Description
“COVID-19 will redefine the holiday market, not only in terms of the continuing threat to health and the associated requirement for social distancing, but also the impact of the inevitable recession. Whilst holidaying will remain one of Brits’ main priorities, the way in which they holiday will change. People will sacrifice short overseas breaks in order to afford longer holidays. We will also see the introduction of more ‘working holidays’ as employers show greater flexibility on working locations, giving more people the opportunity to travel further afield.”
– Marloes de Vries, Senior Travel Analyst – 10 June 2020
This report covers the following issues:
- The impact of COVID-19 on the domestic and overseas holiday markets
- How consumers’ holidaying preferences will change in the short, medium and long term
- Opportunities and threats arising from COVID-19
- How a COVID-19 recession will reshape the travel market.
Table of Contents
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Overview
- What you need to know
- Key issues covered in this Report
- Products covered in this Report
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Executive summary
- Short, medium and long-term impact on the industry
- Figure 1: Expected impact of COVID-19 on the UK travel market, short, medium and long-term, 10 June 2020
- Short-term
- Medium-term
- Long-term
- Opportunities and threats
- Overseas holidays will be heavily disrupted even once the possibility returns
- Staycations will be high in demand when recovery begins
- Marketing that focuses on escapism will appeal
- Consumers will expect brands to demonstrate action to protect travellers
- Providing great customer service will help brands to recover quicker
- Impact on the market
- Travel industry will face its steepest decline in history with overseas travel taking the biggest hit
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- Figure 2: UK value* forecast of holidays (adjusted for COVID-19 on 20 May 2020), 2014-24**
- Shifts in consumer behaviour
- COVID-19 will accelerate demand for wellness breaks/activities…
- …whilst ethical concerns will take a temporary backseat
- Video conferencing will become a vital communication tool
- Overseas business travel will not return to its previous level
- Impact on key consumer segments
- Solo holidays among 16-34-year olds set to benefit
- Families will be particularly price-sensitive
- Cruise industry challenged to restore confidence among its key users: the over-55s
- Luxury travellers in a better position to afford exclusive travel
- How a COVID-19 recession will reshape the market
- Travellers will be more price-sensitive when booking holidays
- Consumers likely to cut back on short breaks
- Price of holidaying likely to rise in the medium-term as a result of COVID-19
- COVID-19: UK context
- Economic and other assumptions
- Short, medium and long-term impact on the industry
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The Impact of COVID-19 on Consumers
- Anxiety levels align with case curve…
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- Figure 3: Mintel COVID-19 exposure anxiety index, 28 February – 3 June 2020
- … but consumers remain anxious about their health
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- Figure 4: People’s level of concerns about the risk of being exposed to the coronavirus, 28 February – 3 June 2020
- COVID-19 concerns by demographics
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- Figure 5: Proportion of consumers showing the highest degree of concern (4 or 5 out of 5) regarding the risk of being exposed to the coronavirus, by age, 28 February – 3 June 2020
- UK begins to soften lockdown measures
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- Figure 6: Government COVID-19 lockdown exit strategy, published 11 May 2020
- Lockdown fears moderate
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- Figure 7: People’s level of concerns about how the outbreak might affect their lifestyle, 28 February – 3 June
- A bleak outlook for the economy
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- Figure 8: Consumer views on the impact of the COVID-19 outbreak on the UK economy and their own finances, 28 May – 3 June 2020
- Consumers cut back outgoings, and add to savings
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- Figure 9: How consumers have been affected or changed their behaviour as a result of the outbreak, 21-28 May 2020
- Household finances hold steady for most
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- Figure 10: changes in financial situation since the start of the COVID-19 outbreak, 21-28 May 2020
- COVID-19 is yet to meaningfully affect most households’ well-being…
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- Figure 11: The financial well-being index, January 2015-May 2020
- …but confidence for the year ahead plummets
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- Figure 12: Consumers’ financial confidence for the coming year, May 2020
- Middle age groups feel particularly vulnerable…
- …and self-employed respondents show the importance of the COVID-19 support package
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How COVID-19 Has Already Affected Travel
- Travel has been all but wiped out due to lockdown
- Brands start to adapt
- Travel industry challenged to offer flexibility
- Figure 13: Changes made as a result of the COVID-19 outbreak, 28 February 2020 – 16 April 2020
- Providing great customer service will help brands to recover quicker
- Figure 14: Changed holiday plans, 26 March 2020 – 16 April 2020
- Holidays remain among consumers’ priorities
- Figure 15: Most desired activities once the current social distancing measures are relaxed, 30 April 2020 – 7 May 2020
- Mintel’s consumer confidence data provides some grounds for optimism
- Figure 16: “Thinking about how you spend your money, which of the following have you done over the last three months? And which do you plan to do over the next three months?”, May 2020
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What Behaviours Will Change in the Short-term
- Staycations will be high in demand when recovery begins
- China’s experience hints at the way forward in the UK
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- Figure 17: Interest in holiday types after travel restrictions are lifted, May 2020 (fieldwork dates: 30 April-12 May 2020)
- Exclusivity will become even more important for luxury travellers
- Figure 18: Meanings attached to luxury holidays, August 2017 and August 2019
- Travellers will be more price-sensitive when booking holidays
- Consumers likely to cut back on short breaks
- Figure 19: Type of UK short breaks taken, May 2019 versus May 2018
- Consumers will expect brands to demonstrate action to protect travellers
- Social distancing measures provides advance-selling opportunities
- The cruise sector is set for an even slower recovery
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- Figure 20: Plans to book a holiday in the next three months, by demographics, March 2020 (fieldwork dates: 19-30 March 2020)
- Solo travel set to benefit
- Winter sports will play well to post-COVID priorities
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- Figure 21: Plans to book a holiday in the next three months, by demographics, March 2019 (fieldwork dates: 13-26 March 2019) versus March 2020 (fieldwork dates: 19-30 March 2020)
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What Behaviours Will Change in the Medium-term
- Overseas travel back in the game once economy recovers
- COVID-19 will accelerate demand for wellness breaks/activities…
- Figure 22: Changes in priorities since the COVID-19 outbreak, 30 April-7 May 2020
- …whilst ethical concerns will take a temporary backseat
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What Behaviours Will Change in the Long-term
- New way of working provides opportunities to cater for working holidays
- Video conferencing will become a vital communication tool
- Overseas business travel will not return to its previous level
- COVID-19 will accelerate the trend towards exclusive experiences
- Travel insurance comes to the fore
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What We Can Learn from Previous Slowdowns
- Overseas holidays and business travel show a strong correlation with economic performance
- Figure 23: UK residents’ visits abroad by purpose, 1998 -2018
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- Figure 24: Domestic holiday volume versus overseas holiday volume, 2008-19
- The recession resulted in more people staying closer to home
- US returned to growth in 2004 following the 9/11 attacks
- SARS impacted demand for travel to China, but recovery was fast
- Overseas holidays and business travel show a strong correlation with economic performance
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Lessons from Other Regions
- Travel the first priority for Chinese consumers
- Close to home and less populated areas rebound first in China
- US consumers are as likely as their UK counterparts to be looking forward to getting away
- Road trips are likely to prove popular among US residents
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