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Travel Money - UK - March 2016

“With the holiday market growing and strong forecasts for overseas expenditure, the travel money market has a positive outlook. However, the commoditisation of the sector and consumers’ continued pursuit of value for money makes it a challenge for brands to maintain market share if they don’t keep up the best rates and lowest fees and charges. The convenience of using credit or debit cards to withdraw cash abroad poses an even greater long-term threat to traditional travel money providers.”
– Deborah Osguthorpe, Head of UK Financial Services Research

This report examines the following areas:

  • Travel money providers are expanding money management
  • Rates and fees are top of mind for consumers
  • Pre-holiday travel money purchase is on the decline

Although there have been a number of launches of prepaid cards over the last year, usage remains fairly low, despite awareness of the product being high. A brand’s reputation is a key factor in financial services and some of the more innovative prepaid card products are from newer market entrants, limiting their impact overall. For consumers, fees and charges remain an important factor and many holidaymakers will make the effort to get the best deal for their money.

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Table of contents

  1. Overview

    • What you need to know
      • Definitions and report scope
      • Executive Summary

          • The market
            • Overseas expenditure is rising year-on-year
              • Figure 1: Annual expenditure on overseas trips by UK residents, at current prices, 2009-15
            • Overseas expenditure is forecast to grow 16% by 2020
              • Figure 2: Forecast for annual expenditure on overseas trips by UK residents, 2010-20
            • Companies and brands
              • The Post Office is still the most common source of travel money
                • Figure 3: Methods of arranging travel money for holidays in the last 12 months, November 2015
              • TV advertising is growing its share of advertising spend
                • Figure 4: Percentage share of adspend on travel money services (including pre-paid cards), by media type, 2012-15
              • The Post Office’s brand strength helps give it an edge
                • Brand map
                  • Figure 5: Attitudes towards and usage of selected finance brands, November 2015
                • The consumer
                  • Prepaid cards still lag behind standard credit and debit cards
                    • Figure 6: Methods used to spend money abroad, November 2015
                  • Two thirds of consumers collect their travel money in person
                    • Figure 7: How travel money was collected for holidays abroad in the last 12 months, November 2015
                  • Over half of consumers see rates as the most important factor
                    • Figure 8: Attitudes towards arranging travel money, November 2015
                  • What it means
                  • Issues and Insights

                    • Travel money providers are expanding money management
                      • The facts
                        • The implications
                          • Rates and fees are top of mind for consumers:
                            • The facts
                              • The implications
                                • Pre-holiday travel money purchase under threat
                                  • The facts
                                    • The implications
                                    • The Market – What you need to know

                                      • UK spending abroad increased by £6.5 billion from 2011-15
                                        • Overseas expenditure is forecast to grow 16% by 2020
                                          • Exchange rates may disappoint travellers
                                          • Market Size and Forecast

                                            • Overseas expenditure rising year-on-year
                                              • Figure 9: Total annual expenditure on overseas trips by UK residents, at current prices, 2009-15
                                            • Uncertainty in the global economy could slow the growth in overseas expenditure
                                              • Figure 10: Annual expenditure on overseas trips by UK residents, by purpose of visit 2009-15
                                            • Europe takes a 60% share of overseas expenditure
                                              • Figure 11: Annual expenditure on overseas trips by UK residents, by region of visit, 2009-15
                                            • Plastic cards are taking a growing share of the market
                                              • There is no realistic prospect of a sharp fall in demand for travel money in the near future.
                                                • Overseas expenditure is forecast to grow 16% by 2020.
                                                  • Figure 12: Forecast for annual expenditure on overseas trips by UK residents, 2010-20
                                                  • Figure 13: Forecast for annual expenditure on overseas trips by UK residents, 2010-20
                                                • Forecast methodology
                                                • Market Drivers

                                                  • Visits overseas grew over 12% last year
                                                    • Figure 14: Number of overseas visits by UK residents, by purpose, 2009-15
                                                  • North America had an 11% growth in visits in the last year
                                                    • Figure 15: Number of overseas visits by UK residents, by region visited, 2009-15
                                                  • Consumer finances are improving over time
                                                    • Figure 16: How respondents would describe their financial situation, February 2009-January 2016
                                                  • Holiday bookings are becoming more spread out over the year
                                                    • Figure 17: Booking holidays in the last 3 months and intentions to book a holiday in the next 3 months
                                                  • Rising demand for short breaks will shift travel money demand
                                                    • Travellers will be getting less for their money thanks to exchange rates
                                                      • Figure 18: Spot exchange rates, US dollar-Sterling and Euro-Sterling, January 2009-January 2016
                                                  • Companies and Brands – What You Need to Know

                                                    • Nearly a third of consumers arrange their travel money when abroad
                                                      • New entrants expand into money management
                                                        • TV advertising is the main media type for travel money
                                                        • Market Share

                                                          • Nearly a third of consumers arrange their travel money when abroad
                                                            • Figure 19: Methods of arranging travel money for holidays in the last 12 months, November 2015
                                                        • Competitive Strategies

                                                          • Reduced fee prepaid cards launched
                                                            • Multi-currency cards introduced by key market players
                                                              • Smartphone apps launched in the travel money sector
                                                                • Business expense solutions
                                                                • Advertising and Marketing Activity

                                                                  • £5.5 million was spent on advertising travel money in 2015
                                                                    • Figure 20: Total above-the line, online display and direct mail advertising expenditure on travel money services (including pre-paid cards), 2012-15
                                                                  • The Post Office remains the top travel money advertiser
                                                                    • Figure 21: Top 10 advertisers of travel money services (including pre-paid cards), 2012-15
                                                                  • TV advertising is growing its share of advertising spend
                                                                    • Figure 22: Percentage share of adspend on travel money services (including pre-paid cards), by media type, 2012-15
                                                                  • Nielsen Media Research coverage
                                                                  • Brand Research

                                                                      • What you need to know
                                                                        • Brand map
                                                                          • Figure 23: Attitudes towards and usage of selected finance brands, November 2015
                                                                        • Key brand metrics
                                                                          • Figure 24: Key metrics for selected finance brands, November 2015
                                                                        • Brand attitudes: Post Office most noted for offering something different
                                                                          • Figure 25: Attitudes, by finance brand, November 2015
                                                                        • Brand personality: HSBC and NatWest most likely to be seen as negative
                                                                          • Figure 26: Brand personality – macro image, November 2015
                                                                        • Most brands located around genuine, competent and responsive
                                                                          • Figure 27: Brand personality – micro image, November 2015
                                                                        • Brand analysis
                                                                          • The Post Office stands out as a differentiated and well-liked brand
                                                                            • Asda is seen as a welcoming brand that offers good value
                                                                              • Banks are most associated with unfavourable characteristics
                                                                                • Travelex scores well with younger age groups
                                                                                  • Supermarket brands have an advantage of being seen to reward loyalty
                                                                                  • The Consumer – What you need to know

                                                                                    • A third of consumers use credit or debit cards abroad
                                                                                      • Prepaid card awareness is high but usage remains low
                                                                                        • People are still cost-conscious
                                                                                        • Methods of Spending Abroad

                                                                                          • Nearly three quarters use foreign currency on holiday
                                                                                            • Figure 28: Methods used to spend money abroad, November 2015
                                                                                          • Prepaid cards are the most popular with those aged 35-44
                                                                                            • Figure 29: Methods used to spend money abroad, by age group, November 2015
                                                                                          • Credit cards are most frequently used for holidays in North America
                                                                                            • Figure 30: Methods used to spend money abroad, by holiday destination, November 2015
                                                                                          • Half of consumers use two or more methods to spend abroad
                                                                                            • Figure 31: Number of methods used to arrange travel money, November 2015
                                                                                        • Ways of Arranging and Collecting Foreign Currency

                                                                                          • The Post Office is the most popular for pre-holiday travel money
                                                                                            • Figure 32: Method of arranging travel money for holidays abroad in the last 12 months, November 2015
                                                                                          • Two thirds of consumers collect their travel money in person
                                                                                            • Figure 33: How travel money was collected for holidays abroad in the last 12 months, November 2015
                                                                                            • Figure 34: How travel money for holidays in the last 12 months was collected, by holiday destination, November 2015
                                                                                          • Users of bureaux de change and supermarkets are the most likely to collect online
                                                                                            • Figure 35: How travel money was collected vs how it was arranged for holidays abroad in the last 12 months, November 2015
                                                                                        • Timescales for Arranging Travel Money

                                                                                          • Nearly half of consumers purchase travel money just before they travel
                                                                                            • Figure 36: When travel money purchases were made, November 2015
                                                                                          • Younger consumers purchase their travel money latest
                                                                                            • Figure 37: When travel money purchases were made, by age group, November 2015
                                                                                        • Attitudes towards Travel Money

                                                                                          • Over half of consumers see rates as the most important factor
                                                                                            • Figure 38: Attitudes towards arranging travel money, November 2015
                                                                                          • Awareness of prepaid cards is high but usage remains low
                                                                                            • Figure 39: Awareness of prepaid cards by those who haven’t used prepaid cards in the last 12 months
                                                                                          • Brand reputation is important for prepaid card providers
                                                                                            • Figure 40: Attitudes towards prepaid cards
                                                                                        • Approaches to Arranging Travel Money

                                                                                          • A quarter of consumers go out of their way to get the best deal
                                                                                              • Figure 41: Approaches towards arranging travel money, November 2015
                                                                                            • High value customers put more effort into tracking down the best rates
                                                                                              • Figure 42: Approaches to arranging travel money by number of methods used, November 2015
                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                            • Report scope and definitions
                                                                                              • Data sources
                                                                                                • Abbreviations
                                                                                                • Appendix – Market Size and Forecast

                                                                                                  • Best and worst case forecast
                                                                                                    • Figure 43: Best and worst forecast for annual expenditure on overseas trips by UK residents, 2015-20
                                                                                                  • Forecast methodology

                                                                                                  Companies Covered

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

                                                                                                  Travel Money - UK - March 2016

                                                                                                  US $2,648.76 (Excl.Tax)