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Budget Holidays - UK - March 2011

There were an estimated 11.2 million budget holidays taken overseas in 2010, making up approximately three in ten trips abroad by UK holidaymakers. However this segment of the market has by no means proved recession-proof – at its peak in 2008 12.5 million such holidays were taken.

What has occurred instead is a greater fall in the total number of overseas holidays than budget trips in both 2009 and 2010 – and in fact the latter are estimated to have declined only 0.9% since 2009 (against a fall in foreign holidays of 6%). As a result, budget holidays’ share of the market has increased, even as the number of such trips taken has fallen.

This report considers whether budget holiday abroad will increase in future, and if they will continue to increase in importance as a segment of the overall market. It looks at consumer attitudes towards budget trips and how these differ between people who have taken such holidays and those who haven’t. It examines the strengths and weaknesses of such trips, the key players and innovations in the industry.

  • In 2010, there were an estimated 11.2 million overseas budget holidays, a fall of 0.9% year on year. This came in the context of a 6% drop in the number of trips abroad – as a result, budget holidays’ share of the market has increased, even as the number of such breaks taken has fallen. Mintel estimates that approximately three in ten overseas holidays were budget trips in 2010.
  • The segment has by no means been recession-proof. The number of budget trips abroad fell 9.6% in 2009. This was the year in which holidaymaking was hit hardest - the number of overseas holidays dropping by over 15% year on year.
  • European destinations dominate the most popular choices for budget holidays overseas, with Spain, France, Greece, Germany, Italy and Portugal all in the top seven. The only non-eurozone country to rank highly is Turkey (third most popular with budget holidaymakers).
  • Despite packages’ long-standing associations with the ‘cheap and cheerful’ and ‘fly and flop’ model of holidaymaking, budget holidays are now more likely to be independent bookings (those in which consumers have arranged and booked the components of the trip themselves). Approximately one in seven people took an independent budget break in the two years to November 2010; one in fourteen took a package.
  • With an average expenditure of £212 in 2010, domestic breaks are the key competition for budget overseas holidays. While the number of all overseas trips and budget breaks dropped in 2009, UK holidays taken by UK residents rose almost 17% that year.
  • Amongst people who’ve been on budget holidays, more than four in ten people say they’ve had great holidays for a budget amount. Across all adults, the most popular attitude towards budget holidays is negative – almost one in three people say they prefer to save up and take more expensive holidays.

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Table of contents

  1. Introduction

      • Definitions
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: Overseas budget holidays market size and forecast, 2005-15
            • Recessionary impact
              • Better position in 2010
                • Holding up against sluggish growth
                  • Figure 2: Overseas holidays market size and forecast, 2005-15
                • Market factors
                  • Key competition is domestic
                    • Affluence and polarisation
                      • Oil and all that means
                        • Companies, brands and innovation
                          • LCC leaders still flying high
                            • Potential major player enters the market
                              • Competitive companies
                                • Teletext re-invention
                                  • Innovations details
                                    • The consumer
                                      • Figure 3: Overseas budget holidays taken, January 2011
                                    • One quarter have been on a budget break
                                      • Preferring to save
                                        • Figure 4: Attitudes towards budget holidays abroad, January 2011
                                      • What we think
                                      • Issues in the Market

                                          • What has the recession meant for budget holidays?
                                            • What are the most popular budget holiday destinations?
                                              • What do people feel are essentials for their holiday, even if they are spending a ‘budget’ amount?
                                                • Who takes budget holidays abroad?
                                                  • Are packages the main choice for budget holidays abroad?
                                                  • Future Opportunities

                                                      • Trend: Boomerang Generation
                                                        • Trend: The Real Thing
                                                        • Internal Market Environment

                                                          • Key points
                                                            • Most take holidays
                                                              • Figure 5: Percentage of adults booking UK and overseas holidays, 2010
                                                            • Recession, staycations and stagnation
                                                              • Figure 6: Domestic versus overseas holidays, 2005-10
                                                            • Flight to value
                                                              • Figure 7: Domestic and overseas holidays expenditure, 2005-10
                                                              • Figure 8: Average spend per trip, 2005-10
                                                            • More than six in ten are independent trips
                                                              • Figure 9: Inclusive holidays versus independent holidays abroad, by volume, 2005-10
                                                              • Figure 10: Methods used to book holidays/short breaks abroad, 2010
                                                            • Low-cost leaders keep growing
                                                              • Figure 11: Scheduled passengers carried by easyJet and Ryanair, 2006-10
                                                              • Figure 12: Total overseas holiday trips, by mode of transport, 2005-10
                                                            • Flight plus increases protection
                                                              • New player takes off
                                                              • Broader Market Environment

                                                                • Key points
                                                                  • GDP falls, confidence down
                                                                    • Figure 13: GDP quarterly percentage change, Q1 2005-Q4 2010
                                                                    • Figure 14: GfK NOP Consumer Confidence index, January 2008- January 2011
                                                                  • Ageing along
                                                                    • Figure 15: Trends in the age structure of the UK population, by gender, 2005-15
                                                                  • ABs up
                                                                    • Figure 16: Forecast adult population trends, by socio-economic group, 2005-15
                                                                  • Broadband penetration grows
                                                                    • Figure 17: Broadband penetration, by demographics, 2004-10
                                                                  • Currency constraints
                                                                    • Figure 18: Annual average exchange rates for Sterling, 2007-11
                                                                • Competitive Context

                                                                  • Key points
                                                                    • Domestic trips drop
                                                                      • Figure 19: Budget holidays overseas, domestic holidays and total holidays (overseas and domestic), 2005-10
                                                                    • Portugal and Spain positioned for budget
                                                                      • Figure 20: Post Office Worldwide Holiday Costs Barometer for eight most popular budget holiday destinations for UK tourists, January 2011
                                                                  • Strengths and Weaknesses in the Market

                                                                      • Strengths
                                                                        • ABC1 advantage
                                                                          • Volume holds up in 2010
                                                                            • easyJet Holidays takes off
                                                                              • Prices fall in key destinations
                                                                                • Positive experience
                                                                                  • Weaknesses
                                                                                    • Stung by staycations
                                                                                      • Petrol, fuel and oil prices
                                                                                        • Ageing population
                                                                                          • Prefer to save
                                                                                            • Lack of experience
                                                                                            • Who's Innovating?

                                                                                              • Key points
                                                                                                • (Ultra) Cheap stays…
                                                                                                  • …and cost-saving tips
                                                                                                    • More comparison sites launch
                                                                                                      • Inspirational information
                                                                                                        • Air – loyalty, length and fuel fluctuations
                                                                                                        • Market Size and Forecast

                                                                                                          • Key points
                                                                                                            • Budget holidays hit by recession
                                                                                                              • Figure 21: Estimated volume of budget holidays, 2005-15
                                                                                                            • Market size methodology
                                                                                                              • Forecasts
                                                                                                                • Figure 22: Overseas budget holidays market size and forecast, 2005-15
                                                                                                                • Figure 23: Overseas holidays market size and forecast, 2005-15
                                                                                                              • Forecast methodology
                                                                                                              • Segment Performance

                                                                                                                • Key points
                                                                                                                  • New, familiar and ‘far near’
                                                                                                                    • Figure 24: Countries visited for budget holidays, 2010
                                                                                                                  • Getting there
                                                                                                                    • Figure 25: Transport used for budget holidays, 2010
                                                                                                                  • Type and time
                                                                                                                    • Figure 26: Types of budget holidays taken, 2010
                                                                                                                    • Figure 27: Advance booking times for budget holidays, 2010
                                                                                                                    • Figure 28: Time spent away on budget holidays in total during the last 12 months, 2010
                                                                                                                  • Staying and doing
                                                                                                                    • Figure 29: Type of accommodation used for budget holidays, 2010
                                                                                                                    • Figure 30: Activities enjoyed on budget holidays, 2010
                                                                                                                • Companies and Products

                                                                                                                    • easyJet
                                                                                                                        • Figure 31: Financial performance of easyJet, 2009 and 2010
                                                                                                                      • Hostelling International
                                                                                                                          • Figure 32: Financial performance of International Youth Hostel Federation, 2008 and 2009
                                                                                                                        • Low Cost Travel Group
                                                                                                                            • Figure 33: Financial performance of lowcostholidays.com Limited, 2008 and 2009
                                                                                                                          • Ryanair
                                                                                                                              • Figure 34: Financial performance of Ryanair, 2009 and 2010
                                                                                                                              • Figure 35: Half-year results of Ryanair, 2009 and 2010
                                                                                                                            • Shearings Holidays
                                                                                                                                • Figure 36: Financial performance of Shearings Holidays Limited, 2008 and 2009
                                                                                                                              • Teletext Holidays
                                                                                                                                  • Figure 37: Financial performance of Teletext Holidays Limited, 2008 and 2009
                                                                                                                                • Thomas Cook
                                                                                                                                    • Figure 38: Financial performance of Thomas Cook Group Plc – UK & Ireland, India and Middle East Segment, 2009 and 2010
                                                                                                                                  • TUI
                                                                                                                                      • Figure 39: Financial performance of TUI Plc – UK & Ireland market, 2009 and 2010
                                                                                                                                  • Channels to Market

                                                                                                                                    • Key points
                                                                                                                                      • Online information
                                                                                                                                        • Figure 40: Sources used to get information for holidays, 2010
                                                                                                                                      • Flying through the web
                                                                                                                                        • Figure 41: Channels to market for holidays, 2010
                                                                                                                                        • Figure 42: Method used to book holidays, 2010
                                                                                                                                    • Budget Holiday Experience

                                                                                                                                      • Key points
                                                                                                                                        • One in four have taken a budget break
                                                                                                                                          • Figure 43: Budget holidays taken, January 2011
                                                                                                                                        • Top-ups and main trips
                                                                                                                                          • Independents, packages and ‘lapsed takers’
                                                                                                                                            • Never been budget
                                                                                                                                            • Holiday Essentials

                                                                                                                                              • Key points
                                                                                                                                                • Seeking sunshine
                                                                                                                                                  • Figure 44: Budget holiday essentials, January 2011
                                                                                                                                                • Away for weather
                                                                                                                                                  • Beachside, poolside
                                                                                                                                                    • Accommodation ABs
                                                                                                                                                      • Type taken versus essentials
                                                                                                                                                        • Figure 45: Budget holiday essentials, by most popular budget holidays taken, January 2011
                                                                                                                                                        • Figure 46: Budget holiday essentials, by most popular budget holidays taken, January 2011
                                                                                                                                                    • What People Think of Budget Holidays

                                                                                                                                                      • Key points
                                                                                                                                                        • Budget holiday attitudes
                                                                                                                                                          • Figure 47: Attitudes towards budget holidays, January 2011
                                                                                                                                                        • Family financials
                                                                                                                                                          • Youth appeal
                                                                                                                                                            • Women and children
                                                                                                                                                              • Package holidaymakers positive
                                                                                                                                                                • Figure 48: Attitudes towards budget holidays, by most popular budget holidays taken, January 2011
                                                                                                                                                                • Figure 49: Attitudes towards budget holidays, by next most popular budget holidays taken, January 2011
                                                                                                                                                            • Targeting Opportunities

                                                                                                                                                              • Key points
                                                                                                                                                                • Target groups
                                                                                                                                                                  • Figure 50: Budget holidays target groups, January 2011
                                                                                                                                                                • Budget Holiday Fans
                                                                                                                                                                  • Demographic profile
                                                                                                                                                                    • About Affordability
                                                                                                                                                                      • Demographic profile
                                                                                                                                                                        • Save and Spenders
                                                                                                                                                                          • Demographic profile
                                                                                                                                                                            • Not Interested
                                                                                                                                                                              • Demographic profile
                                                                                                                                                                              • Appendix – Market Size and Forecast

                                                                                                                                                                                  • Figure 51: Volume forecast of budget holidays overseas, best- and worst-case scenarios, 2010-15
                                                                                                                                                                                  • Figure 52: Volume forecast of holidays overseas, best- and worst-case scenarios, 2010-15
                                                                                                                                                                              • Appendix – Budget Holiday Experience

                                                                                                                                                                                  • Figure 53: Most popular budget holidays taken, by demographics, January 2011
                                                                                                                                                                                  • Figure 54: Next most popular budget holidays taken, by demographics, January 2011
                                                                                                                                                                              • Appendix – Holiday Essentials

                                                                                                                                                                                  • Figure 55: Most popular budget holiday essentials, by demographics, January 2011
                                                                                                                                                                                  • Figure 56: Next most popular budget holiday essentials, by demographics, January 2011
                                                                                                                                                                                  • Figure 57: Most popular budget holiday essentials for budget holidaymakers, by demographics, January 2011
                                                                                                                                                                                  • Figure 58: Next most popular budget holiday essentials for budget holidaymakers, by demographics, January 2011
                                                                                                                                                                              • Appendix – What People Think of Budget Holidays

                                                                                                                                                                                  • Figure 59: Attitudes towards budget holidays, by most popular budget holiday essentials, January 2011
                                                                                                                                                                                  • Figure 60: Attitudes towards budget holidays, by next most popular budget holiday essentials, January 2011
                                                                                                                                                                                  • Figure 61: Attitudes towards budget holidays, by other budget holiday essentials, January 2011
                                                                                                                                                                                  • Figure 62: Most popular attitudes towards budget holidays, by demographics, January 2011
                                                                                                                                                                                  • Figure 63: Next most popular attitudes towards budget holidays, by demographics, January 2011
                                                                                                                                                                                  • Figure 64: Attitudes towards budget holidays, by demographics, January 2011
                                                                                                                                                                              • Appendix – Targeting Opportunities

                                                                                                                                                                                  • Figure 65: Attitudes towards budget holidays, by target groups, January 2011
                                                                                                                                                                                  • Figure 66: Budget holidays taken, by target groups, January 2011
                                                                                                                                                                                  • Figure 67: Budget holiday essentials, by target groups, January 2011
                                                                                                                                                                                  • Figure 68: Target groups, by demographics, January 2011

                                                                                                                                                                              Companies Covered

                                                                                                                                                                              • Aer Lingus Group Plc
                                                                                                                                                                              • Airtours Holidays
                                                                                                                                                                              • Condor Ferries
                                                                                                                                                                              • Europcar International
                                                                                                                                                                              • Eurostar UK Ltd
                                                                                                                                                                              • First Choice Holidays & Flights Ltd
                                                                                                                                                                              • Going Places
                                                                                                                                                                              • MyTravel Group plc
                                                                                                                                                                              • Office of Fair Trading
                                                                                                                                                                              • Ryanair Holdings plc
                                                                                                                                                                              • Shearings Holidays Ltd
                                                                                                                                                                              • Sunquest Holidays
                                                                                                                                                                              • Teletext Holidays
                                                                                                                                                                              • The Youth Hostels Association
                                                                                                                                                                              • Thomas Cook Group PLC
                                                                                                                                                                              • Thomson Holidays
                                                                                                                                                                              • TUI Travel PLC

                                                                                                                                                                              Budget Holidays - UK - March 2011

                                                                                                                                                                              £1,995.00 (Excl.Tax)