Airlines - Package Holidays vs Online Holidays - Ireland

Published by: Mintel International Group Ltd.

Published: Jan. 1, 2009 - 113 Pages

Table of Contents

ISSUES IN THE MARKET

Key themes in the report

Definitions

ABBREVIATIONS

SECTOR IN BRIEF

Over €6 billion (£4.2 billion) spent on overseas holidays in 2007

Economic downturn likely to hit the holiday market

Are LCCs becoming travel agents with fleets?

Preference for foreign over domestic holidays

European destinations top for Irish holidaymakers

Beach holidays most popular, but city breaks growing

Trend towards multiple holidays of shorter duration

Internet the dominant channel for researching and booking

Package holidays not yet a phenomenon of the past

INTERNAL MARKET ENVIRONMENT

Key points

Air travel: Expanding capacity = expanding options

Britain the gateway to Ireland

Low-cost carriers driving air travel capacity growth

Wider range of services available to RoI consumers…

…with particular concentration in Dublin Airport

Passenger traffic through Irish airports on the up

Decline in charter traffic amidst growing traffic overall

Figure 1: Air passenger traffic (millions of passengers), IoI, RoI and NI, 1997-2006

Importance of charter flights concentrated among international travel…

Figure 2: Passengers (domestic and International) by flight type, NI airports, 2006

…and even more so among those taking foreign holidays

Figure 3: International air passenger traffic to/from Belfast International Airport, selelected destinations,

2006

Main low-cost carriers developing into ‘à la carte tour operators’

More and more consumers ‘flying without wings’

Consumers who entirely self-book

Where does this leave travel agents and tour operators?

Travel agents fight back

Travel operators fare poorly in independent price comparison

Figure 4: Price comparison, selected city breaks, self-booking vs tour operators/travel agents, euros, 2008

Travel companies fare even worse on flight-only deals

Are ‘sleight of hand’ charges killing the goose?

Subtle introduction…

…then escalation and expansion

Families suffering more than most

Such charges now consumers’ greatest ‘bugbear’

Yet seemingly here to stay

BROADER MARKET ENVIRONMENT

Key points

Bad and getting worse on the economic front

RoI

NI

Crisis of confidence to sharpen focus on value and price

Standing out from the rest

Oil price volatility threatens continued low-cost travel

Fuel surcharges unlikely to be introduced by low-cost carriers

Tour operators feeling fuel pinch, too

Ailing Sterling likely to send NI holidaymakers further afield

Grey skies over eurozone for NI consumers

Impact on 2009 travel

Iceland on the horizon for 2009

Ageing of Ireland likely to drive growth in package sector

Figure 5: International travel by RoI residents, by age, 2003-07

Targeting third agers

Airline consolidation to reduce competition and consumer choice

STRENGTHS AND WEAKNESSES

Strengths

Weaknesses

COMPETITIVE CONTEXT

Key points

To fly or not to fly

Figure 6: Consumers that took a holiday in the last 12 months and a holiday abroad in the last 12 months,

NI and RoI, 2008

NI consumers opt for foreign in 2007

Figure 7: Domestic tourism, NI, 2006 and 2007

RoI consumers remain loyal to the home market

Figure 8: Holiday trips, domestic tourists, RoI, 2003-07

A forgotten alternative: Sea travel

Figure 9: International travel by RoI residents, mode of transport used, percentage share, 2007

Benefits of sea travel are perhaps being overlooked by consumers

Holidays now more ‘essential’ than ‘luxury’

Figure 10: Consumer responses to statement ‘When feeling the pinch, which of these are you most likely to

do when trying to cut back your personal spending?’, NI and RoI, January 2008

MARKET VALUE

Key points

Approaching 7 million holidays taken in 2007

Figure 11: Number of overseas holidays (000s), IoI, RoI and NI, 2003-07

SSIA effect drives RoI overseas holiday market

Overseas holiday spending around €6.2 billion (£4.4 billion) in 2007

Figure 12: Expenditure on overseas holidays, IoI, RoI and NI, 2003-07

Expenditure per trip higher among NI consumers

€821 million paid in airfares to Irish carriers in 2007

MARKET SEGMENTATION

Key points

Europe the most popular holiday destination for Irish consumers

Figure 13: Location of last holiday/short break, NI and RoI, 2008

NI consumers’ destination choice restricted by limited access beyond UK

Far greater destination diversity for RoI consumers

Air travel dominates holidaymakers’ means of transport

RoI consumers travel for holiday, NI consumers to visit friends and family

City breaks en vogue, beach holidays stagnant

Figure 14: Consumers taking beach/resort holidays or taking city/short breaks for their last holiday in the

last 12 months, NI and RoI, 2003-08

Traditional ‘fortnight away’ on the way out?

Figure 15: Length of last holiday (number of nights), NI and RoI, 2008

Multiple holidays almost de rigueur among Irish consumers

Figure 16: Number of holidays taken during last 12 months, NI and RoI, 2008

Package holidays account for half of all holidays abroad

COMPANIES AND BRANDS

Figure 17: Companies and brands, 2008

DISCOUNT/LOW-FARE CARRIERS

Aer Arann

Bmibaby

CityJet

EasyJet

Flybe

Ryanair

TRADITIONAL/LONG-HAUL CARRIERS

Aer Lingus

British Midland Airways (trading as bmi)

British Airways

TOUR OPERATORS

American Holidays (NI and RoI)

Budget Travel (RoI only)

Direct Holidays (NI and RoI)

Ebookers.com (NI)/ebookers. ie (RoI)

Expedia

Falcon Holidays (NI and RoI)

First Choice Holidays (NI only)

Panorama Holidays (RoI only)

Sunway Travel Group (RoI only)

Sunworld Holidays (RoI only)

Thomas Cook (NI)

Thomson Travel (NI only)

Topflight (NI and RoI)

CHANNELS TO MARKET

Key points

Internet as a near-revolutionary development

The world at your fingertips

Internet comes tops for researching and booking holidays

Figure 18: Source of information, last holiday, NI and RoI, 2008

Figure 19: Method used to book last holiday, NI and RoI, 2008

Agents trump operators for package holidays

Figure 20: How last holiday was booked, NI and RoI, 2008

Role of mainstream media diminishing

Figure 21: Agreement with the statement, ‘Newspaper and magazine articles on holiday and travel influence

my choice of holiday’, NI and RoI, 2003-08

THE CONSUMER - BOOKING THE HOLIDAY

Key points

A third of holidays booked within a month of departure

Figure 22: Amount of advance booking for last holiday, NI and RoI, 2008

Planning holidays a pleasure for most

Figure 23: Agreement with ‘I enjoy planning holidays’, by gender and socio-economic group, NI and RoI,

2008

THE CONSUMER - WHO HOLIDAYS ABROAD?

Key points

Most Irish holidaymakers take their holidays abroad

Figure 24: Consumers who have taken a holiday abroad in the last 12 months, by age, NI and RoI, 2008

Couples the biggest market for holidays

Figure 25: Number of family members on last holiday, NI and RoI, 2008

THE CONSUMER AND PACKAGE HOLIDAYS

Key points

Half of all holidays abroad are package holidays

Figure 26: Travelled abroad on package holiday, last holiday, by age, NI and RoI, 2008

A fifth would never consider a package holiday

Doubts about package holidays: insights from the UK consumer

Not convinced by promises of quality

Perception that package = herding

Belief that an independent holiday is the cheaper option

APPENDIX

BROADER MARKET ENVIRONMENT

Economic outlook

Figure 27: Economic outlook, RoI & NI, 2007-09

MARKET SEGMENTATION

Type of holiday taken

Figure 28: Type holiday taken, last holiday, NI and RoI, 2008

CHANNELS TO THE MARKET

Figure 29: International travel by RoI residents, method of booking, 2006 and 2007

Figure 30: How last holiday booked, NI and RoI, 2008

Figure 31: International travel by RoI residents, method of booking, percentage share, 2006-08

THE CONSUMER - BOOKING THE HOLIDAY

Figure 32: Agreement with selected holiday planning statements, NI and RoI, 2008

THE CONSUMER - HOLIDAYS ABROAD

Have taken holiday in last 12 months

Figure 33: Consumers who have taken a holiday in the last 12 months, by age, NI and RoI, 2008

Figure 34: Consumers who have taken a holiday in the last 12 months, by socio-economic group, NI and

RoI, 2008

Taken holiday abroad in last 12 months

Figure 35: Consumers who have taken a holiday abroad in the last 12 months, by socio-economic group, NI

and RoI, 2008

THE CONSUMER AND PACKAGE HOLIDAYS

Figure 36: Travelled abroad on package holiday, last holiday, by socio-economic group, NI and RoI, 2008

Figure 37: Agreement with ‘I would never think of taking a package holiday’, by age, NI and RoI, 2008

Figure 38: Agreement with ‘I would never think of taking a package holiday’, by socio-economic group, NI

and RoI, 2008

THE CONSUMER - HOLIDAY ACCOMMODATION

Figure 39: Type of accommodation, last holiday, NI and RoI, 2008

Figure 40: Stayed in a domestic hotel in the last 12 months, by age, NI and RoI, 2008

Figure 41: Stayed in a domestic hotel in the last 12 months, by socio-economic group, NI and RoI, 2008

WHAT DO CONSUMERS WANT FROM HOLIDAYS?

Figure 42: Agreement with ‘I like to take holidays in my own country rather than abroad’, by age, NI and RoI,

2008

Figure 43: Agreement with ‘I like to take holidays in my own country rather than abroad’, by socio-economic

group, NI and RoI, 2008

Figure 44: Agreement with ‘I like to go back to familiar places for holidays’, by age, NI and RoI, 2008

Figure 45: Agreement with ‘I try to go somewhere different on holiday every time’, by age, NI and RoI,

2008

Figure 46: Agreement with ‘I try to go somewhere different on holiday every time’, by socio-economic

group, NI and RoI, 2008

Figure 47: Agreement with ‘When on holiday, I only want to eat, drink and sunbathe’, by socio-economic

group, NI and RoI, 2008

Figure 48: Agreement with ‘When on holiday, I only want to eat, drink and sunbathe’, by number of people

in household, NI and RoI, 2008

Figure 49: Agreement with ‘I like to go on holidays where activities are organised for me’, by age, NI and

RoI, 2008

Figure 50: Agreement with ‘I like to go on holidays where activities are organised for me’, by number of

people in household, NI and RoI, 2008

Figure 51: Agreement with ‘I like to go on holidays where activities are organised for me’, by

socio-economic group, NI and RoI, 2008

APPENDIX: RESEARCH METHODOLOGY

Abstract

The overseas holiday market in Ireland has undergone profound change in recent years, primarily related to the seemingly inexorable rise of independent travel. The principle catalyst in this trend is the ever-increasing role of the internet, which is now the dominant channel used by consumers for both holiday information and bookings.

However, these changes occurred alongside phenomenal growth of over 50% overall in Ireland during the period 2003-07. The boom in business during this period appears largely to have shielded the traditional travel sector from what could have been a severe blow from the independent, self-book option, enabling it to record year-on-year growth and appear more resilient than it truly is.

The current economic climate facing NI and RoI consumers is likely to further expose the fault lines that have appeared now that consumers have a real alternative to package holidays and the traditional travel sector in general.

This report provides an overview of the market for self-booked and traditionally booked overseas travel, examining the core market factors, strengths and weaknesses, consumer dynamics and likely future developments.

Key themes in the report:

• What impact will the economic downturn, continued fuel price uncertainty and exchange rate changes have on Irish overseas travel?
• How are low-cost carriers driving air travel capacity growth?
• How are travel agents/tour operators addressing the increased competition coming from the independent holiday sector? Are they well placed to withstand these pressures into the future?
• Changes in how consumers are choosing and booking holidays, and how these trends are likely to play out in the years to come.
• What are Irish consumers’ preferences in terms of holiday type and how are these preferences changing?
• What are Irish consumers’ attitudes towards holidays generally, in terms of destinations, activities and package vs independent?

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