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Package vs Independent Holidays - UK - February 2014

“Package brands generally have a lot of buying power and are able to offer significant discounts against topline prices, should the need arise. However, such negotiations are largely impossible online, and consumers might be unwilling to pick up the phone or haggle in person. Package brands need to both encourage that first contact, and also work to digitise the traditional back-and-forth negotiation process.”

– Harry Segal, Research Analyst

Some questions answered in this report include:

  • How can package brands better compete against click-through and comparison sites?
  • How will PTD reform affect holiday booking methods?
  • How can brands better attract DIY enthusiasts?
  • What are the prospects for all-inclusive products in 2014?

The long-term shift towards independent bookings stalled during the recession as cash-strapped holidaymakers sacrificed choice in favour of the value for money offered by aggressively priced commodity packaged products. As the UK enters a period of economic recovery, package brands face a range of challenges from increasingly powerful online comparison sites, the advent of no-frills long-haul airfares and changes to legislation that grant a similar level of financial protection to previously unprotected independent products.

This report examines package and independent holidays taken by UK residents, and explores the motivations behind each booking method. The report also provides a five-year volume and value forecast for both package and independent holidays taken abroad, explores the challenges and opportunities that operators will face in 2014 and investigates the core drivers behind changes in the market. The report also looks at consumer experience of and attitudes towards all-inclusive holidays. This subject was last explored in Mintel’s Package vs Independent Holidays – UK, February 2013.

This report examines the habits and attitudes of British adults concerning package and independent holidays taken both in the UK and abroad. A holiday must constitute at least one overnight stay. The business travel market is not reviewed in this report.

For the purposes of this report, Mintel defines a package holiday in conjunction with the International Passenger Survey (IPS) as an ‘advertised inclusive tour or package holiday’. A package holiday is considered to be a holiday in which a return fare and accommodation are purchased from one provider, for a single price.

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Long-term shift to independent bookings stalled during the recession…
                • …but 2014 should see independent bookings return to growth
                  • Figure 1: Forecast volume of UK overseas independent holidays, 2008-18
                  • Figure 2: Forecast volume of UK overseas package holidays, 2008-18
                • Market factors
                  • Evolution of price comparison tools to drive independent booking
                    • PTD reform to grant financial protection to more independent products
                      • Reforms could also see firms leave the UK for cheaper regulation
                        • Low-cost airfares will raise the appeal of independent bookings
                          • No major failures could dampen demand for protection
                            • Companies, brands and innovation
                              • Top eight ATOL holders increased capacity in 2013
                                • Lastminute.com seeks ‘spontaneity champion’
                                  • Kuoni launches in-store smell promotion
                                    • Momondo launches Flight Insight
                                      • Thomas Cook partners with Brand USA
                                        • The consumer
                                          • Over half of holidaymakers booked independently
                                            • Figure 3: Holiday booking method, December 2013
                                          • Cost and convenience are primary drivers behind package bookings
                                            • Figure 4: Motivations behind booking a package, December 2013
                                          • Four in 10 independent bookers enjoy the research and planning process
                                            • Figure 5: Motivations behind booking independently, December 2013
                                          • Over half of people have taken an all-inclusive holiday
                                            • Figure 6: Experience of all-inclusive holidays, December 2013
                                          • Value and spending controls are key drivers for all-inclusive
                                            • Figure 7: Attitudes towards all-inclusive holidays, December 2013
                                          • What we think
                                          • Issues in the Market

                                              • How can package brands better compete against click-through and comparison sites?
                                                • How will PTD reform affect holiday booking methods?
                                                  • How can brands better attract DIY enthusiasts?
                                                    • What are the prospects for all-inclusive products in 2014?
                                                    • Trend Application

                                                        • Trend: The Real Thing
                                                          • Trend: Guiding Choice
                                                            • Mintel Futures: Human
                                                            • Market Drivers

                                                              • Key points
                                                                • Evolution of price comparison tools to drive independent booking
                                                                  • PTD reform to grant financial protection to more independent products
                                                                    • Reforms could also see firms leave the UK for cheaper regulation
                                                                      • Low-cost airfares will raise the appeal of independent bookings
                                                                        • No major failures could dampen demand for protection
                                                                          • Figure 8: ATOL tour operator failures/closures in the UK, October 2012-November 2013
                                                                      • Who’s Innovating?

                                                                        • Key points
                                                                          • Lastminute.com seeks ‘spontaneity champion’
                                                                            • Kuoni launches in-store smell promotion
                                                                              • Momondo launches Flight Insight
                                                                                • Thomas Cook partners with Brand USA
                                                                                • Market Size and Forecast

                                                                                  • Key points
                                                                                    • Long-term shift to independent bookings stalled during the recession…
                                                                                      • Figure 9: Forecast volume of UK overseas package and independent holiday markets, 2008-18
                                                                                    • … but 2014 should see independent bookings return to growth
                                                                                      • Holidaymaker spending will follow the same trend
                                                                                        • Figure 10: Forecast value of UK overseas package and independent holiday markets, 2008-18
                                                                                      • Fan charts
                                                                                        • Figure 11: Forecast volume of UK overseas independent holidays, 2008-18
                                                                                        • Figure 12: Forecast volume of UK overseas package holidays, 2008-18
                                                                                        • Figure 13: Forecast value of UK overseas independent holidays, 2008-18
                                                                                        • Figure 14: Forecast value of UK overseas package holidays, 2008-18
                                                                                      • Forecast methodology
                                                                                      • Segment Performance

                                                                                        • Key points
                                                                                          • Long-haul package holidays have outperformed independent
                                                                                            • Figure 15: Package vs independent overseas holidays, by long-haul vs short-haul, 2008-13
                                                                                          • High airfares have seen flight packages outperform the market
                                                                                            • Figure 16: Package vs independent overseas holidays, by transport method, 2008-13
                                                                                          • Package holidays to Mexico increase 48%
                                                                                            • Figure 17: Top 10 overseas package holiday destinations, by volume, 2012 and 2013
                                                                                          • North Africa and Caribbean are dominated by package bookings
                                                                                            • Figure 18: Top 10 overseas holiday destinations, by market share of package bookings, 2008 and 2013
                                                                                        • Market Share

                                                                                          • Key points
                                                                                            • Top eight ATOL holders increased capacity in 2013
                                                                                              • Figure 19: Passengers licensed under ATOL protection, by top 10 ATOL holders, 2011-13
                                                                                          • The Consumer – Holiday Booking Method

                                                                                            • Key points
                                                                                              • Over half of holidaymakers booked independently
                                                                                                • Figure 20: Holiday booking method, December 2013
                                                                                              • Package holidays have a strong family-friendly positioning
                                                                                                • ABs favour independent breaks to Europe over packaged products
                                                                                                • The Consumer – Motivations behind Booking a Package

                                                                                                  • Key points
                                                                                                    • Cost and convenience are primary drivers behind package bookings
                                                                                                      • Figure 21: Motivations behind booking a package, December 2013
                                                                                                    • A quarter of package bookers wanted financial protection
                                                                                                      • Low-deposit schemes have little impact on booking methods
                                                                                                      • The Consumer – Motivations behind Booking Independently

                                                                                                        • Key points
                                                                                                          • Four in 10 independent bookers enjoy the research and planning process
                                                                                                            • Figure 22: Motivations behind booking independently, December 2013
                                                                                                          • A third of independent bookers secured cheaper deals
                                                                                                            • A quarter of independent bookers never considered a package holiday
                                                                                                            • The Consumer – Experience of All-Inclusive Holidays

                                                                                                              • Key points
                                                                                                                • Over half of people have taken an all-inclusive holiday…
                                                                                                                  • Figure 23: Experience of all-inclusive holidays, December 2013
                                                                                                                • … but a fifth who have taken one would not like to take another
                                                                                                                • The Consumer – Attitudes towards All-Inclusive Holidays

                                                                                                                  • Key points
                                                                                                                    • Value and spending controls are key drivers for all-inclusive holidays
                                                                                                                      • Figure 24: Attitudes towards all-inclusive holidays, December 2013
                                                                                                                    • Awareness of unexpected costs is not harming demand
                                                                                                                      • One in five think all-inclusive holidays lack cultural authenticity
                                                                                                                        • Concern over impact on local economies is low
                                                                                                                        • Appendix – The Consumer – Holiday Booking Method

                                                                                                                            • Figure 25: Holiday booking method – any holiday, by demographics, December 2013
                                                                                                                            • Figure 26: Holiday booking method – a holiday in Europe, by demographics, December 2013
                                                                                                                            • Figure 27: Holiday booking method – a holiday outside of Europe, by demographics, December 2013
                                                                                                                            • Figure 28: Holiday booking method – a holiday in the UK, by demographics, December 2013
                                                                                                                        • Appendix – The Consumer – Motivations behind Booking a Package

                                                                                                                            • Figure 29: Motivations behind booking a package, by demographics, December 2013
                                                                                                                            • Figure 30: Motivations behind booking a package, by demographics, December 2013 (continued)
                                                                                                                            • Figure 31: Motivations behind booking a package, by booking method, December 2013
                                                                                                                            • Figure 32: Motivations behind booking a package, by motivations behind booking a package, December 2013
                                                                                                                            • Figure 33: Motivations behind booking a package, by motivations behind booking a package, December 2013 (continued)
                                                                                                                        • Appendix – The Consumer – Motivations behind Booking Independently

                                                                                                                            • Figure 34: Motivations behind booking independently, by demographics, December 2013
                                                                                                                            • Figure 35: Motivations behind booking independently, by demographics, December 2013 (continued)
                                                                                                                            • Figure 36: Motivations behind booking independently, by booking method – Any, December 2013
                                                                                                                            • Figure 37: Motivations behind booking independently, by motivations behind booking independently, December 2013
                                                                                                                            • Figure 38: Motivations behind booking independently, by motivations behind booking independently, December 2013 (continued)
                                                                                                                        • Appendix – The Consumer – Experience of All-Inclusive Holidays

                                                                                                                            • Figure 39: Experience of all-inclusive holidays, by demographics, December 2013
                                                                                                                            • Figure 40: Experience of all-inclusive holidays, by demographics, December 2013 (continued)
                                                                                                                        • Appendix – The Consumer – Attitudes towards All-Inclusive Holidays

                                                                                                                            • Figure 41: Attitudes towards all-inclusive holidays, by demographics, December 2013
                                                                                                                            • Figure 42: Attitudes towards all-inclusive holidays, by demographics, December 2013 (continued)
                                                                                                                            • Figure 43: Attitudes towards all-inclusive holidays, by experience of all-inclusive holidays, December 2013
                                                                                                                            • Figure 44: Experience of all-inclusive holidays, by attitudes towards all-inclusive holidays, December 2013
                                                                                                                            • Figure 45: Experience of all-inclusive holidays, by attitudes towards all-inclusive holidays, December 2013 (continued)

                                                                                                                        Companies Covered

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                                                                                                                        Package vs Independent Holidays - UK - February 2014

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