2022
9
UK Travel Money Market Report 2022
2022-04-21T04:07:54+01:00
OX1101863
2195
150633
[{"name":"Finance","url":"https:\/\/store.mintel.com\/industries\/finance"},{"name":"Holidays and Travel","url":"https:\/\/store.mintel.com\/industries\/holidays-travel"}]
Report
en_GB
"Demand for travel money is set to soar this year as people take overseas holidays again in greater numbers. However, we won’t see an immediate return to pre-pandemic levels. This…

UK Travel Money Market Report 2022

£ 2,195 (Excl.Tax)

Description

The UK Travel Money report identifies consumer attitudes towards foreign holidays, the impact of digital banks, and types of travel money in the UK. This market report covers the market size, market forecast, market segmentation and industry trends for the Travel Money market in the UK.

Current Market Landscape

Holidaymakers who intend to spend on their debit card when they next go abroad are under the impression that their bank does not charge any extra fees on foreign transactions. This points to many people being unaware of the fees charged by their bank when they use their debit card overseas.

  • 52% of UK adults are planning to take a holiday abroad within the next three years.
  • 67% of prospective holidaymakers plan to use cash as a source of spending money on their next trip abroad.
  • 77% of holidaymakers intend to spend on their debit card when they next go abroad.

Yet, with the cost of goods and services rising steeply – both at home and abroad – people are likely to become more price conscious this year, meaning they will be on the lookout for anything that makes their money stretch further. This will benefit prepaid travel cards, but also some debit and credit cards that are free to use for overseas spending and cash withdrawals – assuming providers can clearly communicate this.

Future Market Trends in Travel Money 

Notwithstanding the risk of a new vaccine-resistant COVID variant emerging and an escalation in the Ukraine-Russia conflict, the sharp increase in the cost of living is, arguably, the biggest threat facing the market this year. Although there is a huge amount of pent-up demand for overseas travel – following two years of limited opportunity to go abroad – higher holiday prices and the biggest squeeze on household budgets in a generation will slow the recovery.

On a positive note, there is an opportunity for providers of prepaid travel cards to help customers keep better track of their spending on holiday. Mintel’s research reveals significant interest in online tools and apps that help people work out and stick to a holiday budget. Adding this capability to an online account or app would make the travel card proposition more attractive.

Read on to discover more details or take a look at all of our UK Financial Services market research

Quickly understand

  • Appetite for foreign holidays over the coming year, as we emerge from the pandemic and face a new cost-of-living crisis.
  • The impact of rising inflation on demand for foreign travel, length of stay, overseas spending etc.
  • The types of travel money people prefer to use, and whether preferences and behaviours have changed as a result of the pandemic (eg whether people are buying currency/loading up travel cards nearer to their departure date).
  • The impact of challenger digital banks that offer no-fee overseas transactions and international money transfers.
  • The appeal and take-up of prepaid travel money/currency cards.

Covered in this report

Brands: The Post Office, Travelex, Caxton, American Express, Visa, Mastercard.

Expert analysis from a specialist in the field

This report, written by Sarah Hitchcock, a leading analyst in the Financial sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Demand for travel money is set to soar this year as people take overseas holidays again in greater numbers. However, we won’t see an immediate return to pre-pandemic levels. This is partly because of lingering COVID concerns and, more pertinently, the fact that the UK is facing one of the biggest squeezes on household income in a generation.

Sarah Hitchcock
Associate Consultant – Financial Services

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Market context
    • Products covered in this Report
    • Key definitions are as follows:
    • A note on sizing the market
  2. Executive Summary

    • The five-year outlook for travel money
      • Figure 1: Travel money market outlook, 2022-26
    • The market
    • COVID impact on travel
    • Market size and forecast
      • Figure 2: Market forecast for total spending overseas by UK residents, 2016-26
    • People are spending more while on holiday abroad
    • Demand for euros will soar…
    • …underpinned by a stronger pound
    • Companies and brands
    • Post Office is the largest player in the consumer market
    • Currency specialists face increased competition from digital banks
    • The consumer
    • Huge pent-up demand for overseas travel
      • Figure 3: Proportion of UK adults planning a holiday abroad, 2022
    • 82% are planning to use a card for spending when abroad…
      • Figure 4: Sources of travel money used on last overseas holiday and those planning to use on next overseas holiday, 2022
    • …and many of these intend to use their card to withdraw currency from an ATM
    • 23% of card users don’t know whether their bank charges foreign transaction fees
      • Figure 5: Whether or not foreign-exchange fees apply to the debit or credit card planning to use on next overseas holiday, 2022
    • 22% of prospective currency buyers will look for a provider that offers a full refund guarantee
      • Figure 6: Agreement with statements about buying/obtaining foreign currency, 2022
      • Figure 7: Most appealing prepaid travel card benefits, 2022
    • 45% of holidaymakers are interested in an app that tracks their spending
      • Figure 8: Interest in holiday budgeting and money tracking apps, 2022
  3. Issues and Insights

    • Over-55s are more hesitant about booking an overseas holiday this year
    • Cost-of-living crisis will slow the pace of recovery
    • Travel card providers need to stress different benefits to attract different age groups
  4. Market Size and Performance

    • Demand for travel money plummets as restrictions take their toll on the overseas holiday market
      • Figure 9: Total spending overseas by UK residents, by purpose of visit, 2012-21
  5. Market Forecast

    • Spending overseas will grow strongly in 2022, but it’ll take longer to return to pre-COVID levels
      • Figure 10: Travel money market outlook, 2022-26
    • Soaring cost of holidays will dampen demand for overseas travel…
    • … while inflationary pressures will slow the recovery in overseas spend
      • Figure 11: Market forecast for total spending overseas by UK residents, 2021-26
    • Market drivers and assumptions
    • Forecast methodology
  6. Market Segmentation

    • Holidaymakers generate the largest share of overseas spend
      • Figure 12: Overseas expenditure by UK residents, by purpose of visit, 2017-21
    • Average holiday spend rose strongly in 2021
      • Figure 13: Average amount spent by UK residents per trip (holidays only), 2012-21
    • Preference for European destinations strengthens during pandemic
      • Figure 14: Overseas expenditure by UK residents, region (all trips), 2017-21
  7. Market Drivers

    • Travel restrictions and uncertainty deter most from venturing abroad in 2020-21
      • Figure 15: Number of overseas visits by UK residents, by purpose of visit, 2012-21
    • Spain and France remain the top destinations for British holidaymakers
    • Extra travel rules and requirements reduce appeal of short-stay holidays
    • Airfares to rise and there’s trouble on the ferries
    • A stronger pound will help to partially offset higher holiday prices
      • Figure 16: Monthly average spot exchange rates, US dollar-sterling and euro-sterling, 2015-2022
    • Recovery in spending will be hampered by rising prices
      • Figure 17: Key economic data, 2020-26
    • Inflationary pressures are mounting
    • Rising food and fuel prices are a major concern for many…
      • Figure 18: Consumer concerns about household finances, 2021
    • …though especially over-55s
      • Figure 19: Concerns about impact of rising costs on household financial situation, by age, 2022
  8. Key Players and Competitive Environment

    • The Post Office is the UK’s largest provider of foreign currency
    • Some bureaux de change providers have yet to fully re-open…
    • …while several have now withdrawn their 100% refund guarantees
    • Travel money generally attracts a low level of above-the-line adspend
    • Travelex rebounds after restructure
    • Caxton establishes new partnerships with Thomas Cook and Holiday Extras
    • Digital banks pose an increasing threat to currency specialists
    • American Express is the only provider of travellers cheques in the UK
  9. Holidays Recently Taken and Planned

    • 44% of adults have holidayed overseas within the past three years
      • Figure 20: Where people have been on holiday in the past three years and where they plan to go in the next three years, 2020 and 2022
    • Significant pent-up demand
      • Figure 21: Proportion planning to holiday abroad within the next 12 months (among those expecting to travel within the next three years), 2022
    • Over-55s are more hesitant about travelling overseas
    • Medium- to high-income households comprise the core target market for travel money
  10. Sources of Travel Money

    • British holidaymakers rely heavily on cards for spending abroad
      • Figure 22: Sources of travel money used on last overseas holiday and those planning to use on next overseas holiday, 2022
    • Travellers cheques still have a place in the holiday wallet for a minority
    • Interest in prepaid travel cards set to grow…
    • …but will continue to face tough competition from credit and debit cards
    • Most favour a mix of currency and card
      • Figure 23: Sources of travel money planning to use on next overseas holiday – cross-analysis, 2022
  11. Awareness of Credit and Debit Card Foreign-Exchange Fees

    • Low consumer awareness of transaction fees charged on overseas card purchases
      • Figure 24: Whether or not foreign-exchange fees apply to the debit or credit card planning to use on next overseas holiday, 2022
    • 23% of credit and debit card users are unsure if fees are charged or not
    • Around a quarter of overseas debit card users have a digital bank account
      • Figure 25: Type of account linked to debit card expecting to use on next overseas holiday, 2022
    • 56% of holidaymakers need to let their bank know in advance of using their card abroad
      • Figure 26: Whether or not credit and debit card users need to let their bank know in advance of using their card abroad, 2022
  12. Foreign Currency Buying Behaviour

    • Most holidaymakers plan to buy foreign currency in advance
      • Figure 27: Agreement with statements about buying/obtaining foreign currency, 2022
    • 29% plan to use a card to withdraw local currency from a cash machine
      • Figure 28: Agreement with statement about using a card at an ATM to obtain currency abroad, 2022
    • Most people prefer to keep some cash on them in the local currency
      • Figure 29: Agreement with statement about usage of local currency, 2022
  13. Assessing the Appeal of Travel Card Benefits

    • People want security, convenience and fee-free transactions
      • Figure 30: Most appealing prepaid travel card benefits, 2022
  14. Interest in Holiday Money Apps

    • Under-35s and parents want help to keep track of their holiday spending
      • Figure 31: Interest in holiday budgeting and money tracking apps, 2022
    • Money management tools will increase appeal of prepaid cards
  15. Appendix – Data Sources and Abbreviations

    • Abbreviations
    • Sources
    • Consumer research methodology
  16. Appendix – Forecast Methodology

    • Market forecast and prediction intervals
      • Figure 32: Market forecast for total spending overseas by UK residents, 2021-26
      • Figure 33: Market forecast for total spending overseas by UK residents, 2016-26
    • Market drivers and assumptions
    • Forecast methodology

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

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Data

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*databooks not available with UK B2B Industry reports.

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