan to book a holiday in the next 3 months, January 2017
Older consumers much more financially confident
Figure 23: Current financial situation, by age, January 2017
Figure 24: Consumer sentiment for the coming year, by age, January 2017
Portugal, Bulgaria, and Spain are the cheapest holiday destinations
Figure 25: Post Office travel cost barometer 2017
REGULATORY CHANGES 
The Package Travel Directive
How will Brexit affect the new Package Travel Directive?
The falling pound means travel companies can impose surcharges
Denied Boarding Regulation could be called into question
Passenger protections in light of Brexit
MARKET SHARE
TUI and Jet2holidays enjoy double-digit growth
Figure 26: Passengers licensed under ATOL protection, by top 10 ATOL holders, 2011-17
LAUNCH ACTIVITY AND INNOVATION
Hotelplan and Google partner to offer packages
Skyscanner and Finnair partner
Inghams adds two new ski packages for the Easter 2017 break
Music festival packages
THE CONSUMER – WHAT YOU NEED TO KNOW
Package and independent bookings remain the same
Value is the main reason for booking a package
Value and flexibly the main driver of independent bookings
Young and affluent want to have unique accommodation
Many consumers view package destinations as being too touristy
PACKAGE VERSUS INDEPENDENT BOOKINGS
Package and independent bookings remain the same
Figure 27: Package versus independent bookings, February 2017
Packages most popular amongst over-55s
Figure 28: Package versus independent bookings, by age, February 2017
Beach breaks tend to be booked as packages, while city breaks tend to be independently booked
Figure 29: Holiday types taken in the last 12 months, by package versus independent bookings, February 2017
ALL-INCLUSIVE PACKAGES 
Two thirds of packages are all-inclusive
Figure 29: All-inclusive bookings, February 2017
Plans for booking a package holiday in the future
Figure 30: Package holiday bookings in 2017, February 2017
REASONS FOR BOOKING A PACKAGE
Value is the main reason for booking a package
The convenience of packages
A quarter of consumers feel that packages offer greater financial protection
Figure 31: Reasons for booking holiday as a package, February 2017
 REASONS FOR BOOKING INDEPENDENTLY
Value and flexibly the main driver of independent bookings
Figure 32: Cheap flight email alerts form online flight aggregator and flight comparison site Skyscanner
Figure 33: Travel versus accommodation bookings, March 2017
Figure 34: Reasons for booking holiday independently, February 2017
ATTITUDES TOWARDS PACKAGE BOOKINGS 
Young and affluent want to have unique accommodation
Figure 35: Attitudes towards accommodation in package holidays, February 2017
Figure 36: Attitudes towards accommodation in package holidays, February 2017
Many consumers see package destinations as too touristy
Figure 37: Attitudes towards accommodation in package holidays, February 2017
Figure 38: Package holiday attitudes I, February 2017
Consumers recognise all-inclusive can help manage their money
Customisation via business-to-customer live chat messaging apps
Figure 39: Attitudes towards access to a travel expert while on holidays, February 2017
Airlines entering the package space
Figure 40: Package holiday attitudes II, February 2017
CHAID ANALYSIS – ATTITUDES TOWARDS PACKAGE BOOKINGS
Methodology
Younger package bookers under-45 are the most receptive to B2C live chat/messaging…
… and are more likely to book an all-inclusive deal because the weak Pound
Affluent parents recognise that all-inclusive deals can be a good way to manage their spending
Affluent consumers are more likely to think that more interesting/unique accommodation can be found by booking independently
Package deals and ‘living like a local’ for city breakers
Figure 41: Target groups based on attitudes towards package and independent holidays – CHAID – Tree output, February 2017
Figure 42: Target groups based on attitudes towards package and independent holidays – CHAID – Table output, February 2017
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
Travel and tourism definitions
APPENDIX – MARKET SIZE AND FORECAST BEST- AND WORST-CASE FORECAST 
Forecast methodology
Figure 43: Best- and worst-case forecast for independent volume, 2016-21
Figure 44: Best- and worst-case forecast for Package volume, 2016-21
Figure 45: Best- and worst-case forecast for Independent value, 2016-21
Figure 46: Best- and worst-case forecast for Package value, 2016-21

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