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UK The Premium vs Budget Traveler Market Report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the The Premium vs Budget Traveller market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

For the purposes of this report, Mintel has defined the premium and budget traveller based on their expenditure on their most expensive holiday in the past five years in combination with the length of stay.

What you need to know

Consumers’ holiday-taking habits and intentions have already been impacted by the Brexit vote, and its impact on the value of the Pound in particular. All-inclusive holidays are more likely to be considered, as this is typically a holiday which gives consumers more control over their holiday spending. Countries with a favourable exchange rate will benefit as well. Destinations such as Egypt and Turkey have noted a significant increase in the number of British holidaymakers since 2017, while trips to Tunisia have resumed in 2018.

Expert analysis from a specialist in the field

Written by Marloes De Vries, a leading analyst in the Travel sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Holidaying remains high on Brits’ to do list. However, economic uncertainties are having an impact on their holiday behaviour, as well as their intentions for the coming year. All-inclusive holidays, staycations and destinations with a favourable exchange rate are more likely to be considered. Marloes De Vries
Travel Analyst

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
        • Figure 1: Definition of the premium and budget traveller segments, August 2018
    • Executive Summary

        • The market
          • Confidence about financial situation is comparable to last year
            • Figure 2: Consumer sentiment, by gross annual household income, October 2018
          • Holidaying intentions remain strong across all income levels
            • Government helps to save
              • Increasing demand for budget destinations; Egypt, Tunisia and Turkey
                • Figure 3: Top 15 budget destinations overseas based on spend in 2015-17, by volume of holidays 2017
              • Iceland and Finland attract high spenders
                • Figure 4: Top 15 premium to mid-range destinations overseas based on spend in 2015-17, by volume of holidays 2017
              • Companies and brands
                • easyJet aims to become the most data driven airline in the world
                  • Hilton’s budget brand allows travellers to create their own experience
                    • Kuoni increases its focus on short-haul destinations
                      • Premier Inn introduces ZIP; small rooms for small prices
                        • Club Med renovates and plans to open many new resorts
                          • British Airways switches to premium catering provider
                            • The consumer
                              • Defining the premium and budget traveller
                                • Figure 5: Definition of the premium and budget traveller segments, August 2018
                              • A quarter of consumers are ‘budget travellers’
                                • Figure 6: Volume of premium, mid-range and budget traveller segments, August 2018
                              • Budget and premium travellers are present across all age groups
                                • Figure 7: Premium and budget traveller segments, by age and household income, August 2018
                              • The UK is highly appealing to both budget and premium travellers
                                • Figure 8: Destinations visited on holiday in the past 12 months, by traveller segments, August 2018
                              • All-inclusive holidays popular among premium travellers
                                • The majority of premium travellers take city breaks
                                  • Figure 9: Types of holiday taken in the past 12 months, by traveller segments, August 2018
                                • Low participation but high interest in cruising among budget travellers
                                  • Even premium travellers enjoy seeking out special offers
                                    • Figure 10: Booking behaviours, by traveller segments, August 2018
                                  • Most budget travellers are open to trading up on food and drink and accommodation
                                    • Figure 11: Attitudes among budget travellers towards holiday spending, August 2018
                                  • Many premium travellers consider splashing out on accommodation for overseas holidays
                                    • Figure 12: Attitudes among premium travellers towards holiday spending, August 2018
                                  • The domestic market could benefit from uncertainties around Brexit
                                    • Figure 13: Attitudes towards the impact of Brexit and exchange rates, by traveller segments, August 2018
                                  • What we think
                                  • Issues and Insights

                                    • Transport competes more than any other holiday element on price
                                      • The facts
                                        • The implications
                                          • Travellers need more help in finding the best deal possible
                                            • The facts
                                              • The implications
                                              • The Market – What You Need to Know

                                                • Confidence about financial situation is comparable to last year
                                                  • Government helps to save
                                                    • Increasing demand for budget destinations; Egypt, Tunisia and Turkey
                                                      • Iceland and Finland attract high spenders
                                                      • Market Drivers

                                                        • Confidence about financial situation is comparable to last year
                                                          • Figure 14: Consumer sentiment, by gross annual household income, October 2018
                                                        • Egypt, Turkey, Mexico and Tunisia offer more value for money
                                                          • Figure 15: Sterling exchange rate versus selected currencies, annual averages, 2013-17, and spot rate 9 November 2018
                                                        • Airlines are being challenged by fluctuating oil prices
                                                          • Holidaying intentions remain strong across all income levels
                                                            • Figure 16: Holidaying intentions, by gross annual household income, January 2017-October 2018
                                                          • Government helps to save
                                                            • Increasing demand for budget destinations; Egypt, Tunisia and Turkey
                                                              • Figure 17: Top 15 budget destinations overseas based on spend in 2015-17, by volume of holidays 2017
                                                            • Iceland and Finland attract high spenders
                                                              • Figure 18: Top 15 premium to mid-range destinations overseas based on spend in 2015-17, by volume of holidays 2017
                                                          • Companies and Brands – What You Need to Know

                                                            • easyJet aims to become the most data driven airline in the world
                                                              • Hilton’s budget brand allows travellers to create their own experience
                                                                • Kuoni increases its focus on short-haul destinations
                                                                  • Airbnb introduces cost-splitting option
                                                                    • Premier Inn introduces ZIP; small rooms for small prices
                                                                    • Competitive Strategies

                                                                        • The majority of Millennials think Airbnb can offer a luxury experience
                                                                          • easyJet aims to become the most data driven airline in the world
                                                                            • Hilton’s budget brand allows travellers to create their own experience
                                                                              • Kuoni increases its focus on short-haul destinations
                                                                                • Thomas Cook supports travellers with their holiday finances
                                                                                  • TUI Group further expands its cruises segment
                                                                                  • Launch Activity and Innovation

                                                                                    • Earning money whilst travelling
                                                                                      • New peer-to-peer car rental at Gatwick Airport
                                                                                        • Peer-to-peer delivery service Grabr secures $8 million funding
                                                                                          • Offering cheaper options to sleep and fly
                                                                                            • Premier Inn introduces ZIP; small rooms for small prices
                                                                                              • Thomas Cook introduces economy light fares
                                                                                                • Offering flexible payment options to stimulate bookings
                                                                                                  • Airbnb introduces cost-splitting option
                                                                                                    • Thomas Cook offers zero deposit holidays
                                                                                                      • No unforeseen costs through the all-inclusive concept
                                                                                                        • Club Med renovates and plans to open many new resorts
                                                                                                          • Hilton partners with Playa Hotels & Resorts
                                                                                                            • Investing in quality to justify for premium pricing
                                                                                                              • British Airways switches to premium catering provider
                                                                                                                • AutoCamp will open a premium campsite in the US
                                                                                                                • The Consumer – What You Need to Know

                                                                                                                  • Volume of premium and budget traveller segments
                                                                                                                    • Premium travellers travel most frequently both in the UK and abroad
                                                                                                                      • All-inclusive holidays popular among premium travellers
                                                                                                                        • Low participation but high interest in cruising among budget travellers
                                                                                                                          • The domestic market could benefit from uncertainties around Brexit
                                                                                                                          • Defining the Premium and Budget Traveller

                                                                                                                            • One in 20 consumers spends £3,000+ per head on holiday
                                                                                                                              • Figure 19: Amount spent on most expensive holiday taken, August 2018
                                                                                                                            • Most expensive holidays are most likely to be 7 to 13 nights
                                                                                                                              • Figure 20: Duration of most expensive holiday taken, August 2018
                                                                                                                            • Volume of premium and budget traveller segments
                                                                                                                              • Figure 21: Definition of the premium and budget traveller segments, August 2018
                                                                                                                              • Figure 22: Volume of premium, mid-range and budget traveller segments, August 2018
                                                                                                                            • Budget and premium travellers are present across all age groups
                                                                                                                              • Figure 23: Premium and budget traveller segments, by age and household income, August 2018
                                                                                                                          • Premium vs Budget Traveller – Holiday Taking

                                                                                                                            • The UK is highly appealing to both budget and premium travellers
                                                                                                                              • Figure 24: Destinations visited on holiday in the past 12 months, by traveller segments, August 2018
                                                                                                                            • Premium travellers travel most frequently both in the UK and abroad
                                                                                                                              • Figure 25: Frequency of visits to holiday destinations in the past 12 months, by traveller segments, August 2018
                                                                                                                            • All-inclusive holidays popular among premium travellers
                                                                                                                              • Figure 26: All-inclusive holiday taking, by traveller segments, August 2018
                                                                                                                            • Dual-parent families keen to book all-inclusive holidays
                                                                                                                              • Figure 27: All-inclusive holiday taking – CHAID, August 2018
                                                                                                                          • Premium vs Budget Traveller – Holiday Types

                                                                                                                            • The majority of premium travellers take city breaks
                                                                                                                              • Figure 28: Types of holiday taken in the past 12 months, by traveller segments, August 2018
                                                                                                                            • Premium travellers undertake many different holiday types in a year
                                                                                                                              • Figure 29: Number of holiday types taken in the past 12 months - Repertoire, by traveller segments, August 2018
                                                                                                                            • Low participation but high interest in cruising among budget travellers
                                                                                                                              • Figure 30: Interest in cruising, by traveller segments, August 2018
                                                                                                                          • Premium vs Budget Traveller – Booking Behaviours

                                                                                                                            • Even premium travellers enjoy seeking out special offers
                                                                                                                              • Figure 31: Booking behaviours, by traveller segments, August 2018
                                                                                                                          • Premium vs Budget Traveller – Attitudes towards Holiday Spending

                                                                                                                            • Most budget travellers are open to trading up on food and drink and accommodation
                                                                                                                              • Figure 32: Attitudes among budget travellers towards holiday spending, August 2018
                                                                                                                            • Many premium travellers consider splashing out on accommodation for overseas holidays
                                                                                                                              • Figure 33: Attitudes among premium travellers towards holiday spending, August 2018
                                                                                                                          • Premium vs Budget Traveller – Attitudes towards Brexit

                                                                                                                            • The domestic market could benefit from uncertainties around Brexit
                                                                                                                              • Figure 34: Attitudes towards the impact of Brexit and exchange rates, by traveller segments, August 2018
                                                                                                                          • Appendix – Definitions, Abbreviations and Supporting Information

                                                                                                                              • Definitions
                                                                                                                                • Abbreviations
                                                                                                                                  • Consumer research methodology
                                                                                                                                    • CHAID analysis methodology