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Travel Money - UK - March 2018

“The travel money market continues to be driven by consumers’ desire to get the best exchange rate possible. Sterling’s struggles against the euro and the income squeeze caused by rising inflation at home mean travellers have even greater reason to demand the best rates for their foreign currencies.”

– Sam Marks, Financial Services Analyst

This report examines the following issues:

  • The Pound is struggling against the Dollar and euro
  • Convenience may be more influential than consumers let on
  • Security is an important consideration for people

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Total expenditure grew by 4% in 2017
              • Figure 1: Forecast for annual expenditure on overseas trips by UK residents, 2012-22
            • 85% of people arrange travel money prior to travel
              • Figure 2: Arrangement of travel money for holidays abroad, November 2017
            • Annual increase in visits slows to 0.4%
              • Figure 3: Number of overseas visits by UK residents, by purpose, 2010-17
            • Sterling is still struggling against the euro
              • Figure 4: Spot exchange rates, monthly average, US Dollar-Sterling and euro-Sterling, January 2010-January 2018
            • Companies and brands
              • Adspend drops to £3.6 million in 2017
                • Figure 5: Total above-the-line, online display and direct mail advertising expenditure on travel money (including prepaid cards), 2013-17
              • Post Office is seen as the most trusted and differentiated brand
                • Figure 6: Attitudes towards and usage of selected brands, November 2017
              • The consumer
                • Three quarters of people used travel money abroad
                  • Figure 7: Method of spending money on holiday abroad, 2015-17
                • Foreign currency is seen as the most convenient
                  • Figure 8: Perceptions of travel money, November 2017
                • Getting the best exchange rate is key
                  • Figure 9: Most important factors for travel money, November 2017
                • 84% take more notice of exchange rates before travel
                  • Figure 10: Exchange rate monitoring behaviour, November 2017
                • 35% of people are interested in receiving notifications about exchange rate changes
                  • Figure 11: Interest in travel money features, November 2017
                • Security is the biggest concern for consumers
                  • Figure 12: Attitudes towards travel money, November 2017
                • What we think
                • Issues and Insights

                  • The Pound is struggling against the Dollar and euro
                    • The facts
                      • The implications
                        • Convenience may be more influential than consumers let on
                          • The facts
                            • The implications
                              • Security is an important consideration for people
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • Total expenditure grew by 4% in 2017
                                      • 85% of people arrange travel money prior to travel
                                        • Volume growth has slowed
                                        • Market Size and Forecast

                                          • Total expenditure grew by 4% in 2017
                                            • Figure 13: Total annual expenditure on overseas trips by UK residents, 2010-17
                                          • Expenditure on holidays rose by 4% in 2017
                                            • Expenditure abroad for business reasons decreased in 2017
                                              • Figure 14: Annual expenditure on overseas trips by UK residents, by purpose of visit, 2010-17
                                            • Europe accounts for the majority of overseas spending…
                                              • …while expenditure in North America fell by 4%
                                                • Figure 15: Annual expenditure on overseas trips by UK residents, by region of visit, 2010-17
                                              • Growth expected to be slow and steady
                                                • Figure 16: Forecast for annual expenditure on overseas trips by UK residents, 2012-22
                                                • Figure 17: Forecast for annual expenditure on overseas trips by UK residents, at current and constant prices, 2012-22
                                              • Forecast methodology
                                              • Channels to Market

                                                • 85% of people arrange travel money prior to travel
                                                  • Figure 18: Arrangement of travel money for holidays abroad, November 2017
                                                • Four fifths of consumers use one method to arrange travel money
                                                  • Figure 19: Repertoire of methods of arranging travel money, November 2017
                                                • Two thirds collected travel money in-store
                                                  • Figure 20: Collection of travel money, November 2017
                                                • Millennials are the most likely to use an ATM
                                                  • Figure 21: Collection of travel money, by generation, November 2017
                                              • Market Drivers

                                                • Annual increase in visits slows to 0.4%
                                                  • Figure 22: Number of overseas visits by UK residents, by purpose, 2010-17
                                                • Europe accounts for 80% of overseas visits
                                                  • Figure 23: Number of overseas visits by UK residents, by region visited, 2010-17
                                                • Holiday bookings held up in 2017
                                                  • Figure 24: Booked holidays in the last three months and intentions to book a holiday in the next three months, June 2013-November 2017
                                                • Sterling is still struggling against the euro…
                                                  • …while the Dollar is its own worst enemy
                                                    • Figure 25: Spot exchange rates, monthly average, US Dollar-Sterling and euro-Sterling, January 2010-January 2018
                                                • Companies and Brands – What You Need to Know

                                                  • Adspend drops to £3.6 million in 2017
                                                    • Post Office is seen as the most trusted and differentiated brand
                                                      • AI is revitalising travel money, while brands are split on ATM fees
                                                      • Competitive Strategies

                                                        • Strong demand for local collection of travel money
                                                          • AI is revitalising travel money
                                                            • Monzo introduces overseas ATM fees…
                                                              • …while the Global ATM Alliance removes them
                                                                • Monzo ends prepaid travel card
                                                                  • Prepaid multi-currency card/apps
                                                                    • Open Banking presents an opportunity
                                                                    • Advertising and Marketing Activity

                                                                      • Adspend drops to £3.6 million in 2017
                                                                        • Figure 26: Total above-the-line, online display and direct mail advertising expenditure on travel money (including prepaid cards), 2013-17
                                                                      • Post Office accounted for 44% of adspend on travel money
                                                                        • Figure 27: Top 10 advertisers on above-the-line, online display and direct mail advertising expenditure on travel money (including prepaid cards), 2015-17
                                                                      • Adspend on digital accounts for 54%
                                                                        • Figure 28: Total above-the-line, online display and direct mail advertising expenditure on travel money (including prepaid cards), by media type, 2017
                                                                      • Nielsen Ad Intel coverage
                                                                      • Brand Research

                                                                          • What you need to know
                                                                            • The Post Office is seen as the most trusted and differentiated brand
                                                                              • Brand map
                                                                                • Figure 29: Attitudes towards and usage of selected brands, November 2017
                                                                              • Key brand metrics
                                                                                • Figure 30: Key metrics for selected brands, November 2017
                                                                              • Brand attitudes: Tesco Bank rewards loyalty
                                                                                • Figure 31: Attitudes, by brand, November 2017
                                                                              • Brand personality: Thomas Cook is the most fun
                                                                                • Figure 32: Brand personality – macro image, November 2017
                                                                              • Post Office is the most reliable
                                                                                • Figure 33: Brand personality – micro image, November 2017
                                                                              • Brand analysis
                                                                                • Post Office is seen as the most reliable and helpful provider
                                                                                  • Thomas Cook is seen as the most fun brand
                                                                                    • Tesco Bank rewards loyalty
                                                                                    • The Consumer – What You Need to Know

                                                                                      • Three quarters of people used travel money abroad
                                                                                        • Foreign currency is seen as the most convenient
                                                                                          • Getting the best exchange rate is key
                                                                                            • 84% take more notice of exchange rates before travel
                                                                                              • 19% of people are interested in a mobile app that tracks spending
                                                                                                • Security is the biggest concern for consumers
                                                                                                • Methods of Spending Abroad

                                                                                                  • Three quarters of people used travel money abroad
                                                                                                      • Figure 34: Method of spending money on holiday abroad, 2015-17
                                                                                                    • Under-45s are more likely to use prepaid cards
                                                                                                      • 25-34s are most likely to use a debit card abroad
                                                                                                        • Figure 35: Method of spending money on holiday abroad, by age, November 2017
                                                                                                      • Half of consumers use one method of spending money abroad
                                                                                                        • Figure 36: Repertoire of ways of spending money abroad, November 2017
                                                                                                    • Perceptions of Travel Money

                                                                                                      • Foreign currency is seen as the most convenient way to spend money
                                                                                                        • A third of people consider prepaid cards convenient
                                                                                                          • Figure 37: Perceptions of travel money, November 2017
                                                                                                        • Under-45s are most likely to see prepaid travel/currency cards as innovative
                                                                                                          • Figure 38: Association with innovation for prepaid travel or currency cards, by age, November 2017
                                                                                                          • Figure 39: Correspondence analysis, November 2017
                                                                                                      • Factors Affecting Choice of Travel Money

                                                                                                        • Getting the best exchange rate is key
                                                                                                          • Convenience is important
                                                                                                              • Figure 40: Most important factors for travel money, November 2017
                                                                                                            • A well-known brand is more important to Millennials…
                                                                                                              • …while Generation X and Baby Boomers seek value for money
                                                                                                                • Figure 41: Most important factors for travel money, by generation, November 2017
                                                                                                            • Monitoring of Exchange Rates

                                                                                                              • 84% take more notice of exchange rates before travel…
                                                                                                                • …while 47% regularly monitor rates
                                                                                                                  • Figure 42: Exchange rate monitoring behaviour, November 2017
                                                                                                                • Millennials are much more likely to find exchange rates confusing
                                                                                                                  • Figure 43: Exchange rate monitoring behaviour, by generation, November 2017
                                                                                                              • Interest in Features

                                                                                                                • 19% of people are interested in a mobile app that tracks spending
                                                                                                                    • Figure 44: Interest in travel money features, November 2017
                                                                                                                  • 35% are interested in notifications about exchange rate changes
                                                                                                                    • Millennials are the key demographic for exchange rate notifications
                                                                                                                      • Figure 45: Key demographic target group for exchange rate notifications – CHAID – Tree output, December 2017
                                                                                                                  • Attitudes towards Travel Money

                                                                                                                    • Security is the biggest concern for consumers
                                                                                                                      • Figure 46: Attitudes towards travel money, November 2017
                                                                                                                    • Older Millennials are more likely to worry about having all their money in cash
                                                                                                                      • Figure 47: Attitudes towards the security of travel money in cash and debit/credit card, by generation, November 2017
                                                                                                                  • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                      • Abbreviations
                                                                                                                        • Consumer research methodology
                                                                                                                          • Correspondence analysis methodology
                                                                                                                            • Figure 48: Correspondence analysis for perceptions of travel money, November 2017
                                                                                                                          • CHAID analysis methodology
                                                                                                                            • Figure 49: Key demographic target group for exchange rate notifications – CHAID – Table output, November 2017
                                                                                                                        • Appendix – Market Size and Forecast

                                                                                                                            • Figure 50: Best- and worst-case forecast of annual expenditure on overseas trips by UK residents, at current and constant prices, 2017-22
                                                                                                                          • Forecast methodology

                                                                                                                          Travel Money - UK - March 2018

                                                                                                                          US $2,693.85 (Excl.Tax)