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Airlines - Package Holidays vs Online Holidays - Ireland - January 2009

The overseas holiday market in Ireland has undergone profound change in recent years, primarily related to the seemingly inexorable rise of independent travel. The principle catalyst in this trend is the ever-increasing role of the internet, which is now the dominant channel used by consumers for both holiday information and bookings.

However, these changes occurred alongside phenomenal growth of over 50% overall in Ireland during the period 2003-07. The boom in business during this period appears largely to have shielded the traditional travel sector from what could have been a severe blow from the independent, self-book option, enabling it to record year-on-year growth and appear more resilient than it truly is.

The current economic climate facing NI and RoI consumers is likely to further expose the fault lines that have appeared now that consumers have a real alternative to package holidays and the traditional travel sector in general.

This report provides an overview of the market for self-booked and traditionally booked overseas travel, examining the core market factors, strengths and weaknesses, consumer dynamics and likely future developments.

Key themes in the report:

  • What impact will the economic downturn, continued fuel price uncertainty and exchange rate changes have on Irish overseas travel?

  • How are low-cost carriers driving air travel capacity growth?

  • How are travel agents/tour operators addressing the increased competition coming from the independent holiday sector? Are they well placed to withstand these pressures into the future?

  • Changes in how consumers are choosing and booking holidays, and how these trends are likely to play out in the years to come.

  • What are Irish consumers’ preferences in terms of holiday type and how are these preferences changing?

  • What are Irish consumers’ attitudes towards holidays generally, in terms of destinations, activities and package vs independent?

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Table of contents

  1. Issues in the Market

      • Key themes in the report
        • Definitions
          • Abbreviations
          • Insights and Opportunities

            • Extension of the package concept to all-year holidays
              • Merit to package holidays’ rigid simplicity
                • Specially-designed packages for the old and young
                • Sector in Brief

                  • Over €6 billion (£4.2 billion) spent on overseas holidays in 2007
                    • Economic downturn likely to hit the holiday market
                      • Are LCCs becoming travel agents with fleets?
                        • Preference for foreign over domestic holidays
                          • European destinations top for Irish holidaymakers
                            • Beach holidays most popular, but city breaks growing
                              • Trend towards multiple holidays of shorter duration
                                • Internet the dominant channel for researching and booking
                                  • Package holidays not yet a phenomenon of the past
                                  • Fast Forward Trends

                                      • Trend 1: Empowered Seniors
                                        • What's it about?
                                          • What we've seen
                                            • What next?
                                              • Trend 2: Local Knowledge
                                                • What's it about?
                                                  • What we've seen
                                                    • What next?
                                                    • Internal Market Environment

                                                      • Key points
                                                        • Air travel: Expanding capacity = expanding options
                                                          • Britain the gateway to Ireland
                                                            • Low-cost carriers driving air travel capacity growth
                                                              • Wider range of services available to RoI consumers…
                                                                • …with particular concentration in Dublin Airport
                                                                  • Passenger traffic through Irish airports on the up
                                                                    • Decline in charter traffic amidst growing traffic overall
                                                                      • Figure 1: Air passenger traffic (millions of passengers), IoI, RoI and NI, 1997-2006
                                                                    • Importance of charter flights concentrated among international travel…
                                                                      • Figure 2: Passengers (domestic and International) by flight type, NI airports, 2006
                                                                    • …and even more so among those taking foreign holidays
                                                                        • Figure 3: International air passenger traffic to/from Belfast International Airport, selelected destinations, 2006
                                                                      • Main low-cost carriers developing into ‘à la carte tour operators’
                                                                        • More and more consumers ‘flying without wings’
                                                                          • Consumers who entirely self-book
                                                                            • Where does this leave travel agents and tour operators?
                                                                              • Travel agents fight back
                                                                                • Travel operators fare poorly in independent price comparison
                                                                                    • Figure 4: Price comparison, selected city breaks, self-booking vs tour operators/travel agents, euros, 2008
                                                                                  • Travel companies fare even worse on flight-only deals
                                                                                    • Are ‘sleight of hand’ charges killing the goose?
                                                                                      • Subtle introduction…
                                                                                        • …then escalation and expansion
                                                                                          • Families suffering more than most
                                                                                            • Such charges now consumers’ greatest ‘bugbear’
                                                                                              • Yet seemingly here to stay
                                                                                              • Broader Market Environment

                                                                                                • Key points
                                                                                                  • Bad and getting worse on the economic front
                                                                                                    • RoI
                                                                                                      • NI
                                                                                                        • Crisis of confidence to sharpen focus on value and price
                                                                                                          • Standing out from the rest
                                                                                                            • Oil price volatility threatens continued low-cost travel
                                                                                                              • Fuel surcharges unlikely to be introduced by low-cost carriers
                                                                                                                • Tour operators feeling fuel pinch, too
                                                                                                                  • Ailing Sterling likely to send NI holidaymakers further afield
                                                                                                                    • Grey skies over eurozone for NI consumers
                                                                                                                      • Impact on 2009 travel
                                                                                                                        • Iceland on the horizon for 2009
                                                                                                                          • Ageing of Ireland likely to drive growth in package sector
                                                                                                                              • Figure 5: International travel by RoI residents, by age, 2003-07
                                                                                                                            • Targeting third agers
                                                                                                                              • Airline consolidation to reduce competition and consumer choice
                                                                                                                              • Strengths and Weaknesses

                                                                                                                                • Strengths
                                                                                                                                  • Weaknesses
                                                                                                                                  • Who’s Innovating?

                                                                                                                                    • Key points
                                                                                                                                      • Entry into rail travel will enable Air France to compete on two fronts
                                                                                                                                        • Packages with flexibility built in
                                                                                                                                          • It’s a package but it’s authentic
                                                                                                                                            • Consumer-to-consumer holiday accommodation
                                                                                                                                              • Get me there for a tenner!
                                                                                                                                                • Ryanair thinking outside of the box on ancillary revenue
                                                                                                                                                  • Bmi trialling boarding passes by phone
                                                                                                                                                    • Independent initiative
                                                                                                                                                    • Competitive Context

                                                                                                                                                      • Key points
                                                                                                                                                        • To fly or not to fly
                                                                                                                                                            • Figure 6: Consumers that took a holiday in the last 12 months and a holiday abroad in the last 12 months, NI and RoI, 2008
                                                                                                                                                          • NI consumers opt for foreign in 2007
                                                                                                                                                            • Figure 7: Domestic tourism, NI, 2006 and 2007
                                                                                                                                                          • RoI consumers remain loyal to the home market
                                                                                                                                                            • Figure 8: Holiday trips, domestic tourists, RoI, 2003-07
                                                                                                                                                          • A forgotten alternative: Sea travel
                                                                                                                                                              • Figure 9: International travel by RoI residents, mode of transport used, percentage share, 2007
                                                                                                                                                            • Benefits of sea travel are perhaps being overlooked by consumers
                                                                                                                                                              • Holidays now more ‘essential’ than ‘luxury’
                                                                                                                                                                  • Figure 10: Consumer responses to statement ‘When feeling the pinch, which of these are you most likely to do when trying to cut back your personal spending?’, NI and RoI*, January 2008
                                                                                                                                                              • Market Value

                                                                                                                                                                • Key points
                                                                                                                                                                  • Approaching 7 million holidays taken in 2007
                                                                                                                                                                    • Figure 11: Number of overseas holidays (000s), IoI, RoI and NI, 2003-07
                                                                                                                                                                  • SSIA effect drives RoI overseas holiday market
                                                                                                                                                                    • Overseas holiday spending around €6.2 billion (£4.4 billion) in 2007
                                                                                                                                                                      • Figure 12: Expenditure on overseas holidays, IoI, RoI and NI, 2003-07
                                                                                                                                                                    • Expenditure per trip higher among NI consumers
                                                                                                                                                                      • €821 million paid in airfares to Irish carriers in 2007
                                                                                                                                                                      • Market Segmentation

                                                                                                                                                                        • Key points
                                                                                                                                                                          • Europe the most popular holiday destination for Irish consumers
                                                                                                                                                                            • Figure 13: Location of last holiday/short break, NI and RoI, 2008
                                                                                                                                                                          • NI consumers’ destination choice restricted by limited access beyond UK
                                                                                                                                                                            • Far greater destination diversity for RoI consumers
                                                                                                                                                                              • Air travel dominates holidaymakers’ means of transport
                                                                                                                                                                                • RoI consumers travel for holiday, NI consumers to visit friends and family
                                                                                                                                                                                  • City breaks en vogue, beach holidays stagnant
                                                                                                                                                                                    • Figure 14: Consumers taking beach/resort holidays or taking city/short breaks for their last holiday in the last 12 months, NI and RoI, 2003-08
                                                                                                                                                                                  • Traditional ‘fortnight away’ on the way out?
                                                                                                                                                                                    • Figure 15: Length of last holiday (number of nights), NI and RoI, 2008
                                                                                                                                                                                  • Multiple holidays almost de rigueur among Irish consumers
                                                                                                                                                                                    • Figure 16: Number of holidays taken during last 12 months, NI and RoI, 2008
                                                                                                                                                                                  • Package holidays account for half of all holidays abroad
                                                                                                                                                                                  • Companies and Brands

                                                                                                                                                                                      • Figure 17: Companies and brands, 2008
                                                                                                                                                                                    • Discount/low-fare carriers
                                                                                                                                                                                      • Aer Arann
                                                                                                                                                                                        • Bmibaby
                                                                                                                                                                                          • CityJet
                                                                                                                                                                                            • EasyJet
                                                                                                                                                                                              • Flybe
                                                                                                                                                                                                • Ryanair
                                                                                                                                                                                                  • Traditional/long-haul carriers
                                                                                                                                                                                                    • Aer Lingus
                                                                                                                                                                                                      • British Midland Airways (trading as bmi)
                                                                                                                                                                                                        • British Airways
                                                                                                                                                                                                          • Tour operators
                                                                                                                                                                                                            • American Holidays (NI and RoI)
                                                                                                                                                                                                              • Budget Travel (RoI only)
                                                                                                                                                                                                                • Direct Holidays (NI and RoI)
                                                                                                                                                                                                                  • Ebookers.com (NI)/ebookers. ie (RoI)
                                                                                                                                                                                                                    • Expedia
                                                                                                                                                                                                                      • Falcon Holidays (NI and RoI)
                                                                                                                                                                                                                        • First Choice Holidays (NI only)
                                                                                                                                                                                                                          • Panorama Holidays (RoI only)
                                                                                                                                                                                                                            • Sunway Travel Group (RoI only)
                                                                                                                                                                                                                              • Sunworld Holidays (RoI only)
                                                                                                                                                                                                                                • Thomas Cook (NI)
                                                                                                                                                                                                                                  • Thomson Travel (NI only)
                                                                                                                                                                                                                                    • Topflight (NI and RoI)
                                                                                                                                                                                                                                    • Channels to Market

                                                                                                                                                                                                                                      • Key points
                                                                                                                                                                                                                                        • Internet as a near-revolutionary development
                                                                                                                                                                                                                                          • The world at your fingertips
                                                                                                                                                                                                                                            • Internet comes tops for researching and booking holidays
                                                                                                                                                                                                                                              • Figure 18: Source of information, last holiday, NI and RoI, 2008
                                                                                                                                                                                                                                              • Figure 19: Method used to book last holiday, NI and RoI, 2008
                                                                                                                                                                                                                                            • Agents trump operators for package holidays
                                                                                                                                                                                                                                              • Figure 20: How last holiday was booked, NI and RoI, 2008
                                                                                                                                                                                                                                            • Role of mainstream media diminishing
                                                                                                                                                                                                                                              • Figure 21: Agreement with the statement, ‘Newspaper and magazine articles on holiday and travel influence my choice of holiday’, NI and RoI, 2003-08
                                                                                                                                                                                                                                          • The Consumer – Booking the Holiday

                                                                                                                                                                                                                                            • Key points
                                                                                                                                                                                                                                              • A third of holidays booked within a month of departure
                                                                                                                                                                                                                                                  • Figure 22: Amount of advance booking for last holiday, NI and RoI, 2008
                                                                                                                                                                                                                                                • Planning holidays a pleasure for most
                                                                                                                                                                                                                                                    • Figure 23: Agreement with ‘I enjoy planning holidays’, by gender and socio-economic group, NI and RoI, 2008
                                                                                                                                                                                                                                                • The Consumer – Who Holidays Abroad?

                                                                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                                                                    • Most Irish holidaymakers take their holidays abroad
                                                                                                                                                                                                                                                        • Figure 24: Consumers who have taken a holiday abroad in the last 12 months, by age, NI and RoI, 2008
                                                                                                                                                                                                                                                      • Couples the biggest market for holidays
                                                                                                                                                                                                                                                          • Figure 25: Number of family members on last holiday, NI and RoI, 2008
                                                                                                                                                                                                                                                      • The Consumer and Package Holidays

                                                                                                                                                                                                                                                        • Key points
                                                                                                                                                                                                                                                          • Half of all holidays abroad are package holidays
                                                                                                                                                                                                                                                              • Figure 26: Travelled abroad on package holiday, last holiday, by age, NI and RoI, 2008
                                                                                                                                                                                                                                                            • A fifth would never consider a package holiday
                                                                                                                                                                                                                                                              • Doubts about package holidays: insights from the UK consumer
                                                                                                                                                                                                                                                                • Not convinced by promises of quality
                                                                                                                                                                                                                                                                  • Perception that package = herding
                                                                                                                                                                                                                                                                    • Belief that an independent holiday is the cheaper option
                                                                                                                                                                                                                                                                    • What do Consumers Want from Holidays?

                                                                                                                                                                                                                                                                      • Key points
                                                                                                                                                                                                                                                                        • Attitudes towards holiday destinations
                                                                                                                                                                                                                                                                          • Figure 27: Agreement with selected statements, NI and RoI, 2008
                                                                                                                                                                                                                                                                        • Holidaying abroad still the favoured option
                                                                                                                                                                                                                                                                          • Something old, something new: a demand for both
                                                                                                                                                                                                                                                                            • Excitement and adventure – just not too much, thanks
                                                                                                                                                                                                                                                                              • Lazing on the beach a bore for most
                                                                                                                                                                                                                                                                                  • Figure 28: Agreement with ‘When on holiday, I only want to eat, drink and sunbathe’, by age, NI and RoI, 2008
                                                                                                                                                                                                                                                                                • Small but steady number appreciate organised activities
                                                                                                                                                                                                                                                                                • Appendix

                                                                                                                                                                                                                                                                                  • Broader market environment
                                                                                                                                                                                                                                                                                    • Economic outlook
                                                                                                                                                                                                                                                                                      • Figure 29: Economic outlook, RoI & NI, 2007-09
                                                                                                                                                                                                                                                                                    • Market segmentation
                                                                                                                                                                                                                                                                                      • Type of holiday taken
                                                                                                                                                                                                                                                                                        • Figure 30: Type holiday taken, last holiday, NI and RoI, 2008
                                                                                                                                                                                                                                                                                      • Channels to the market
                                                                                                                                                                                                                                                                                        • Figure 31: International travel by RoI residents, method of booking, 2006 and 2007
                                                                                                                                                                                                                                                                                        • Figure 32: How last holiday booked, NI and RoI, 2008
                                                                                                                                                                                                                                                                                        • Figure 33: International travel by RoI residents, method of booking, percentage share, 2006-08
                                                                                                                                                                                                                                                                                      • The consumer – Booking the holiday
                                                                                                                                                                                                                                                                                        • Figure 34: Agreement with selected holiday planning statements, NI and RoI, 2008
                                                                                                                                                                                                                                                                                      • The consumer – Holidays abroad
                                                                                                                                                                                                                                                                                        • Have taken holiday in last 12 months
                                                                                                                                                                                                                                                                                          • Figure 35: Consumers who have taken a holiday in the last 12 months, by age, NI and RoI, 2008
                                                                                                                                                                                                                                                                                          • Figure 36: Consumers who have taken a holiday in the last 12 months, by socio-economic group, NI and RoI, 2008
                                                                                                                                                                                                                                                                                        • Taken holiday abroad in last 12 months
                                                                                                                                                                                                                                                                                          • Figure 37: Consumers who have taken a holiday abroad in the last 12 months, by socio-economic group, NI and RoI, 2008
                                                                                                                                                                                                                                                                                        • The Consumer and package holidays
                                                                                                                                                                                                                                                                                          • Figure 38: Travelled abroad on package holiday, last holiday, by socio-economic group, NI and RoI, 2008
                                                                                                                                                                                                                                                                                          • Figure 39: Agreement with ‘I would never think of taking a package holiday’, by age, NI and RoI, 2008
                                                                                                                                                                                                                                                                                          • Figure 40: Agreement with ‘I would never think of taking a package holiday’, by socio-economic group, NI and RoI, 2008
                                                                                                                                                                                                                                                                                        • The consumer – Holiday accommodation
                                                                                                                                                                                                                                                                                          • Figure 41: Type of accommodation, last holiday, NI and RoI, 2008
                                                                                                                                                                                                                                                                                          • Figure 42: Stayed in a domestic hotel in the last 12 months, by age, NI and RoI, 2008
                                                                                                                                                                                                                                                                                          • Figure 43: Stayed in a domestic hotel in the last 12 months, by socio-economic group, NI and RoI, 2008
                                                                                                                                                                                                                                                                                        • What do consumers want from holidays?
                                                                                                                                                                                                                                                                                          • Figure 44: Agreement with ‘I like to take holidays in my own country rather than abroad’, by age, NI and RoI, 2008
                                                                                                                                                                                                                                                                                          • Figure 45: Agreement with ‘I like to take holidays in my own country rather than abroad’, by socio-economic group, NI and RoI, 2008
                                                                                                                                                                                                                                                                                          • Figure 46: Agreement with ‘I like to go back to familiar places for holidays’, by age, NI and RoI, 2008
                                                                                                                                                                                                                                                                                          • Figure 47: Agreement with ‘I try to go somewhere different on holiday every time’, by age, NI and RoI, 2008
                                                                                                                                                                                                                                                                                          • Figure 48: Agreement with ‘I try to go somewhere different on holiday every time’, by socio-economic group, NI and RoI, 2008
                                                                                                                                                                                                                                                                                          • Figure 49: Agreement with ‘When on holiday, I only want to eat, drink and sunbathe’, by socio-economic group, NI and RoI, 2008
                                                                                                                                                                                                                                                                                          • Figure 50: Agreement with ‘When on holiday, I only want to eat, drink and sunbathe’, by number of people in household, NI and RoI, 2008
                                                                                                                                                                                                                                                                                          • Figure 51: Agreement with ‘I like to go on holidays where activities are organised for me’, by age, NI and RoI, 2008
                                                                                                                                                                                                                                                                                          • Figure 52: Agreement with ‘I like to go on holidays where activities are organised for me’, by number of people in household, NI and RoI, 2008
                                                                                                                                                                                                                                                                                          • Figure 53: Agreement with ‘I like to go on holidays where activities are organised for me’, by socio-economic group, NI and RoI, 2008

                                                                                                                                                                                                                                                                                      Companies Covered

                                                                                                                                                                                                                                                                                      To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                                                                                                                      Airlines - Package Holidays vs Online Holidays - Ireland - January 2009

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