paper 3 - june 2019 research

UK consumer trends over the last 10 years, such as activity holidays, staycations, city breaks, package holidays

K Consumer trends can be defined as the ever-changing pattern of habits or behaviours that are prevalent among people who use goods or services. Here, we are talking about the patterns of habits or behaviours of UK residents (British citizens) who go on holiday, either in the UK and / or abroad.

According to ABTA’s Holiday Habits Reports, around 86% of UK residents (Britons) currently (2016 to 2018) take a holiday each year. According to ABTA’s Holiday Habits Reports people are taking an average of 3 or more holidays a year. Average num of holidays taken per person (UK resident) has decreased by 83%. In 2018, besides families (with young children) taking an average of 4 holidays a year, people aged between 25 and 34 took an average of 4.1 holidays a year.

popular location

The number of holidays by UK residents to Spain has increased significantly - by 87% between 1996 and 2016, whereas the number of holidays by UK residents to France has fallen - by 9% over the same period. An increase in the number of long-haul holidays being taken by UK consumers (despite a weak pound and high inflation putting a strain on consumer finances = put down to more fuel-efficient aircraft resulting in cheaper long-haul flights.

holiday duration 

UK holidaymakers were favouring week-long breaks as opposed to the formerly popular two-week holiday - Travelodge’s Annual Holiday. This could be due to the increase in renting a private home or a home swap, home stay, couch surfing has also become popular over the last 4 years, possibly due to the rise of booking sites such as Airbnb.

In terms of staycations, ie just UK residents holidaying in the UK,the most popular type of holiday is the seaside (beach) holiday, with over half British holidaymakers taking a sea-side break over the last 4 years. -  reported by Travelodge’s Annual Holiday Index.

popular activities

Activity holiday must involve ‘physical exertion’ and that such holidays can range from mainstream and popular activities such as hiking and skiing to more niche activities such as diving - reported by Key Note’s Market (Travel and Leisure).  E.G. Thomas Cook and Virgin holidays show that in terms of demographics, according to ABTA research, older holidaymakers are travelling further and are seeking more active and adventurous holidays. It is suggested that it is the younger generation that is driving the trend towards more active holidays : 50% of 16 - 35 year olds planned to take an activity / sporting/ adventure / challenge holiday break.

growth popularity in cruising

Cruising is 4 times more popular now than it was 20 years ago (2016 compared to 1996), a record 1.7million UK holidaymakers opted to take a cruise in 2016; and the average age of cruise passengers overall has fallen to its lowest in 20 years - reports ABTA Holiday Habits. Therefore, there's mprovements in technology and internet connectivity, ships have made their Wi-Fi cheaper and quicker as they have realised people want to post on social media- BBC.

popular 'wellness' holidays

wellness tourism (globally) is growing more than twice as fast as general tourism - with trips globally up 20% since 2015 and travel companies - ‘from adventure to youth to cruise brands’ increasingly catering to the demand for ‘wellness holidays’.

things to be revising UKCTO10yr - consumer trends, market research, secondary / primary research, quantitative data, qualitative data, market segmentation and sample

things to revis ing OUKC4H - emerging economies, economic growth, industrialisation, social trends, sustainable, social media, budgets, forecasts, leasing and purchasing (pro&con), depreciation, net cost, exchange rate, inflation, price, contribution, fixed costs, breakeven, total revenue, total costs ad break-even level of output, price elasticity of demand, promotion, branding, YED, interest rate, payback, recession / downturn, external shocks, seasonality, capacity and capacity utilisation.

things to be revising MBCO - market segmentation, investment appraisal techniques, types of finance, loan (pro&con), joint venture, market / product orientation, customer centric, culture, consider the impact this would have on cash flow, advertising, induction, training, profit sharing schemes (pro&cons), commision, mass market - niche operator (pro&con), 

TCEUKH - competitive environment, competition, market size, market share, porter's strategy matrix, product differentation, USP, quality & quality management strategies and efficiency.

types of holiday & popularity

• 85% took either domestic / foreign holiday last year.
• 60% took a foreign holiday - many more were 7 day breaks rather than 14 day breaks, 7 day breaks are twice as popular as 20yrs ago and 14 day breaks are 20% less popular than 20yrs ago - this could be cost driven and income hasn't risen with it.
• package (all included) holidays are still growing in popularity - consumers care about 'value for money' as it's perceived as cheaper than buying them individually and everything is done for them due to 'convenience' trends in every market as people have become lazy = there's a growth in online and e-commerce.
• city breaks are the most popular type of holiday (48% of people took one last year) = this is likely due to convenience and decreased costs.
• the impact of instagram on city break trends - a study showed that 40.1% of millennial travellers thought one of the most important factors in their choice of holiday destination was how 'instagrammable' the holiday would be. Laker Wanaka deliberately started targeting influencers w/ their tourism strategy = tourism has increased by 15% every year in the last 4 yrs.It's having a major influence on UK consumers’ choice of destination, what to do (eg sights to see, events and activities to attend) and where to stay when they get there, and is also serving as a channel to purchase the required tickets, especially amongst Millennials.

Who are people booking with?

• for foreign holidays people much prefer using experts due to the lack of knowledge
• a study showed that only 7% people who had engaged w/ a travel professional then went away and booked independently = this suggests that if a business engages w/ a consumer, it's likely to lead to a sale. Engaging w/ the consumer is the difficult part, especially online where competition is much easier to find.
• 20% UK consumers book foreign holidays in a travel agents.

Domestic / Foreign Holiday Data

• foreign holidays - UK outbound holiday expenditure 2017 : £31.2bn and num of holidays abroad from the UK 2017 = £46.6m
• domestic holidays - expenditure 2017 = £141.1bn and average domestic holiday length = 3.34 days.
• domestic holiday expenditure is lower, despite more demand, in large part due to significantly lower travel costs.
• domestic holidays are average 3 1/2 - 4 days instead of the foregin 7 / 14 days holiday.

emerging economies demand increasing

•  emerging economies = the growing demand for international tourism
• many of the emerging economies are making huge efforts to develop their inbound tourism, Rwanda tourism industry contributes to 12.7% of their GDP and over 130,000 jobs
• a government's work to develop tourism in a sustainable way, incl. a £30m sponsorship deal w/ Arsenal announced in the same week as a 20% increase in UK visitors to Rwanda in 2018.

social trends

• people want more holidays (11% of people surveyed) however, people will likely spend slightly less on holidays this year (roughly 7% less) and beach breaks are moving fown the wish list, behind city breaks, walking, and wildlife holidays - reported by The independent 's  interview w/ AITO's director.

fuel costs and impact on pricing

• global airline industry's fuel bill estimated to total roughly £142bn in 2018, which is about 23.5% of operating expenses = this is an increase in price of over 20% on 2017 & has nearly doubled the global fuel bill for 2005 ~ this is forecast to rise again to over £160bn in 2019.
• easyject shares slipped in value in 2018 following warnings fuel costs would rise again, their fuel cost for the year was an estimated £1.2b, mainly due to the increase in prices of crude oil, which has risen by 16% in the last 4 moths of 2018. 

economic factors / impact of the EU

border - free travel - 76% of foreign holidays from UK consumers are to EU countries = of course partly due to georgraphical proximity but due to ease as well, no borders within the EU = simplier checks when holidaying within EU countries.

exchange rate - a sharp fall in the value of pound, the negative impact on outbound tourism (due to UK consumers getting less foreign currency for their £s), however, it has made the UK a more attractive tourism destination due to increased foreign spending power.

airlines

low cost producer - a num of low-cost airlines have started to enter the long-haul market, e.g Norwegian Air offering flights from the UK to New York for less than £300 = increased availability of cheaper aircraft sucj as, Boeing Dreamline have made a low-cost long-haul a real threat to established long-haul companies.

high product differentiation - the market for luxury airline is still strong, and it has prompted huge investment from the companies within it, as they all seek to innovate and create a competitive advantage.

E.G. Thomas Cook, in may they've released their third profits warning of the last 12 months, and announced losses of £1.45bn = mostly attributed to writing off their £1.1bn acquisition of MyTravel, in order to ensure their survival, since February 2019 they've been looking to seel off their airline and their share price has plummeted since this time last year.

E.G. Ryanair Consumer body Which? named Ryanair the UK's least liked short-haul airline for the 6th year in a row despite this, there was a 7% increase in passenger numbers = the main way they manage this average price of £37 per flight, is through extra charges for pretty much everything else: luggage, meals, extra legroom, seats together.

reasons for using a tour operator / travel agent

• researching a destination, finding suitable accommodation & booking suitable transport takes time, and require specialist knowledge.
• booking through a tour operator and, in particular, a travel agent, where there are plenty of well-researched packages to consider all in one place, can be far less time consuming and more convenient.

UK residents going on more holidays is the growth of the budget (‘no frills’) airlines, which have made it more affordable to do so.

low cost v high differentiation

• in recent months, a num of low cost carriers have struggled w/ seasonality, shortage of pilots and loss of key members of staff.
• the low cost airlines that have done well are the ones who have been able to benefit from economies of scale - E.G. Ryanair makes $8 / passenger and flying 140m passengers makes a lot of profit and they benefit by being able to buy a lot of aircraft at once, due to their scale and buying in bulk w/ a discount & therefore being able to charge lower prices.
• consumers want lowest costs, when they're lookig at low cost airlines = the businessesthatkeep their costs downare the inevitable winners.
• HD~ high differentiation comes in many forms - it could be bespoke holiday providers / tourism boards advertising what makes their country / destination unique as it's not always specific to the airline
• HD = high quality, unique features / attractions and something that cannot be replicated elsewhere (a distinctive capability)