Special Report: Mintel's 2016 Holiday Review UK

Special Report: Mintel's 2016 Holiday Review UK

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Mintel reports the holiday market is ‘strong’ and package bookings up 20%. Ian Taylor reviews the leisure market analyst’s 2016 Holiday Review UK report

'Mobile bookings are relatively uncommon'

Consumers don’t like booking holidays on smartphones. That is the conclusion of leisure market analyst Mintel in its most up-to-date review of the UK holiday market.

Holiday bookings on smartphones remain “relatively uncommon” and “are still unpopular among consumers”, Mintel concludes in its Holiday Review UK report, which identifies the latest trends in the sector.

“Fewer than 3% [of people] booked their last holiday via a smartphone,” Mintel found in research carried out in November, despite most bookings being 
made online.

“Most holidaymakers book their trip on a laptop or desktop. Mobile bookings on tablets and smartphones are still relatively low.” This is despite the fact that “76% of UK consumers own a smartphone, and tablets are present in 56% of households”.

Mintel notes 27% of respondents in its survey of 2,000 internet users said they were “just as happy to book on their smartphone” as on a laptop or desktop. But almost half (46%) of online holiday bookers said they wouldn’t be happy to book on a smartphone and 27% were unsure.

However, Mintel still considers there to be “scope to increase bookings via this channel”. It found 40% of 16-35-year-olds would be just as happy to book on a smartphone and suggests “mobile booking could be the norm once under-16s reach an age where they start to holiday themselves”.

Mintel suggests: “Brands need to make sure their smartphone booking process is fluid, while addressing privacy concerns. The key is to get consumers comfortable rather than get them to switch devices. Brands should ensure one-click-per-screen functionality, which limits the number of steps the user has to make.”

It argues companies should still seek to develop mobile booking because of the “data trail from which [consumer] profiles can be constructed and strategies developed”.

Mintel’s research also found one in five holiday bookings (19%) made on a laptop were “direct with a tour operator’s website”.

It suggests only 9% of holidaymakers booked their most recent trip in-store with a travel agent. However, the research – conducted online – includes domestic bookings.

The report identifies a surprising lack of influence for social media. When people who had taken a holiday in the past year were asked what factor most influenced their choice of destination, 25% said friends or family and 5% travel agents. But Mintel noted: “Just 4% are influenced by social media.”

This finding tallies with latest research by German travel analyst IPK, whose World Travel Monitor – released this month and based on a survey of 500,000 consumers in more than 60 countries – identified the internet as the main source of holiday information, used by 78% of travellers, and social networks were the least-used source of online information.

IPK chief executive Rolf Freitag, speaking at German trade show ITB, said: “Many organisations in travel concentrate their budget on social networks and these are not selling much.”

Packages on the rise but indy breaks still ’dominate’

Package holiday sales have grown twice as fast as independent bookings over the past five years, rising 20% and increasing as a proportion of all UK holidays, according to Mintel.

However, Mintel’s latest Holiday Review UK report concludes “independent bookings still dominate the market”.

It suggests one element of this is due to the inclusive price of package holidays, quoting research suggesting consumers are split in their attitude to package pricing, with 27% agreeing they are put off by “the fact I can’t compare the cost of individual parts of the booking” and 27% saying they are not.

The research figures come from a survey for Mintel’s report on ‘Package vs Independent Holidays’, published in April 2015, which suggested 37% of holidaymakers travelling beyond Europe “say booking independently was better value than booking a package”.

This implies 63% did not agree a package holiday was poorer value or did not have a view.

Mintel combines outbound and domestic holidays in reaching its conclusion that independent bookings dominate the market, and it uses Office for National Statistics (ONS) figures as the basis for its assessment of whether outbound holiday bookings were made independently or as a package.

ONS figures derive from a rolling International Passenger Survey at UK airports and ports and rely on consumers’ own understanding of how they booked. The figures do not tally with the CAA’s Atol figures, based on Atol Protection Contribution returns, which suggest a much higher proportion of Atol-protected holidays.

For example, 23.8 million of the 31 million outbound holidays by air in 2014 were Atol-protected, or 77%, and almost 62% of all outbound holidays that year. This suggests a minority of outbound holidays are booked independently.

Mintel finds use of Airbnb-style accommodation in the UK to be low, with just 3% of consumers having used such a service in 2015. Its report concludes: “Airbnb-style accommodation remains relatively unpopular among UK consumers.” However, Mintel suggests Airbnb “should gain traction in 2016”.

Cities attract as many visitors as beach holidays

City breaks have grown in popularity to rival beach holidays, and ski and cruise offer important opportunities to the trade despite remaining niche markets.

Mintel reports 35% of UK holidaymakers took a city break in 2015, the same proportion as had a beach holiday – with demand driven by more affluent “high-frequency holidaymakers” who take three or more breaks a year.

Snowsports make up just 2% of the holiday market but “offer lucrative growth opportunities” among 16-35-year-olds despite an 18% decline in this market between 2008-09 and 2013-14.

However, Mintel notes: “Alpine resorts are contending with unusually warm temperatures…leading to insufficient snow coverage. Any meaningful recovery will depend on the weather.”

Cruise attracts 6% of the outbound holiday market, with 11% of holidaymakers over 65. Mintel reports cruise customers are “most likely to spend above £1,000” per person on a holiday.

Outbound market can expect to see ‘strong growth’

The UK outbound market should see “strong growth” over the next five years, according to leisure analyst Mintel.

Mintel describes the outlook for the sector as a whole as “positive” in its latest Holiday Review UK report, published in January.

It forecasts the total volume of outbound and domestic holidays and breaks should increase by more than 3% to 98.8 million by 2020 from 95.8 million last year, with spending on holidays forecast to rise by 13% to £45 billion a year by 2020.

But Mintel concludes the outbound sector will see all the growth. It suggests: “Strong consumer confidence should fuel holiday taking in 2016.”

The survey of 2,000 internet users aged 16 and over in November 2015 suggests 82% of UK adults took some sort of holiday or short break away from home during 2015, up from 78% the previous year. It found 62% had a holiday or break in the UK in the preceding 12 months, 16% visited Spain, 10% France, 24% other destinations in Europe and 15% countries beyond Europe.

The survey suggests about one in four adults who had a holiday in the 12 months to November expect to take more breaks and/or spend more on holidays this year – with 24% expecting to spend more, 26% expecting to take more breaks of one to three nights, and 21% to take more holidays of four-plus nights.

Mintel refers to its own consumer-confidence tracking survey that suggests the proportion of consumers describing their financial situation as “tight” fell from 29% in September 2010 to 23% in September 2015, while those describing their situation as “healthy” rose from 19% to 24%.

However, these figures could be construed as showing less of a pick-up in confidence than might be expected.

September 2010 came at the end of the most serious recession since the 1930s and before any real sense of economic recovery. One in 10 respondents reported themselves as “struggling” or “in trouble” financially in 2010 and 9% did so in 2015. The proportion describing their financial situation as “OK” was broadly the same – 43% in 2010 and 44% in 2015.

Only one in four (24%) considered their situation “healthy” in 2015, interpreted as “I have money left at the end of the month for a few luxuries”, against 32% describing their finances as “tight”, “in trouble” or “struggling”.

‘Domestic trips will take back seat to overseas breaks’

Mintel describes the domestic holiday market as “contracting” and warns of “a downturn”.

It notes 2014 was “a particularly bad year for domestic holidays” with volume falling by 7% to 52.9 million, although the total was still higher than 2006, 2007 or 2008.

The survey suggests 62% of internet-using adults took a short break or holiday in the UK in the previous 12 months and the research identified England as the most-popular repeat holiday destination.

However, the report suggests a contraction in the domestic holiday market “is likely to continue as the overseas market improves”. It forecasts domestic trips will “take a back seat as overseas trips rise [and] consumers take advantage of the strong pound and cheaper air fares”.

Despite domestic holiday numbers in 2015 being 4.8% down on 2013, it notes spending on domestic trips rose almost 22% between 2010 and 2015 and forecasts the value of domestic trips “should rise steadily” to 2020. Leading figures in the domestic sector dispute Mintel’s forecast of a downturn and suggest the outbound and domestic sectors can grow in tandem.

Budget carriers lose out to comfort on long-haul flights

The comfort on board legacy airlines such as British Airways “could outweigh the cheap prices of budget carriers” on long-haul holidays, says Mintel.

Its research found half of holidaymakers agree “budget carriers would not provide the comfort/entertainment they need for a long-haul flight”. Just 14% said a budget airline would be good enough to fly long-haul. However, almost one in three (32%) agreed a low fare could “outweigh the reduction in comfort”.

When consumers were presented with the inclusive fare of a BA-style carrier versus the fare plus ancillary fees of a budget carrier, Mintel found: “Many opt for the legacy carrier. The price gap becomes less pronounced after add-on fees are included.”

It also found 60% of consumers in more affluent social classes AB said a budget long-haul flight would not suit them.

The Holiday Review UK 2016 report by market intelligence agency Mintel is available for £1,750 from mintel.com


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