Package holidays – Back in favour?

The package holiday is more popular than commonly thought, as over half of UK adults who took a holiday abroad last year, travelled on a package holiday, according to new independent Mintel research.

The results published in the annual First Choice/Thomson travel trends report reveal that 53 per cent of people questioned had travelled abroad on holiday in the twelve months to June on a package, of which 11 per cent had travelled on both package and independent holidays, and 42 per cent had taken only package holidays.

Mintel analysis also suggests that government figures may be understating tour operators’ share of the holidays market. Government figures are based on the long established International Passenger Survey (IPS), but only customers who have bought holidays “marketed at an inclusive price” are considered to have taken a package holiday according to this survey. IPS data for 2007 suggests that of the 46 million overseas holidaymakers, 27 million were travelling independently and 19 million on package holidays – 3.5 million higher than a decade ago.

However it’s likely that any traveller who has bought several parts of their holiday from the same tour operator would be added to the government’s tally of independent travellers.

Dermot Blastland, TUI Travel UK and Ireland managing director said:

“First Choice and Thomson look after 7.5 million holidaymakers every year so our size and scale gives us a really good view of what people are buying and doing with their holidays. I’m frustrated when I hear talk about the death of the package holiday. Package holidays are changing very rapidly to deliver greater quality and variety than we’ve ever been able to offer before and our market is therefore actually stable rather than declining. We’re firmly of the opinion that more holidaymakers are travelling on packages than current statistics indicate and Mintel also predicts that this figure will continue to grow.”

Key trends highlighted in the First Choice/Thomson travel trends report:

Focus on quality

In 2006 and 2007 the number of people booking top-end package holidays under the First Choice Premier, or Thomson Gold or Platinum branded holidays increased 20 per cent annually to top half a million passengers. The company’s package holiday customers also reflect this trend. More than one third of First Choice customers and 40 per cent of Thomson customers have a household income of more than £50,000 per year.

Quality in the skies

Tour operators’ push for quality also extends to the skies. By May 2009 First Choice Airways and Thomsonfly will merge to become Thomson Airways and will offer British travellers the first opportunity to fly the innovative Boeing 787 Dreamliner from the UK in 2010. This lighter, more fuel-efficient aircraft can fly directly as far as Hawaii, Malaysia and South Africa with lower cabin pressure to reduce travellers’ jet lag.

Product innovation

Tour operators are investing in new concepts and services. For example Thomson recently launched the Sensatori Resort – a stylish contemporary hotel at an affordable price featuring swim-up and private pool suites. First Choice has developed the family-focused Holiday Villages that feature extensive activities for families from soccer schools, to dance and singing workshops.

Financial security

The importance of buying a package was thrown into sharp relief by the recent failures of XL and Zoom Airlines. Many customers not booked on a package were left stranded, or have lost thousands of pounds, but those who had booked a package will be repatriated or refunded. Travellers are expected to turn to protected package holidays in times of financial uncertainty and predictions of further airline failures.

Quality service

First Choice and Thomson have permanent native staff as well as overseas British representatives in resort and believe the renaissance of the representative is overdue, as travellers become more demanding. First Choice and Thomson have invested in new vocational training for overseas staff and are looking at changing their 1,000 high street shops from being purely retail outlets to “mini service centres.”

Value

Mintel’s consumer spending priorities survey for 2009 shows that overseas holidays are still high on the wish list and it supports Thomson and First Choice’s research that people see a holiday as a necessity not a luxury with no evidence of trading down or curtailing holidays. However, canny British travellers have always had an eye for a bargain and for 2009 Thomson and First Choice predict:

More all-inclusive holidays as budget conscious families look for greater value-for-money and certainty about their spending regardless of exchange rate fluctuations. Demand for all-inclusive holidays has risen by 30% over the past five years. First Choice reports it is looking to contract more hotels on an all-inclusive basis to satisfy demand. The growth of demand for cruise holidays also reflects this interest in inclusive holidays. Thomson Cruises has grown to become the second-largest cruise operator in the UK with a fleet of four ships calling at 100 ports of call on more than 30 itineraries.

Value exchange rates will influence travellers even more strongly in 2009 as people look to make their money go further. Thomson says this year destinations such as Egypt, Turkey and Croatia have offered good value in resort compared to eurozone destinations. Counties like Sri Lanka where hotels are contracted in pound sterling won’t be affected by currency fluctuations and Kenya is also tipped as good value for 2009.