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Package vs Independent Holidays - UK - May 2016

“Package providers must adapt to growing consumer demands for customisation and personalisation, especially on mobile devices. As new price comparison and aggregator apps continue to come on the market, consumers will become more comfortable doing independent research and booking on their mobile devices. As a result of the choice on offer, package providers should implement a more flexible booking model to help satisfy consumer desire for customisation.”
- Fergal McGivney, Travel and Technology Analyst

This report discusses the following key topics:

  • Pure package providers must adapt to the growing demand for city breaks
  • Using technology to get consumers excited
  • Consumers have concerns about accommodation quality when booking packages

Independent bookings dominate the holiday market, but package bookings are still going strong in 2016. However, while pent-up demand for holidays overseas is finally being released, consumers are still somewhat cautious. The means that there is still demand for aggressively priced package holidays offering security and staggered payment models.

However, going towards 2020, it is likely that consumers will move towards independent and dynamic bookings due to increasing consumer confidence, increased financial protection when booking from separate providers and new independent booking platforms coming to market.

Pure package providers should look to make package bookings a more customisable and creative process. Brands must now compete on experiences as well as price to gain a competitive advantage. As long as the booking process is clutter-free and functional, package providers can experiment with customisation and personalisation, mobile and smart TV apps, interactive YouTube videos and even virtual reality technology.

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. Overview

    • What you need to know
      • Scope of the Report
      • Executive Summary

          • The market
            • Independent bookings to grow faster than packages
                • Figure 1: Forecast volume of overseas independent holidays taken by UK residents, 2010-20
                • Figure 2: Forecast volume of overseas package holidays taken by UK residents, 2010-20
              • The consumer
                • Make traditional package bookings more flexible
                  • Figure 3: Booking types in the last 12 months, February 2016
                • Cheap packages can drive bookings to alternative destinations
                  • Figure 4: Holiday behaviours, February 2016
                • Package bookers spend nearly twice as much as independent bookers
                  • Figure 5: Holiday booking type, by holiday spending (mean and median), February 2016
                • Many consumers have concerns about the quality of accommodation when booking packages
                  • Figure 6: Package and independent holiday attitudes, February 2016
                • Over half of holidaymakers have booked or are open to booking a package
                  • Figure 7: Package holiday plans for the next year, February 2016
                • What we think
                • Issues and Insights

                  • Pure package providers must adapt to the growing demand for city breaks
                    • The facts
                      • The implications
                        • Using technology to get consumers excited
                          • The facts
                            • The implications
                              • Consumers have concerns about accommodation quality when booking packages
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • Consumer confidence is on a two-track course of recovery
                                      • Volume and value for independent bookings to increase at a faster rate than for packages
                                        • Low oil price could contribute to an increase in independent bookings
                                          • UK travellers could lose some travel benefits if Brexit goes ahead
                                            • Cuts to Air Passenger Duty should make long-haul package trips more attractive
                                            • Market Size and Forecast

                                              • Package bookings buoyed by savvy spending…
                                                • …but independent booking methods likely to grow at a faster rate
                                                  • Figure 8: Forecast of UK overseas volume, package and independent holidays, 2010-20
                                                  • Figure 9: Forecast of UK overseas value*, package and independent holidays, 2010-20
                                                  • Figure 10: Forecast volume of UK overseas independent holidays, 2010-20
                                                  • Figure 11: Forecast volume of UK overseas package holidays, 2010-20
                                                  • Figure 12: Forecast value of UK overseas independent holidays, 2010-20
                                                  • Figure 13: Forecast value of UK overseas package holidays, 2010-20
                                              • Segment Performance

                                                • Independent bookings via air likely to grow at the expense of packages
                                                  • Figure 14: Package vs independent overseas holidays, by transport method, 2010-15
                                                • Top 20 countries
                                                  • Figure 15: Top 15 countries, independent versus package, January-September 2015
                                                  • Figure 16: Package holidays, by volume, Q1-Q3 2014 versus Q1-Q3 2015
                                              • Market Drivers

                                                • Consumers returning overseas
                                                  • Figure 17: Overseas holiday market volume and value*, 2010-20
                                                  • Figure 18: Total package and independent holiday volume, 2010-20
                                                  • Figure 19: Total package and independent holiday value, 2010-20
                                                • Some economic uncertainty lies ahead in 2016…
                                                  • …but consumer sentiment is cautiously optimistic
                                                    • Figure 20: Consumers’ financial situation, January 2009-January 2016
                                                  • New Package Travel Directive
                                                    • Winter months a key time for a call to action
                                                      • Figure 21: Percentage of consumers who plan to book a holiday in the next three months, by month, January 2015-January 2016
                                                    • APD cuts should have a positive effect on long-haul package trips
                                                      • Figure 22: Air Passenger Duty (APD) rates, April 2012-April 2016*
                                                    • 2016’s cheapest destinations can help encourage more package bookings
                                                      • Figure 23: Post Office Worldwide Cost Barometer 2016
                                                    • Low oil price should lead to lower airfares for some destinations
                                                      • Figure 24: Brent Crude Spot Oil Price (US$ per barrel), March 2011-March 2016
                                                  • Key Players – What You Need to Know

                                                    • TUI increases its ATOL-licensed passengers
                                                      • On the Beach aims to generate over £90 million through its IPO
                                                        • Wherefor allows users to book a dynamic package holiday based on their budget
                                                          • Google moving into the online travel booking space
                                                            • Thomson and First Choice launch smart TV apps
                                                            • Market Share

                                                              • TUI increases its ATOL-licensed passengers
                                                                • Figure 25: Passengers licensed under ATOL protection, by top 10 ATOL holders, 2011-16
                                                            • Launch Activity and Innovation

                                                              • Wherefor’s budget before destination dynamic model could take hold
                                                                • Figure 26: Wherefor website screen shot, April 2013
                                                              • Google develops ‘Book on Google’ feature for hotels
                                                                • Google launches Destinations for its mobile search app
                                                                  • Figure 27: Google Destinations, March 2016
                                                                • Smart TV apps and the booking process
                                                                  • Figure 28: Airbnb’s Apple TV app
                                                                  • Figure 29: Thomson’s smart TV app, April 2015
                                                                • Travel brands using virtual reality and 360-degree YouTube videos
                                                                  • Predictive flight booker Hopper raises $16 (£11.2) million in funding
                                                                    • Figure 30: Price predicting smartphone app Hopper
                                                                  • Expedia now enables communication between guest and hotel
                                                                    • Live chat with KLM Royal Dutch Airlines via Facebook Messenger
                                                                      • Figure 31: KLM Royal Dutch Airways in the Facebook Messenger app
                                                                  • The Consumer – What You Need to Know

                                                                    • Package providers should provide more flexibility
                                                                      • Alternative destinations are attractive for the right price
                                                                        • Pure package providers must adapt to the growing trend for city breaks
                                                                          • Package bookers spend twice as much as independent bookers
                                                                            • Consumers need to be reassured about the quality of accommodation
                                                                            • Package vs Independent Profile

                                                                              • Make package bookings more flexible to encourage independent bookers
                                                                                • Figure 32: Booking types in the last 12 months, February 2016
                                                                              • Over-55s the most likely to have booked a pure package
                                                                                • Figure 33: Booking types of main holiday in the last 12 months, by age, February 2016
                                                                              • Affluent holidaymakers keen on packages
                                                                                • Figure 34: Booking types in the last 12 months, by household income, February 2016
                                                                              • Less affluent consumers tend to holiday at home
                                                                                • Figure 35: Booking types in the last 12 months, by financial situation, February 2016
                                                                              • The decline of the staycation presents more opportunities for package providers
                                                                                • Figure 36: Holiday destinations visited in the past 12 months, by booking type, February 2016
                                                                            • Holiday Behaviours

                                                                              • Price a strong influencer on destination choice
                                                                                • Parents want to take their kids on holidays outside of term time
                                                                                  • Affluent holidaymakers most likely to be influenced by favourable market drivers
                                                                                      • Figure 37: Holiday behaviours, February 2016
                                                                                  • Holiday Types and Package Holidays

                                                                                    • Families are key for beach packages
                                                                                      • City breaks on the rise; pure package providers must allow customisation
                                                                                        • Developing a customisable dynamic booking model
                                                                                          • Figure 38: Holiday types taken over the last 12 months, by booking type, February 2016
                                                                                      • Holiday Spending – Package versus Independent

                                                                                        • An overview of holiday spending
                                                                                          • Figure 39: Holiday spending (ranges), February 2016
                                                                                          • Figure 40: Average holiday spend, February 2016
                                                                                        • Package bookers are lucrative targets
                                                                                          • Figure 41: Holiday booking type, by holiday spending (mean and median), February 2016
                                                                                          • Figure 42: Holiday booking type, by holiday spending (ranges), February 2016
                                                                                        • Rewarding consumer desire for more holidays to build loyalty
                                                                                        • Package and Independent Holiday Attitudes

                                                                                          • Parents and beach-goers view packages as the cheaper option
                                                                                            • Consumers wary about the quality of accommodation
                                                                                              • Gamify the experience for concerned parents who enjoy the booking process
                                                                                                • Figure 43: Package and independent holiday attitudes (1), February 2016
                                                                                              • Experience is all; shifting to a more dynamic model
                                                                                                  • Figure 44: Package and independent holiday attitudes (2), February 2016
                                                                                              • Package Holiday Plans

                                                                                                • Package plans for 2016
                                                                                                  • Figure 45: Package holiday plans for the next year, February 2016
                                                                                                • Millennials most likely to book packages
                                                                                                  • Figure 46: Package holiday plans for the next year, by age, February 2016
                                                                                              • CHAID Analysis

                                                                                                • Methodology
                                                                                                  • Collaboration between friends and family could be made possible via messaging apps
                                                                                                    • Figure 47: Target groups based on attitudes towards package and independent holidays – CHAID – Tree output, February 2016
                                                                                                    • Figure 48: Target groups based on attitudes towards package and independent holidays – CHAID – Table output, February 2016
                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                    • Abbreviations
                                                                                                      • Travel and tourism definitions
                                                                                                        • Fan chart forecast
                                                                                                            • Figure 49: Best- and worst-case forecast of UK overseas independent holiday volume, 2015-20
                                                                                                            • Figure 50: Best- and worst-case forecast of UK overseas package holiday volume, 2015-20
                                                                                                            • Figure 51: Best- and worst-case forecast of UK overseas independent holiday value, 2015-20
                                                                                                            • Figure 52: Best- and worst-case forecast of UK overseas package holiday value, 2015-20

                                                                                                        Companies Covered

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

                                                                                                        Package vs Independent Holidays - UK - May 2016

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