Pre-holiday Add-ons - UK

Published by: Mintel International Group Ltd.

Published: Jun. 1, 2008 - 87 Pages

Table of Contents

Issues in the Market

Definitions

Abbreviations

Market In Brief

Huge travel audience creates major cross-sales opportunity

Economic situation will have an impact on holiday demand

The European holiday tourist dominates travel spending

Experience is all

Expenditure on extras valued at about £5 billion

Varying exposure for travel extras

Growing consumer interest in holiday extras

Attitudes determine extras preferences

Internal Market Environment

Key points

Foreign destinations drive holiday volumes

Figure 1: Holiday taking volumes, 2002-12

Moving into multiple holiday mode

Figure 2: Percentage of adults booking UK and overseas holidays, 2002-07

Growth in independent holidays

Figure 3: Volume of overseas holiday visits by UK residents, 2002-08

The traveller mix

Online channel crucial to developing ancillary business

Figure 4: Previous holiday booking patterns, October 2007

Internet penetration reaching its potential

Figure 5: Growth in Internet penetration, 2001-07

The broadening extras supply base

Broader Market Environment

Key points

Holidays continue to exert their grip on our spending plans

Figure 6: UK spending priorities for year ahead, January 2005-08

An uncertain economic climate

Consumer spending habits

Figure 7: Trends in personal disposable income and consumer expenditure, 2003-12

Holidaying on the never never

Consumer confidence

Exchange rates

Figure 8: Sterling exchange rates at the beginning of each year, 2004-07

Market opportunities from population increase

Figure 9: Size of UK population, by age group, 2002-12

Employment trends

Figure 10: Employment trends, 2002-12

Competitive Context

Key points

Overall holiday taking activity

Figure 11: Holiday expenditure and competing expenditure sectors, 2003-07

Holiday extras in the context of holiday expenditure - the customer journey

Strengths and Weaknesses in the Market

Strengths

Weaknesses

Who’s Innovating?

Key points

The low-cost airline experience

Ancillary aviation add-ons

Mobile communication and information

Ready to order?

Press ‘Play’

Extra safe

Market Size, Segmentation and Forecasts

Key points

Valuing the overseas holiday add-ons sector

Figure 12: Holiday extras purchased by overseas holidaymakers in the past 12 months, date? 2007

Figure 13: Assumed expenditures for individual holiday add-ons, 2008

Figure 14: Estimate of total value of overseas holiday add-ons by category shown as gross expenditure

Market Share

Figure 15: Add-ons offered by UK travel companies, 2008

Companies and Products

Key points

British Airways

Figure 16: British airways extras and suppliers, 2008

Cosmos

Figure 17: Cosmos Holidays travel extras and suppliers, 2008

Easyjet

Figure 18: Easyjet travel extras and suppliers, 2008

Expedia Inc

Figure 19: Expedia travel extras and suppliers, 2008

lastminute.com

Figure 20: Lastminute.com travel extras and suppliers, 2008

Ryanair

Figure 21: Ryanair travel extras and suppliers, 2008

Thomas Cook plc

Figure 22: Thomas Cook travel extras and suppliers, 2008

Travelsupermarket.com

Figure 23: Travelsupermarket.com featured travel extras and suppliers, 2008

TUI Travel PLC

Figure 24: Thomson/TUI travel extras and suppliers, 2008

XL Leisure

Figure 25: XL Holiday’s travel extras and suppliers, 2008

Aggregator sites

Holiday extras

APH (Airport Parking and Hotels Limited)

Essential Travel

Airport lounges

Airport transfer services

Excursions and experiences

Viator

Isango

Holiday Extras Purchased

Key points

Figure 26: Holiday extras paid for during the past 12 months, September 2005

Add-ons by holiday taken

Figure 27: Add-ons purchased by type of holiday taken abroad, February 2008

Figure 28: Add-ons purchased by type of holiday taken abroad, Indexed, February 2008

Taxis

Figure 29: Sample that had paid for holiday taxi in past year, February 2008

Car parking

Figure 30: Sample that had paid for car parking in past year, February 2008

Airport/station transfers

Figure 31: Sample that had paid for Airport or station bus transfers in past year, February 2008

Travel passes

Figure 32: Sample that had paid for travel passes in past year, February 2008

Excursions to nearby destinations

Figure 33: Sample that had paid for excursions to attractions or nearby destinations, February 2008

Visits to galleries and museums

Figure 34: Sample that had paid to visit galleries and museums in past year, February 2008

Tickets for performances

Figure 35: Sample that had paid ror tickets to performances in past year, February 2008

Guided group tours

Figure 36: Sample that had paid for guided group tours at cultural attractions in past year, February 2008

Paid sporting activities

Figure 37: Sample that had paid for sporting activities in past year, February 2008

Forecast pre-holiday bookings

Static scenario: Even without modelling, the market looks good

Figure 41: Forecast of pre-holiday booking groups, static scenario, 2008-13

Optimistic scenario: Finance-savvy holidaymakers increasingly pre-book add-ons online

Figure 42: Forecast of Pre-Holiday Booking Groups, Positive scenario, 2008-13

Pessimistic scenario: No predicted take-off for pre-bookings.

Figure 43: Forecast of Pre-Holiday Booking Groups, Negative scenario, 2008-13

Appendix - Holiday Extras Purchased

Figure 44: Pre-holiday add-ons purchased in past 12 months by demographics, February 2008

Figure 45: Further pre-holiday add-ons purchased in past 12 months by demographics, February 2008

Abstract

Across the spectrum of travel supply, everyone is talking-up the ancillary revenue opportunity. Ryanair, for instance, claims it is on target to generate 20% of total revenue from ancillary sources within the next three years. The new holy grail for the industry is maximising customer value by cross selling related travel products. And in some instances, products that don’t necessarily even have much to do with travel, such as gas and electricity.

In an economic climate in which rising fuel costs and currency fluctuations are driving the cost base relentlessly upwards, strategies for teasing ancillary revenue from travellers will become a central focus in business development.

The environment for cross-selling has never been better for travel suppliers, because of the changes in the way that we take and book holidays. We’re holidaying more often, but for shorter durations, driven by the short break. Higher volumes of holiday traffic invariably means more opportunities for selling/buying add-ons.

Online booking is now the default mode for many travellers. Compared to the offline channel, it’s a powerful platform for driving cross-sell income through the e-marketing tool kit. In addition, online platforms have increased the breadth and depth of holiday add-ons dramatically. The aggregation of holiday extras, and their partnering arrangements with travel sites has introduced a large measure of visibility and convenience into the sector, providing a platform for the push-selling of extras to travellers.

Key themes of the report:

• What are people buying from the extras inventory?
• What are travellers’ attitudes towards the arranging and planning of holiday extras?
• Are there correlations between the different travel ‘mindsets’ and the kinds of products purchased?
• What are the ancillary offerings being marketed from the main tour operator, airline and online travel platforms?
• How are changes in the way we take and book holidays benefiting the market?
• What wider economic, demographic and technological factors are also impacting on the travel market, and more specifically on ancillary demand?

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