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Travel Agents - UK - December 2017

“Small independent shops may struggle to compete with the leading chains when it comes to the latest technology, but with Thomas Cook and TUI focusing increasingly on selling their own bespoke holidays, this opens up an opportunity for independent shops to sell a greater diversity of products, and to proactively promote their individuality as a key point of differentiation.”

– John Worthington, Senior Analyst

This report examines the following issues:

  • Attracting a new generation of travel shoppers
  • Specialisation: the silver shop
  • Specialisation: the solo shop
  • Specialisation: the ethical shop
  • Destination experiences can add value to packages

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • Travel shop bookings are dwindling, but still account for one in six holidays
            • Figure 1: Estimated total number of holidays booked via travel agents, 2012-22
          • Store numbers down by around 80 per year over past decade
            • Figure 2: Top UK travel agents, by number of retail stores, November 2016-17
          • Half of customers use Thomas Cook, one third use TUI
            • Figure 3: Use of travel agent shops for holiday research and booking, September 2017
          • One in five consumers have booked in a travel shop in last 12 months
            • Figure 4: Use of travel agent shops for holiday research and booking, September 2017
          • Beyond the beach
            • Figure 5: Type of holiday booked at travel agents, September 2017
          • Specialise to survive
            • Figure 6: Interest in using specialist travel agents, September 2017
          • Tech potential
            • Figure 7: Agreement with attitude statements towards travel agents, September 2017
          • What we think
          • Issues and Insights

            • Attracting a new generation of travel shoppers
              • The facts
                • The implications
                  • Specialisation: the silver shop
                    • The facts
                      • The implications
                        • Specialisation: the solo shop
                          • The facts
                            • The implications
                              • Specialisation: the ethical shop
                                • The facts
                                  • The implications
                                    • Destination experiences can add value to packages
                                      • The facts
                                        • The implications
                                        • The Market – What You Need to Know

                                          • Travel shop bookings down slightly in 2017 as online shift continues
                                            • Shop numbers have fallen 17% since 2008
                                              • But 16 million shop bookings still expected by 2022
                                                • 2017 a record year for holidays abroad, but uncertainty lies ahead
                                                  • Spanish surge continues, but Turkey shows signs of recovery
                                                    • Monarch collapse shows value of support in a crisis
                                                    • Market Size and Forecast

                                                      • Travel shops continue to lose market share…
                                                        • Figure 8: Estimated total number of holidays booked via travel agents, 2012-22
                                                        • Figure 9: Estimated number of overseas and domestic holidays booked via travel agents, 2012-22
                                                      • Forecast
                                                        • Figure 10: Estimated total number of holidays booked via travel agents, 2012-22
                                                      • …but bricks-and-mortar retail still has a big part to play
                                                      • Market Background

                                                        • Household budgets under pressure as economy slows
                                                            • Figure 11: UK average weekly earnings (excluding bonuses)* vs CPI inflation, percentage change year-on-year, January 2014-October 2017
                                                          • Pound pushing up holiday prices
                                                            • Figure 12: Spot exchange rate, Pound Sterling vs selected currencies, June 2016-November 2017
                                                          • Overseas holidays reach record levels, but growth starting to slow
                                                            • Figure 13: Domestic and overseas holiday volume and expenditure, 2012-17
                                                          • Shops need to diversify range of package products
                                                            • Figure 14: Independent vs package overseas holiday volume, 2012-17
                                                          • Shops should promote alternatives to Spain
                                                            • Figure 15: Top 20 overseas holiday destinations, by number of trips, 2012-16
                                                          • Monarch’s failure can focus attention on supportive role of the travel agent
                                                              • Figure 16: ATOL tour operator failures/closures in the UK, 1 January-21 November 2017
                                                          • Key Players – What You Need to Know

                                                            • Cook on the money
                                                              • TUI takes ‘right-brain’ approach with Destination U
                                                                • Expanding Hays launches tie-up with Smiths
                                                                  • V-Rooms are helping to shore up the strongest travel shop brand
                                                                    • Kuoni developing in-store expertise in LGBT and wellness markets
                                                                      • Barrhead introduces branded robots
                                                                        • Taking advantage of mature traveller potential.
                                                                        • Market Share

                                                                          • Number of shops has fallen 17% since 2008
                                                                            • Figure 17: Top UK travel agents, by number of retail stores, November 2016-17
                                                                          • Cook cutting estate, but opening more Discovery stores
                                                                            • TUI launches Holiday Design Store 2.0
                                                                              • Hays branches out into WH Smith
                                                                                • Virgin expanding V-Rooms
                                                                                  • Kuoni adds two more John Lewis concessions
                                                                                    • Barrhead moves south of the border
                                                                                      • Shop numbers stable at Flight Centre, Trailfinders and STA
                                                                                        • Midcounties is now the largest chain with the ‘Co-op’ name
                                                                                          • 10 branded chains account for half of market supply
                                                                                            • Jet2holidays expansion boosts supply in independent shops
                                                                                                • Figure 18: Top 20 UK travel companies, ranked by ATOL passenger licences, November 2015-17
                                                                                            • Launch Activity and Innovation

                                                                                              • TUI developing Destination U
                                                                                                • Barrhead recruits robots
                                                                                                  • STA attracts publicity with flash sale
                                                                                                    • Mature approach
                                                                                                      • Shops can integrate travel and lifestyle trends
                                                                                                      • Brand Research

                                                                                                          • Brand map
                                                                                                            • Figure 19: Attitudes towards and usage of selected brands, October 2017
                                                                                                          • Key brand metrics
                                                                                                            • Figure 20: Key metrics for selected brands, October 2017
                                                                                                          • Big two brands score high on trust
                                                                                                            • Figure 21: Attitudes, by brand, October 2017
                                                                                                          • Big two seen as accessible, but Virgin the most fun
                                                                                                            • Figure 22: Brand personality – Macro image, October 2017
                                                                                                          • Virgin ‘overpriced’ but stylish
                                                                                                            • Figure 23: Brand personality – Micro image, October 2017
                                                                                                          • Brand analysis
                                                                                                            • Virgin has strongest image, but faces value for money challenge
                                                                                                              • Figure 24: User profile of Virgin Holidays, October 2017
                                                                                                            • Brand analysis
                                                                                                              • Re-brand gives TUI chance to refresh package perceptions
                                                                                                                • Figure 25: User profile of TUI/Thomson, October 2017
                                                                                                              • Brand analysis
                                                                                                                • Cook now the best-known brand, but image lags behind TUI
                                                                                                                  • Figure 26: User profile of Thomas Cook, October 2017
                                                                                                                • Brand analysis
                                                                                                                  • Trailfinders scores highest ‘excellent’ rating after Virgin
                                                                                                                    • Figure 27: User profile of Trailfinders, October 2017
                                                                                                                  • Brand analysis
                                                                                                                    • WH Smith plan offers Hays a chance to strengthen brand perceptions
                                                                                                                      • Figure 28: User profile of Hays Travel, October 2017
                                                                                                                    • Brand analysis
                                                                                                                      • STA’s weak image may be affected by backpacker associations
                                                                                                                        • Figure 29: User profile of STA Travel, October 2017
                                                                                                                      • Brand analysis
                                                                                                                        • Flight Centre more likely to be seen as basic
                                                                                                                          • Figure 30: User profile of Flight Centre, October 2017
                                                                                                                        • Brand analysis
                                                                                                                        • The Consumer – What You Need to Know

                                                                                                                          • Shops have 70% conversion rate of lookers to bookers
                                                                                                                            • Millennial events
                                                                                                                              • Cook is the most widely used shop brand
                                                                                                                                • Over half of most affluent group book long-haul
                                                                                                                                  • Shops need to diversify
                                                                                                                                    • Luxury expertise a clear opportunity
                                                                                                                                      • Mixed opinions on the value of travel shops
                                                                                                                                        • New technology can prove popular, but more awareness needed
                                                                                                                                        • Travel Agent Usage

                                                                                                                                          • Seven in 10 shop researchers also book
                                                                                                                                            • Most ‘digitally confident’ consumers are also the most likely to use travel shops
                                                                                                                                              • ABs and C2s most likely to book in travel shops
                                                                                                                                                • Figure 31: Use of travel agent shops for holiday research and booking, September 2017
                                                                                                                                                • Figure 32: Use of travel agent shops for holiday booking, by region, September 2017
                                                                                                                                              • Around half of travel shop users visit Thomas Cook
                                                                                                                                                • Figure 33: Use of travel agent shops for holiday research and booking, September 2017
                                                                                                                                              • Londoners most likely to shop around
                                                                                                                                                • Figure 34: Number of travel agent brands used for holiday research and booking, September 2017
                                                                                                                                              • Cook has most loyal customers out of big two brands
                                                                                                                                                • Independence can be a growing point of differentiation
                                                                                                                                                • Travel Agents – Products Booked

                                                                                                                                                  • Half of higher income shop customers buy long-haul
                                                                                                                                                    • Destination experiences are an under-developed opportunity for shops
                                                                                                                                                      • Figure 35: Types of booking made at travel agents, September 2017
                                                                                                                                                    • City break opportunities
                                                                                                                                                        • Figure 36: Type of holiday booked at travel agents, September 2017
                                                                                                                                                      • Older Millennials likely to book a diverse range of holidays
                                                                                                                                                        • Figure 37: Number of holiday types booked at travel agents, September 2017
                                                                                                                                                    • Travel Agents – Potential for Specialisation

                                                                                                                                                      • Demand for luxury specialisation
                                                                                                                                                        • Older traveller opportunity
                                                                                                                                                          • Solo-friendly shops can appeal to a poorly served demographic
                                                                                                                                                            • Figure 38: Interest in using specialist travel agents, September 2017
                                                                                                                                                          • Ethical and LGBT potential
                                                                                                                                                          • Travel Agents – Attitudes

                                                                                                                                                            • Half of adults say travel shops are a thing of the past
                                                                                                                                                              • But specialised knowledge and time-saving can still be powerful messages
                                                                                                                                                                • Figure 39: Agreement with attitude statements towards travel agents, September 2017
                                                                                                                                                              • Online seen as cheaper and offering better choice
                                                                                                                                                                • Promotional events/sales are quickest way to get people through the door
                                                                                                                                                                  • In-store technology sparks consumer interest, but awareness needs to be raised
                                                                                                                                                                      • Figure 40: Agreement with further attitude statements towards travel agents, September 2017
                                                                                                                                                                    • Scope for charging consultation fees among premium customers
                                                                                                                                                                      • Millennials prefer a mix of communication methods
                                                                                                                                                                        • Consumers are pessimistic about future of travel shops
                                                                                                                                                                        • CHAID Analysis

                                                                                                                                                                          • Methodology
                                                                                                                                                                            • Parents are the most likely people to value travel shops
                                                                                                                                                                              • Figure 41: Target groups based on attitudes towards travel agents – CHAID – Tree output, September 2017
                                                                                                                                                                              • Figure 42: Target groups based on attitudes towards travel agents – CHAID – Table output, September 2017
                                                                                                                                                                          • Appendix

                                                                                                                                                                            • Definitions
                                                                                                                                                                              • Abbreviations

                                                                                                                                                                              Travel Agents - UK - December 2017

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