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Market Review 2010

17th Edition September 2010


Edited by Lucy Capstick

ISBN 978-1-84729-663-4

Travel & Tourism Market


Travel & Tourism Market Foreword

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Travel & Tourism Market Contents

Contents

Executive Summary 1

1. Industry Overview 2
REPORT COVERAGE....................................................................................................................2
Definitions.......................................................................................................................................2
REPORT BACKGROUND.............................................................................................................2
ECOMONIC TRENDS....................................................................................................................3
Population.......................................................................................................................................3
Table 1.1: UK Resident Population Estimates by Sex (000), Mid-Years 2005-2009...........3
Gross Domestic Product................................................................................................................4
Table 1.2: UK Gross Domestic Product at Current and Annual Chain-Linked Prices
(£m), 2005-2009..............................................................................................................................4
Inflation...........................................................................................................................................4
Table 1.3: UK Rate of Inflation (%), 2005-2009.......................................................................5
Unemployment...............................................................................................................................5
Table 1.4: Actual Number of Unemployed Persons in the UK (million), 2005-2009.........5
Household Disposable Income....................................................................................................5
Table 1.5: UK Household Disposable Income Per Capita (£), 2005-2009............................6
MARKET SIZE.................................................................................................................................6
By Value ..........................................................................................................................................6
Table 1.6: The Total UK Travel and Tourism Market by Value (£m), 2005-2009...............6
Figure 1.1: The Total UK Travel and Tourism Market by Value (£m), 2005-2009.............8
By Volume.......................................................................................................................................8
Table 1.7: The Total UK Travel and Tourism Market by Number of Trips (000),
2005-2009........................................................................................................................................9
Figure 1.2: The Total UK Travel and Tourism Market by Number of Trips (000),
2005-2009......................................................................................................................................10
Number of Bed Nights................................................................................................................10
Table 1.8: The Total UK Travel and Tourism Market by Number of Bed Nights
(million), 2005-2009.....................................................................................................................11
Figure 1.3: The Total UK Travel and Tourism Market by Number of Bed Nights
(million), 2005-2009.....................................................................................................................12

© Key Note Ltd 2010


Travel & Tourism Market Contents

MARKET SEGMENTATION......................................................................................................12
Table 1.9: The Total UK Travel and Tourism Market by Sector by Value and Volume
(£m, 000, million and %), 2009.................................................................................................13
Table 1:10: The UK Travel and Tourism Market by Average Expenditure per Trip
and Per Bed Night, and Average Number
of Bed Nights per Trip (£ and number), 2009........................................................................14
UK Tourism....................................................................................................................................14
Table 1.11: The UK Tourism Market by Sector by Value and Volume
(£m, 000, million and %), 2005-2009.......................................................................................15
Internal Tourism...........................................................................................................................16
Table 1.12: The UK Internal Tourism Market by Sector by Value and Volume
(£m, 000, million and %), 2005-2009.......................................................................................16
International Tourism.................................................................................................................18
Table 1.13: The UK International Tourism Market by Sector by Value and Volume
(£m, 000, million and %), 2005-2009.......................................................................................18
INDUSTRY STRUCTURE............................................................................................................20
Concentration...............................................................................................................................20
Table 1.14: Estimated Market Shares of the Three Leading Companies in Selected
Areas of the UK Travel and Tourism Market (%), 2010.......................................................20
Number of UK Businesses...........................................................................................................21
Transport Providers......................................................................................................................21
Table 1.15: Number of UK VAT- and/or PAYE-Based Enterprises Engaged in Urban
and Suburban Passenger Land Transport by Turnover Sizeband
(£000 and number), 2005-2009.................................................................................................21
Table 1.16: Number of UK VAT- and/or PAYE-Based Enterprises Engaged
in Passenger Air Transport by Turnover Sizeband (£000 and number), 2009.................22
Table 1.17: Number of UK VAT- and/or PAYE-Based Enterprises Engaged in Rail
Transport by Turnover Sizeband (£000 and number), 2009................................................23
Table 1.18: Number of UK VAT- and/or PAYE-Based Enterprises Engaged in Sea
and Coastal Passenger Water Transport and Inland Passenger Water Transport
by Turnover Sizeband (£000 and number), 2009...................................................................23
Accommodation Providers.........................................................................................................24
Table 1.19: Number of UK VAT- and/or PAYE-Based Enterprises Engaged as Hotels
and Similar Accommodation, by Turnover Sizeband (£000 and number),
2005-2009......................................................................................................................................25
Table 1.20: Number of UK VAT- and/or PAYE-Based Enterprises Engaged
in the Provision of Holiday and Other Short-Stay Accommodation by Turnover
Sizeband (£000 and number), 2009..........................................................................................26
Travel Agents and Tour Operators...........................................................................................26
Table 1.21: Number of UK VAT- and/or PAYE-Based Enterprises Engaged as Travel
Agencies, Tour Operators and Other Reservation Service and Related Activities
by Turnover Sizeband (£000 and number), 2005-2009........................................................27

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Travel & Tourism Market Contents

Employment..................................................................................................................................27
Table 1.22: Number of UK Employee Jobs in the Hotels and Restaurants, Travel
Agents, Air Transport and Water Transport Sectors (000), 2005-2009.............................28
Distribution...................................................................................................................................28
Table 1.23: The UK Outbound Holiday Market by Type of Arrangement by Volume
(%), 2005-2009..............................................................................................................................28
MARKET POSITION....................................................................................................................29
Table 1.24: Countries Expected To Produce the Largest Amount of Travel
and Tourism Gross Domestic Product ($bn and %), 2010....................................................29
KEY TRENDS................................................................................................................................30
Corporate Activity........................................................................................................................31
LEGISLATION...............................................................................................................................32
Development of Tourism Act 1969 ..........................................................................................33
Outbound Market........................................................................................................................33
Airports..........................................................................................................................................34
Air Transportation.......................................................................................................................34
Bus and Coach..............................................................................................................................34
Sea Passenger Transportation...................................................................................................35
KEY TRADE ASSOCIATIONS....................................................................................................35
Air Transport Users Council........................................................................................................35
The Air Travel Insolvency Protection Advisory Committee..................................................35
Airports Council International...................................................................................................36
Airport Operators Association...................................................................................................36
Association of European Airlines..............................................................................................36
Association of Independent Tour Operators..........................................................................36
British Air Transport Association..............................................................................................37
Civil Aviation Authority..............................................................................................................37
European Low Fares Airline Association.................................................................................37
Guild of European Business Travel Agents.............................................................................38
Guild of Travel Management Companies...............................................................................38
International Air Transport Association..................................................................................38
International Civil Aviation Organization...............................................................................39
Passenger Shipping Association................................................................................................39
The Travel Association................................................................................................................39
UKinbound....................................................................................................................................39
World Tourism Organization.....................................................................................................40
World Travel & Tourism Council...............................................................................................40

© Key Note Ltd 2010


Travel & Tourism Market Contents

2. PEST Analysis 41
POLITICAL FACTORS.................................................................................................................41
Air Travel Insolvency Protection Advisory Committee Urges Adoption of ‘Flight Plus’
Air Travel Organisers’ Licence...................................................................................................41
Air Passenger Duty.......................................................................................................................41
Government Needs To Expand Airports .................................................................................42
Ferry Operators in Disagreement with Dover Harbour Board............................................42
BAA Wins Appeal Over Airports Break-Up.............................................................................42
The Package Travel Directive.....................................................................................................43
ECONOMIC FACTORS...............................................................................................................44
Volcano Crisis Cost Airlines $1.7bn...........................................................................................44
Government Advises Operators to Foot the Ash Bill............................................................44
The Collapse of Goldtrail Travel Ltd.........................................................................................45
Association of Independent Tour Operators Puts Pressure on ’Rogue Traders’.............45
Visit London Saved from Grant Cut.........................................................................................46
SOCIAL...........................................................................................................................................46
Industrial Actions Continue to Affect Air Travel Sector.......................................................46
Cruise and ferry firms oppose new crew salary rules...........................................................47
Greener Journeys Campaign .....................................................................................................47
Holidaymakers Urged To Go Greener......................................................................................48
CAA to be given new duty to help passengers......................................................................48
TECHNICAL...................................................................................................................................48
The introduction of Advanced Imaging Technology............................................................48
Bus Users Get Mobile with Arriva M-Ticketing Launch........................................................49
Dreamliner Visits the UK............................................................................................................50
easyJet Unveils Ash Detector Plan............................................................................................50

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Travel & Tourism Market Contents

3. Consumer Research 51
INTRODUCTION..........................................................................................................................51
NUMBER OF HOLIDAYS TAKEN............................................................................................51
Table 3.1: Penetration of Holidays in the Last 12 Months (% of adults), Years Ending
March 2005-2008 and September 2009..................................................................................51
Table 3.2: Number of Holidays and Short Breaks Taken in the British Isles
and Abroad in the Last 12 Months (% of adults), September 2009..................................52
By Socio-Demographic Group...................................................................................................52
Table 3.3: Penetration of Holidays in the British Isles or Abroad in the Last 12 Months
by Number of Holidays and Socio-Demographic Group (% of adults), September
2009 ...............................................................................................................................................53
PLANNING A HOLIDAY............................................................................................................54
Table 3.4: Sources Used to Obtain Information for the Most Recent Holiday or Short
Break Taken in the Last 12 Months (% of adults), September 2009.................................55
BOOKING A HOLIDAY..............................................................................................................55
Table 3.5: Method of Booking the Most Recent Holiday or Short Break Taken
in the Last 12 Months (% of adults), September 2009.........................................................56
Table 3.6: How Far in Advance the Booking was Made for the Most Recent Holiday
or Short Break Taken in the Last 12 Months (% of adults), September 2009 ................56
METHOD OF TRAVEL................................................................................................................57
Table 3.7: Main Mode of Travel Used for the Most Recent Holiday or Short Break
Taken in the Last 12 Months (% of adults), September 2009.............................................58
TYPE OF ACCOMMODATION................................................................................................58
Table 3.8: Type of Accommodation Used for the Most Recent Holiday or Short Break
Taken in the Last 12 Months (% of adults), September 2009.............................................59
TYPE OF HOLIDAY.....................................................................................................................59
Table 3.9: Most Recent Holiday or Short Break Taken in the Last 12 Months — Type
of Holiday (% of adults), September 2009.............................................................................60
LENGTH OF STAY.......................................................................................................................60
Table 3.10: Most Recent Holiday or Short Break Taken in the Last 12 Months —
Length of Stay (% of adults), September 2009......................................................................61
COST OF HOLIDAY....................................................................................................................61
Table 3.11: Total Cost of Most Recent Holiday or Short Break Taken in the Last
12 Months (% of adults), September 2010.............................................................................61

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Travel & Tourism Market Contents

4. Competitive Structure 63
THE MARKETPLACE..................................................................................................................63
Table 4.1: Leaders in the UK Travel and Tourism Industry by Market and Industry
Sector, 2010...................................................................................................................................63
MARKET LEADERS.....................................................................................................................63
British Airways PLC......................................................................................................................63
Company Structure......................................................................................................................63
Financial Results...........................................................................................................................64
FirstGroup PLC..............................................................................................................................64
Company Structure......................................................................................................................64
Financial Results...........................................................................................................................65
National Express Group PLC.......................................................................................................65
Company Structure......................................................................................................................65
Financial Results...........................................................................................................................66
P&O Ferries Ltd.............................................................................................................................66
Company Structure......................................................................................................................66
Financial Results...........................................................................................................................67
Thomson Airways Ltd..................................................................................................................67
Company Structure......................................................................................................................67
Financial Results...........................................................................................................................67
TUI Travel PLC...............................................................................................................................67
Company Structure......................................................................................................................67
Financial Results...........................................................................................................................68
Other Companies.........................................................................................................................69
Outside Suppliers.........................................................................................................................69
MARKETING ACTIVITY.............................................................................................................69
Table 4.2: Main Media Advertising Expenditure by the Main Sectors in the Travel
and Tourism Industry (£000), Years Ending March 2006-2010...........................................70

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Travel & Tourism Market Contents

5. The Domestic Market 72


DEFINITION..................................................................................................................................72
KEY TRENDS................................................................................................................................72
MARKET SIZE...............................................................................................................................73
Table 5.1: The UK Domestic Travel and Tourism Market by Value and Volume
(£m, 000 and million), 2005-2009.............................................................................................73
Figure 5.1: The UK Domestic Travel and Tourism Market by Number of Trips (000),
2005-2009......................................................................................................................................74
By Purpose of Trip........................................................................................................................74
Table 5.2: The UK Domestic Travel and Tourism Market by Purpose of Trip by Value
(£m and %), 2005-2009...............................................................................................................75
Table 5.3: The UK Domestic Travel and Tourism Market by Purpose of Trip
by Volume (million and %), 2005-2009...................................................................................76
By Season.......................................................................................................................................76
Table 5.4: The UK Domestic Travel and Tourism Market — Expenditure, Number
of Trips and Number of Bed Nights by Season of Stay (£m, million and %), 2009........77
By Destination..............................................................................................................................77
Table 5.5: The UK Domestic Travel and Tourism Market — Expenditure, Number
of Trips and Number of Bed Nights
by Region of Residence (£m, million and %), 2009..............................................................78
By Mode of Transport.................................................................................................................78
Table 5.6: The UK Domestic Travel and Tourism Market by Mode of Transport
(% of trips), 2005-2009...............................................................................................................79
By Type of Accommodation.......................................................................................................79
Table 5.7: The UK Domestic Travel and Tourism Market — Serviced Accommodation
Occupancy by Country (%), 2005-2009....................................................................................79
Occupancy by Type of Establishment .....................................................................................80
Table 5.8: The UK Domestic Travel and Tourism Market — Serviced Accommodation
Occupancy by Type of Establishment (%), 2005-2009..........................................................81
Table 5.9: The UK Domestic Travel and Tourism Market by Type of Accommodation
(% of trips), 2005-2009...............................................................................................................81
Table 5.10: The UK Domestic Travel and Tourism Market by Type of Accommodation
(% of expenditure), 2005-2009.................................................................................................82
SUPPLY STRUCTURE..................................................................................................................83
Transport Operators....................................................................................................................83
Bus and Coach Operators...........................................................................................................83
Table 5.11: Leading Bus Operators in the UK by Estimated Size of Fleet
(number and %), July 2010........................................................................................................84
Train Operators............................................................................................................................84
Train-Operating Companies......................................................................................................84
Table 5.12: Passenger Train-Operating Companies in Great Britain, July 2010..............85

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Travel & Tourism Market Contents

Domestic Air Travel......................................................................................................................87


Table 5.13: Domestic Air Passengers Uplifted on Scheduled and Non-Scheduled
Services in the UK (000), 2005-2009.........................................................................................87
Accommodation Providers.........................................................................................................87
Table 5.14: Selected Hotel Chains by Estimated Number of Outlets, 2010......................88
MAJOR PLAYERS........................................................................................................................88
Bus and Coach Operators...........................................................................................................88
Arriva PLC......................................................................................................................................88
The Go-Ahead Group PLC..........................................................................................................89
Stagecoach Group PLC................................................................................................................90
Accommodation Providers — Hotels.......................................................................................90
Accor UK .......................................................................................................................................90
Best Western Great Britain........................................................................................................90
Choice Hotels Europe .................................................................................................................91
De Vere Hotels & Leisure Ltd.....................................................................................................91
Hilton International Hotels (UK) Ltd........................................................................................91
Intercontinental Hotels Group PLC...........................................................................................91
Jarvis Hotels Ltd............................................................................................................................92
Premier Inn Hotels Ltd................................................................................................................92
Thistle Hotels................................................................................................................................92
Travelodge Hotels Ltd.................................................................................................................92
Other Accommodation Providers.............................................................................................93
Bourne Leisure Group Ltd..........................................................................................................93
Holidaybreak PLC.........................................................................................................................93
The Hoseasons Group Ltd...........................................................................................................93
MARKETING ACTIVITY.............................................................................................................94
Bus and Coach Operators ..........................................................................................................94
Table 5.15: Main Media Advertising Expenditure by UK Bus and Coach Operators
(£000), Years Ending March 2006-2010...................................................................................94
Train Operators............................................................................................................................95
Table 5.16: Main Media Advertising Expenditure by Train Operators (£000), Years
Ending March 2006-2010............................................................................................................95
Hotels..............................................................................................................................................96
Table 5.17: Main Media Advertising Expenditure by UK Hotels (£000), Years Ending
March 2006-2010..........................................................................................................................97
Holiday Camps..............................................................................................................................97
Table 5.18: Main Media Advertising Expenditure by Holiday Resorts (£000), Years
Ending March 2006-2010............................................................................................................98

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Travel & Tourism Market Contents

BUYING BEHAVIOUR................................................................................................................98
Table 5.19: The UK Domestic Travel and Tourism Market — Share of Expenditure,
Trips and Bed Nights by Age Group and Social Grade (%), 2009......................................99
Profile of Domestic Holidays......................................................................................................99
Table 5.20: Profile of One, Two and Three or More Holidays..........................................100
Penetration of Domestic Hotel Stays.....................................................................................101
Table 5.21: Penetration of Hotel Stays..................................................................................102
Penetration of Domestic Air Travel........................................................................................103
Table 5.22: Number of Separate Air Trips Made in the UK in the Last 12 Months
by Sex, Age, Social Grade and Region of Residence (% of adults), September
2009..............................................................................................................................................104
FORECASTS 2010 TO 2014....................................................................................................105
Table 5.23: The Forecast UK Domestic Travel and Tourism Market by Value
and Volume (£m, 000 and million), 2010-2014....................................................................106
Figure 5.2: The Forecast UK Domestic Travel and Tourism Market by Value (£m),
2010-2014....................................................................................................................................106

6. The Outbound Market 107


DEFINITION................................................................................................................................107
Purpose of Trip...........................................................................................................................107
Country of Destination.............................................................................................................107
Mode of Transport.....................................................................................................................108
Type of Arrangement................................................................................................................108
KEY TRENDS..............................................................................................................................109
MARKET SIZE.............................................................................................................................109
Table 6.1: The UK Outbound Travel and Tourism Market by Value and Volume
(£m, 000 and million), 2005-2009...........................................................................................110
Figure 6.1: The UK Outbound Travel and Tourism Market by Value..............................111
By Purpose of Trip......................................................................................................................111
Table 6.2: The UK Outbound Travel and Tourism Market by Purpose of Trip
by Volume (000 and %), 2005-2009 ......................................................................................112
Table 6.3: The UK Outbound Travel and Tourism Market by Purpose of Trip by Main
Regional Destination (000 trips and %), 2009 ....................................................................113
By Destination............................................................................................................................114
Table 6.4: The UK Outbound Travel and Tourism Market by Country of Destination
by Volume (000 trips), 2005-2009...........................................................................................115
By Mode of Transport...............................................................................................................116
Table 6.5: The UK Outbound Travel and Tourism Market by Mode of Transport
(000 trips), 2005-2009................................................................................................................116
By Type of Arrangement..........................................................................................................117
Table 6.6: The UK Outbound Holiday Market by Type of Arrangement and Mode
of Transport by Volume (000 trips and %), 2005-2009......................................................117

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Travel & Tourism Market Contents

The Cruises Market....................................................................................................................118


Table 6.7: The UK Open-Sea Cruise Market by Type of Cruise and Destination
by Volume (000 passengers), 2005-2009...............................................................................119
Table 6.8: The UK Open-Sea Cruise Market by Main Destination by Volume
(000 passengers), 2005-2009....................................................................................................120
SUPPLY STRUCTURE................................................................................................................121
Tour Operators...........................................................................................................................121
Table 6.9: Number of ABTA-Registered Tour Operators in the UK and Average
Number of Package Holidays Sold (number and 000), 2005-2009...................................122
Travel Agents..............................................................................................................................122
Table 6.10: The UK’s Leading Travel Agents by Estimated Number of Branches
(number and %), Year Ending July 2006-2010....................................................................123
Figure 6.2: UK Travel Agents by Number of Branches, Year Ending July
2006-2010....................................................................................................................................124
Airlines.........................................................................................................................................124
Table 6.11: Number of Aircraft in Service with UK Airlines, 2005-2009.........................124
Table 6.12: UK Airlines by Available Seat Capacity and Seat Capacity Used
(000 seat kilometres and %), 2009.........................................................................................126
MAJOR PLAYERS......................................................................................................................126
Tour Operators ..........................................................................................................................127
Thomas Cook Group PLC..........................................................................................................127
Scheduled and Charter Airlines...............................................................................................128
easyJet Airline Company Ltd...................................................................................................128
Monarch Airlines Ltd.................................................................................................................128
Thomas Cook Airlines Ltd.........................................................................................................129
MARKETING ACTIVITY...........................................................................................................129
Table 6.13: Main Media Advertising Expenditure By Companies Engaged
in the Outbound Travel and Tourism Market (£000), Years Ending March
2006-2010....................................................................................................................................130
Tour Operators...........................................................................................................................130
Table 6.14: Main Media Advertising Expenditure by Overseas Tour Operators
(£000), Years Ending March 2006-2010.................................................................................131
Travel Agents..............................................................................................................................131
Table 6.15: Main Media Advertising Expenditure by Travel Agents (£000), Years
Ending March 2006-2010..........................................................................................................132
Online Travel Agents.................................................................................................................132
Table 6.16: Main Media Advertising Expenditure by Online Travel Agents (£000),
Years Ending March 2006-2010...............................................................................................133
BUYING BEHAVIOUR..............................................................................................................133
Table 6.17: Profile of One, Two and Three or More Holidays..........................................134
FORECASTS 2010 TO 2014....................................................................................................135
Table 6.18: The Forecast UK Outbound Travel and Tourism Market by Value
and Volume (£m, 000 and million), 2010-2014....................................................................136

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Travel & Tourism Market Contents

7. The Inbound Market 137


DEFINITION................................................................................................................................137
By Purpose of Visit.....................................................................................................................137
Country of Origin.......................................................................................................................137
By Mode of Transport...............................................................................................................138
By Type of Arrangement..........................................................................................................138
KEY TRENDS..............................................................................................................................138
MARKET SIZE.............................................................................................................................139
Table 7.1: The UK Inbound Travel and Tourism Market by Value and Volume
(£m, 000 and million), 2005-2009...........................................................................................139
Figure 7.1: The UK Inbound Travel and Tourism Market by Value..................................141
By Purpose of Trip......................................................................................................................141
Table 7.2: The UK Inbound Travel and Tourism Market by Purpose of Trip by Volume
(000 and %), 2005-2009............................................................................................................142
Table 7.3: The UK Inbound Travel and Tourism Market by Purpose of Trip by Region
of Origin by Volume (000 trips and %), 2009......................................................................143
Table 7.4: The UK Inbound Travel and Tourism Market by Type of Trip by Volume
(000 trips and %), 2005-2009...................................................................................................144
By Country of Origin.................................................................................................................144
Table 7.5: The UK Inbound Travel and Tourism Market by Country of Origin
by Volume (000 trips and %), 2005-2009..............................................................................145
By Mode of Transport...............................................................................................................146
Table 7.6: The UK Inbound Travel and Tourism Market by Mode of Transport
by Volume (000 trips), 2005-2009...........................................................................................146
By Type of Arrangement..........................................................................................................147
Table 7.7: The UK Inbound Holiday Market by Type of Arrangement and Mode
of Transport by Volume (000 trips and %), 2005-2009......................................................147
Table 7.8: The UK Inbound Holiday Market by Type of Arrangement and Region
of Origin by Volume (000 trips and %), 2009......................................................................149
SUPPLY STRUCTURE................................................................................................................149
MARKETING ACTIVITY...........................................................................................................149
Table 7.9: Main Media Advertising Expenditure by UK Tourist Offices (£000), Years
Ending March 2006-2010..........................................................................................................150
BUYING BEHAVIOUR..............................................................................................................151
Table 7.10: Average Expenditure per Trip, Average Length of Stay and Average
Expenditure per Bed Night by Overseas Visitors to the UK
(£ and number of bed nights), 2005-2009............................................................................151
Table 7.11: Average Expenditure per Trip, Average Length of Stay and Average
Expenditure per Bed Night by Overseas Visitors to the UK by Region of Origin
(£ and number of bed nights), 2007-2009............................................................................152

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Travel & Tourism Market Contents

FORECASTS 2010 TO 2014....................................................................................................152


Table 7.12: The Forecast UK Inbound Travel and Tourism Market by Value
and Volume (£m, 000 and million), 2010-2014....................................................................153
Figure 7.2: The Forecast UK Inbound Travel and Tourism Market by Value.................154

8. A Global Perspective 155


MARKET VOLUME...................................................................................................................155
Table 8.1: International Tourist Arrivals and Receipts
(million and $bn), 2005-2009...................................................................................................155
Figure 8.1: International Tourist Arrivals (millions), 2005-2009.......................................156
By Region.....................................................................................................................................156
Table 8.2: International Tourist Arrivals and Receipts by Region
(million, $bn and %), 2008 and 2009.....................................................................................157
By Country...................................................................................................................................157
Arrivals.........................................................................................................................................157
Table 8.3: International Tourist Arrivals by Country (million and %), 2008
and 2009......................................................................................................................................158
Receipts........................................................................................................................................158
Table 8.4: International Tourist Receipts by Country ($bn and %), 2008 and 2009.....159
AIR PASSENGERS......................................................................................................................159
Table 8.5: Revenue Passenger Kilometres, Available Seat Kilometres Growth
and Passenger Load Factor (%), 2008-2009 .........................................................................160
Table 8.6: Revenue Passenger Kilometres Market Shares by Region (%), 2009............160
EUROPEAN AIRLINE MARKET..............................................................................................161
Table 8.7: Number of Air Transport Passengers and Passenger Kilometres Travelled
by Association of European Airlines’ Members on Scheduled Services
(million and billion kilometres), 2005-2009..........................................................................161
Table 8.8: Number of Air Transport Passengers of Association of European Airlines’
Members by Airline (million and %), 2009...........................................................................162
AIRPORT PASSENGER NUMBERS........................................................................................163
By Region.....................................................................................................................................163
Table 8.9: Worldwide Airport Passengers by Region (000 and %), 2009.......................163
By Airport....................................................................................................................................163
Table 8.10: Worldwide Airport Passengers by Airport (000), 2009..................................164
THE CRUISE MARKET..............................................................................................................165
Table 8.11: Number of European Cruise Passengers by Country (000), 2005-2009......166
GLOBAL TOURIST FORECASTS.............................................................................................167

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Travel & Tourism Market Contents

9. The Future 168


INTRODUCTION........................................................................................................................168
The Economy...............................................................................................................................168
Gross Domestic Product............................................................................................................168
Table 9.1: Forecast UK Growth in Gross Domestic Product in Real Terms (%),
2010-2014....................................................................................................................................168
Inflation.......................................................................................................................................168
Table 9.2: Forecast UK Rate of Inflation (%), 2010-2014...................................................169
Unemployment...........................................................................................................................169
Table 9.3: Forecast Actual Number of Unemployed Persons in the UK (millions),
2010-2014....................................................................................................................................169
Population...................................................................................................................................169
Table 9.4: Forecast UK Resident Population by Sex (000), Mid-Years 2010-2014.........170
FORECASTS 2010 TO 2014....................................................................................................170
Table 9.5: The Forecast UK Travel and Tourism Market by Value and Volume
(£m, 000 and million), 2010-2014...........................................................................................171
Figure 9.1: The Forecast UK Travel and Tourism Market by Value..................................172
FUTURE TRENDS.......................................................................................................................172
Value of Tourism to the UK Economy Set to Rise...............................................................172
Package Travel Directive...........................................................................................................173
Business Travel............................................................................................................................173

10. Further Sources 174


Associations...............................................................................................................................174
Publications...............................................................................................................................177
General Sources.......................................................................................................................178
Government Sources..............................................................................................................178
Other Sources...........................................................................................................................179
Key Note Sources ....................................................................................................................181

Understanding TGI Data 184


Number, Profile, Penetration..............................................................................................184
Social Grade...............................................................................................................................185
Standard Region......................................................................................................................185

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Travel & Tourism Market Contents

Key Note Research 186

The Key Note Range of Reports 187

© Key Note Ltd 2010


Travel & Tourism Market Executive Summary

Executive Summary
The UK travel and tourism industry serves three separate markets: domestic
tourism by UK residents within the UK; outbound tourism by UK residents
travelling abroad; and inbound tourism by overseas residents travelling to the
UK. In 2009, total expenditure on UK travel and tourism (combining these three
markets) fell by 5.5% to £70.17bn. Falls were also recorded in the number of
trips made, which was down by 1.9% to 214.5 million, and in the number of
bed nights, which fell by 6.4% to 1.24 billion. The outbound market is the
largest by expenditure and bed nights, while the highest number of trips made
was reported in the domestic market.

The UK travel and tourism market felt the full force of the UK and global
recession in 2009. The outbound travel and tourism market, which
demonstrated steady annual growth in value terms between 2005 and 2008,
was most affected by the downturn, while the inbound market was hit by
falling visitor numbers. In contrast, the domestic travel and tourism market
flourished, as UK consumers opted for so-called ‘staycation’ holidays in
preference to holidaying abroad.

The election of the Coalition Government has already had implications for the
travel and tourism industry. The Government quickly announced that it will
block the building of a third runway at Heathrow airport and prohibit the
building of further runways at Gatwick and Stansted airports. It has also
indicated that it will replace Air Passenger Duty (APD), a levy which has resulted
in the UK having the highest levels of aviation tax in Europe, with a per-plane
duty (PPD).

The Air Travel Insolvency Protection Advisory Committee (ATIPAC) has


reiterated its support for the ‘flight plus’ Air Travel Organisers’ Licensing
(ATOL) reform proposals. ATIPAC believes that reform of ATOL is long overdue
and that the new Government should not miss the opportunity to bring clarity
to consumers and to extend financial protection arrangements to a greater
number of holidaymakers. The ‘flight plus’ system will require ATOL protection
for all sales of flights, as well as other holiday components, such as hotels or
car hire, regardless of the terms and conditions of booking.

2010 is expected to be another difficult year for the UK travel and tourism
market. The forecast improvement in the UK and global economic outlook in
2010 should help to bolster demand, although the speed and rate of recovery
is likely to remain modest and it may be 2011 before the market starts to
improve. The 2012 London Olympics should provide a welcome boost to both
the inbound and domestic sectors of the market.

© Key Note Ltd 2010 1


Travel & Tourism Market Industry Overview

1. Industry Overview

REPORT COVERAGE
The UK travel and tourism industry serves three separate markets:

• the domestic market — tourism by UK residents within the UK

• the outbound market — tourism by UK residents travelling abroad

• the inbound market — tourism by overseas residents travelling to the UK.

These three markets are examined in detail in Chapters 5 to 7 of this Market


Review. There is particular emphasis on the domestic and outbound markets,
which involve spending by UK residents.

Definitions
The main source of statistics for the domestic tourism market is the United
Kingdom Tourism Survey (UKTS), which is sponsored by the UK’s national
tourist boards. This survey covers all trips lasting up to 60 days, provided that
they involve a stay of at least 1 night away from home.

Figures for the outbound and inbound tourism markets are drawn from the
International Passenger Survey (IPS), which is undertaken by National Statistics
on behalf of central government. This survey covers all overseas trips lasting
up to 1 year, including day trips.

This Market Review also includes some statistics from the World Tourism
Organization (UNWTO). The UNWTO’s definition of international tourism
differs slightly from that used by the IPS, in that day trips are excluded.

REPORT BACKGROUND
The UK travel and tourism market is one of the UK’s largest industries and a
leading travel and tourism market on both a European and global level. In
value terms, the market enjoyed steady growth between 2005 and 2008, aided
by a supportive UK and global economic climate, plus market-specific factors
such as low-cost air travel, the popularity of independently organised holidays
and the growth of, and easy access to, online travel and tourism websites.

© Key Note Ltd 2010 2


Travel & Tourism Market Industry Overview

During the period spanning from 2005 to 2008, the outbound and inbound
sectors of the travel and tourism market flourished while the domestic sector
went through a period of ongoing decline. The dynamics of the market
changed in 2009, however, as the worldwide economic recession resulted in a
downturn in the outbound and inbound sectors of the market and an upturn
in the domestic market. This was mainly due to UK consumers opting for
so-called ‘staycation’ holidays in preference to holidaying abroad, while fewer
overseas visitors arrived in the UK. Although economic growth is set to return
in 2010, the UK travel and tourism market is expected to remain weak and it
may not be until 2011 that growth in the overall market returns.

ECOMONIC TRENDS

Population
The UK population reached a projected 61.8 million in 2009, an increase of
2.6% on 2005 and an additional 1.6 million people over the 5-year period. A
rising population increases demand for many types of goods and services
including travel and tourism. According to Kantar Media’s annual Target
Group Index (TGI) survey, 69.3% of British adults took a holiday or short break
in the 12 months ending September 2009, up from 66.3% who took a holiday
in the year ending March 2008.

Table 1.1: UK Resident Population Estimates by Sex (000),


Mid-Years 2005-2009

2005 2006 2007 2008 †2009

Female 30,741 30,893 31,059 31,232 31,420


Male 29,497 29,694 29,916 30,151 30,374

Total 60,238 60,587 60,975 61,383 61,794


% change year-on-year - 0.6 0.6 0.7 0.7

† — taken from Population Projections Database

Source: Monthly Digest of Statistics, May 2010/Population Projections Database


(2008-based projections), National Statistics website © Crown copyright material
is reproduced with the permission of the Controller of HMSO (and the Queen’s
Printer for Scotland)

© Key Note Ltd 2010 3


Travel & Tourism Market Industry Overview

Gross Domestic Product


The UK economy witnessed a strong performance between 2005 and 2007,
with annual chain-linked gross domestic product (GDP) rising by 5.5% over the
3-year period. The start of the global recession in 2008 contributed to annual
GDP growth slowing to 0.5% in that year (in annual chain-linked terms), and
in 2009, the ongoing economic downturn resulted in a fall in GDP of 4.9%. The
fall in GDP in 2009 affected most sectors of UK business and industry including
some sectors of the travel and tourism market.

Table 1.2: UK Gross Domestic Product at Current and Annual


Chain-Linked Prices (£m), 2005-2009

2005 2006 2007 2008 2009

Current prices 1,254,058 1,325,795 1,398,882 1,448,391 1,395,872


% change
year-on-year - 5.7 5.5 3.5 -3.6

Annual chain-
linked GDP 1,254,058 1,289,833 1,322,842 1,330,088 1,264,646
% change
year-on-year - 2.9 2.6 0.5 -4.9

GDP — gross domestic product

Source: Economic & Labour Market Review, May 2010, National Statistics website
© Crown copyright material is reproduced with the permission of the Controller
of HMSO (and the Queen’s Printer for Scotland)

Inflation
UK inflation increased steadily between 2005 and 2008, reaching 4% in 2008.
Deflation was a feature of the UK economy in 2009, however, with the retail
price index (RPI) falling by 4.5%. The impact of the recession and falling prices,
affected the travel and tourism sector and the RPI for some of the main sectors
of the market. For example, the RPI for UK holidays was 0.3% lower in
December 2009 compared to December 2008 and the RPI for passenger
transport by air was 0.2% lower in December 2009 than in December 2008.
Sectors of the market for which the RPI rose between 2008 and 2009 included
foreign holidays, the RPI for which was 0.4% higher in December 2009 than in
December 2008; and the RPI for passenger transport by sea and inland
waterways which was 14.3% higher.

© Key Note Ltd 2010 4


Travel & Tourism Market Industry Overview

Table 1.3: UK Rate of Inflation (%), 2005-2009

2005 2006 2007 2008 2009

Inflation (%) 2.8 3.2 4.3 4.0 -0.5


Percentage point
change year-on-year - 0.4 1.1 -0.3 -4.5

Note: inflation is at retail price index (RPI).

Source: Monthly Digest of Statistics, May 2010, National Statistics website ©


Crown copyright material is reproduced with the permission of the Controller of
HMSO (and the Queen’s Printer for Scotland)

Unemployment
Unemployment in the UK increased by more than two-thirds (68.1%) to
1.53 million claimants in 2009, largely due to the recession. This sharp rise in
unemployment is likely to have affected consumer confidence and consumer
expenditure and contributed to the downturn in the outbound travel and
tourism market in 2009.

Table 1.4: Actual Number of Unemployed Persons in the UK


(million), 2005-2009

2005 2006 2007 2008 2009

Actual number of claimants


(million) 0.86 0.95 0.86 0.91 1.53
% change year-on-year - 10.5 -9.5 5.8 68.1

Source: Monthly Digest of Statistics, May 2010, National Statistics website ©


Crown copyright material is reproduced with the permission of the Controller of
HMSO (and the Queen’s Printer for Scotland)

Household Disposable Income


Per capita household disposable income increased steadily between 2005 and
2009, with the 2009 total of £15,495 representing an increase of 14.2% over
the 5-year review period. Increasing levels of disposable income have
contributed to rising consumer expenditure on a wide range of goods and
services including travel and tourism.

© Key Note Ltd 2010 5


Travel & Tourism Market Industry Overview

Table 1.5: UK Household Disposable Income Per Capita (£),


2005-2009

2005 2006 2007 2008 2009

Household disposable
income (£) 13,572 13,952 14,331 14,907 15,495
% change year-on-year - 2.8 2.7 4.0 3.9

Source: Economic & Labour Market Review, May 2010, National Statistics website
© Crown copyright material is reproduced with the permission of the Controller
of HMSO (and the Queen’s Printer for Scotland)

MARKET SIZE

By Value
The UK travel and tourism market was valued at £70.17bn in 2009, a 5.5%
reduction on 2008. Outbound travel and tourism is the largest sector of the
market with a value of £31.69bn in 2009, representing 45.2% of the market.
However, the outbound market suffered significantly from the recession in
2009, with receipts from outbound travel and tourism declining by 14%
compared to 2008 figures. The domestic travel and tourism market, the
second-largest segment, had a value of £21.88bn in 2009, a 3.7% increase on
2008. Expenditure on the inbound travel and tourism market was also 1.6%
higher in 2009 at £16.59bn.

The UK continues to operate a trade deficit in travel and tourism although this
fell by more than a quarter (26.4%) in 2009 to £15.1bn from £20.51bn in 2008.

Table 1.6: The Total UK Travel and Tourism Market by Value


(£m), 2005-2009

2005 2006 2007 2008 2009

Domestic 22,667 20,965 21,238 21,107 21,881


Outbound† 32,154 34,411 35,013 36,838 31,694
Inbound† 14,248 16,002 15,960 16,323 16,592

Table continues...

© Key Note Ltd 2010 6


Travel & Tourism Market Industry Overview

Table 1.6: The Total UK Travel and Tourism Market by Value


(£m), 2005-2009

...table continued

2005 2006 2007 2008 2009


Total 69,069 71,378 72,211 74,268 70,167
% change
year-on-year - 3.3 1.2 2.8 -5.5

† — excluding fares
Note: domestic figures relate to trips of at least 1 night but fewer than 60 days; outbound
and inbound figures relate to trips of less than 1 year, including day trips; the 2008 figures
for the outbound and inbound markets has also been revised by the source since the last
edition of this Market Review was published.

Source: United Kingdom Tourism Survey/International Passenger Survey,


National Statistics © Crown copyright material is reproduced with the permission
of the Controller of HMSO (and the Queen’s Printer for Scotland)/Key Note

© Key Note Ltd 2010 7


Travel & Tourism Market Industry Overview

Figure 1.1: The Total UK Travel and Tourism Market by Value


(£m), 2005-2009
75,000

74,500

74,000

73,500

73,000

72,500

72,000

71,500

71,000

70,500

70,000

69,500

69,000

68,500

68,000
2005 2006 2007 2008 2009

Note: domestic figures relate to trips of at least 1 night but fewer than 60 days;
outbound and inbound figures relate to trips of less than 1 year, including day trips;
the 2008 figures for the outbound and inbound markets has also been revised by the
source since the last edition of this Market Review was published.

Source: United Kingdom Tourism Survey/International Passenger Survey,


National Statistics © Crown copyright material is reproduced with the
permission of the Controller of HMSO (and the Queen’s Printer for Scotland)/
Key Note

By Volume
The number of trips made in the UK travel and tourism market declined
throughout the 5-year review period and in 2009, this downward trend
continued with a 1.9% fall to 214.5 million trips. From 2008 to 2009, falls in
trip numbers were recorded in both the outbound and inbound markets, with
outbound trips down by 15.1% to 58.6 million and inbound trips slipping by
6.3% to 29.9 million. In contrast, domestic trips increased for the first time over
the review period, with a 7% advance to 126 million in 2009.

© Key Note Ltd 2010 8


Travel & Tourism Market Industry Overview

Table 1.7: The Total UK Travel and Tourism Market by Number


of Trips (000), 2005-2009

2005 2006 2007 2008 2009

Domestic 138,700 126,300 123,500 117,700 126,000


Outbound 66,441 69,536 69,450 69,011 58,614
Inbound 29,970 32,713 32,778 31,888 29,889

Total 235,111 228,549 225,728 218,599 214,503


% change
year-on-year - -2.8 -1.2 -3.2 -1.9

Note: domestic figures relate to trips of at least 1 night but fewer than 60 days; outbound
and inbound figures relate to trips of less than 1 year, including day trips.

Source: United Kingdom Tourism Survey/International Passenger Survey,


National Statistics © Crown copyright material is reproduced with the permission
of the Controller of HMSO (and the Queen’s Printer for Scotland)/Key Note

© Key Note Ltd 2010 9


Travel & Tourism Market Industry Overview

Figure 1.2: The Total UK Travel and Tourism Market by Number


of Trips (000), 2005-2009

235,000

232,500

230,000

227,500

225,000

222,500

220,000

217,500

215,000

2005 2006 2007 2008 2009

Note: domestic figures relate to trips of at least 1 night but fewer than 60 days;
outbound and inbound figures relate to trips of less than 1 year, including day trips.

Source: United Kingdom Tourism Survey/International Passenger Survey,


National Statistics © Crown copyright material is reproduced with the
permission of the Controller of HMSO (and the Queen’s Printer for Scotland)/
Key Note

Number of Bed Nights


There were 1.24 billion bed nights in the UK travel and tourism market in 2009,
a 6.4% reduction on 2008. As was the case with the number of trips made, falls
in bed night numbers were recorded in the outbound and inbound markets
from 2008 figures, which were down by 12.6% to 614.5 million and 6.7% to
229.4 million, respectively. Conversely, increases in bed nights were registered
in the domestic market which was up by 5.4% to 398.8 million from 2008. In
2009, the number of bed nights in the inbound market was the lowest since
2003 and the number of bed nights in the outbound market was the lowest
since 2002.

© Key Note Ltd 2010 10


Travel & Tourism Market Industry Overview

Table 1.8: The Total UK Travel and Tourism Market by Number


of Bed Nights (million), 2005-2009

2005 2006 2007 2008 2009

Domestic 442.2 400.1 394.4 378.4 398.8


Outbound 669.0 701.3 689.6 703.3 614.5
Inbound 249.2 273.4 251.5 245.8 229.4

Total 1,360.4 1,374.8 1,335.5 1,327.5 1,242.7


% change year-on-year - 1.1 -2.9 -0.6 -6.4

Note: domestic figures relate to trips of at least 1 night but fewer than 60 days; outbound
and inbound figures relate to trips of less than 1 year, including day trips.

Source: United Kingdom Tourism Survey/International Passenger Survey,


National Statistics © Crown copyright material is reproduced with the permission
of the Controller of HMSO (and the Queen’s Printer for Scotland)/Key Note

© Key Note Ltd 2010 11


Travel & Tourism Market Industry Overview

Figure 1.3: The Total UK Travel and Tourism Market by Number


of Bed Nights (million), 2005-2009
1,400

1,375

1,350

1,325

1,300

1,275

1,250

1,225

1,200
2005 2006 2007 2008 2009

Note: domestic figures relate to trips of at least 1 night but fewer than 60 days;
outbound and inbound figures relate to trips of less than 1 year, including day trips.

Source: United Kingdom Tourism Survey/International Passenger Survey,


National Statistics © Crown copyright material is reproduced with the
permission of the Controller of HMSO (and the Queen’s Printer for Scotland)/
Key Note

MARKET SEGMENTATION
Table 1.9 provides a comparison of the three main measures (expenditure,
number of trips and number of bed nights) for the domestic, inbound and
outbound markets in 2009. The domestic market generated the largest
percentage of trips made, while the outbound market accounted for the
highest percentages of expenditure and bed nights.

© Key Note Ltd 2010 12


Travel & Tourism Market Industry Overview

Table 1.9: The Total UK Travel and Tourism Market by Sector by


Value and Volume (£m, 000, million and %), 2009

Expenditure Bed Nights


(£m) Trips (000) (million)
Market Sector
Domestic 21,881 126,000 398.8
Outbound 31,694 58,614 614.5
Inbound 16,592 29,889 229.4

Total 70,167 214,503 1,242.7

% of Total
Domestic 31.2 58.7 32.1
Outbound 45.2 27.3 49.4
Inbound 23.6 13.9 18.5

Total 100.0 †100.0 100.0

† — does not sum due to rounding


Note: domestic figures relate to trips of at least 1 night but fewer than 60 days; outbound
and inbound figures relate to trips of less than 1 year, including day trips; outbound and
inbound expenditure excludes fares.

Source: United Kingdom Tourism Survey/International Passenger Survey,


National Statistics © Crown copyright material is reproduced with the permission
of the Controller of HMSO (and the Queen’s Printer for Scotland)/Key Note

The three sectors of the market continue to produce wide variations in average
expenditure, average bed nights and average bed nights per trip. In 2009,
average expenditure per trip in the domestic market was £173.64, a figure
substantially below the averages for outbound and inbound trips which were
reported as £540.72 and £555.12, respectively. This difference is principally due
to the average length of stay, with domestic trips being much shorter in
comparison to outbound and inbound trips. In 2009, the average stay in the
domestic market was 3.2 bed nights compared to 7.7 bed nights in the inbound
market and 10.5 bed nights in the outbound market.

© Key Note Ltd 2010 13


Travel & Tourism Market Industry Overview

Table 1:10: The UK Travel and Tourism Market by Average


Expenditure per Trip and Per Bed Night, and Average Number
of Bed Nights per Trip (£ and number), 2009

Average Average Average Number


Expenditure per Expenditure per of Bed Nights per
Trip (£) Bed Night (£) Trip

Domestic 173.64 54.87 3.2


Outbound †540.72 51.58 10.5
Inbound †555.12 72.33 7.7

† — excluding fares
Note: domestic figures relate to trips of at least 1 night but fewer than 60 days; outbound
and inbound figures relate to trips of less than 1 year, including day trips.

Source: United Kingdom Tourism Survey/International Passenger Survey,


National Statistics © Crown copyright material is reproduced with the permission
of the Controller of HMSO (and the Queen’s Printer for Scotland)/Key Note

As noted earlier, the three main markets of the travel and tourism sector —
domestic, outbound and inbound — are each covered separately by this Key
Note Market Review. However, they can also be grouped in broader categories,
as follows:

• domestic and outbound tourism are categorised as national or UK tourism

• domestic and inbound tourism relate to internal tourism

• outbound and inbound tourism constitute international tourism.

UK Tourism
The total UK tourism market covers the domestic and outbound sectors. In
2009, this had a value of £53.58bn, a 7.5% reduction on 2008. There was also
a 1.1% fall to 184.6 million in the number of trips made and a 6.3% decline to
1.01 billion in the number of bed nights compared to 2008 levels.

The importance of the outbound sector to the UK tourism market increased


steadily between 2005 and 2008, and in 2008 it accounted for 63.6% of
expenditure and 65% of bed nights. The downturn in the outbound market in
2009 and the resurgence of the domestic market affected these trends,
however, and the domestic market percentages of UK tourism expenditure,
trips and bed nights all increased in the same year.

© Key Note Ltd 2010 14


Travel & Tourism Market Industry Overview

Table 1.11: The UK Tourism Market by Sector by Value and


Volume (£m, 000, million and %), 2005-2009

2005 2006 2007 2008 2009


Expenditure (£m)
Domestic 22,667 20,965 21,238 21,107 21,881
Outbound† 32,154 34,411 35,013 36,838 31,694
Total 54,821 55,376 56,251 57,945 53,575

% of Total
Domestic 41.3 37.9 37.8 36.4 40.8
Outbound 58.7 62.1 62.2 63.6 59.2
Total 100.0 100.0 100.0 100.0 100.0

Trips (000)
Domestic 138,700 126,300 123,500 117,700 126,000
Outbound 66,441 69,536 69,450 69,011 58,614
Total 205,141 195,836 192,950 186,711 184,614

% of Total
Domestic 67.6 64.5 64.0 63.0 68.3
Outbound 32.4 35.5 36.0 37.0 31.7
Total 100.0 100.0 100.0 100.0 100.0

Bed Nights (million)


Domestic 442.2 400.1 394.4 378.4 398.8
Outbound 669.0 701.3 689.6 703.3 614.5
Total 1,111.2 1,101.4 1,084.0 1,081.7 1,013.3

Table continues...

© Key Note Ltd 2010 15


Travel & Tourism Market Industry Overview

Table 1.11: The UK Tourism Market by Sector by Value and


Volume (£m, 000, million and %), 2005-2009

...table continued

2005 2006 2007 2008 2009


% of Total
Domestic 39.8 36.3 36.4 35.0 39.4
Outbound 60.2 63.7 63.6 65.0 60.6
Total 100.0 100.0 100.0 100.0 100.0

† — excluding fares
Note: domestic figures relate to trips of at least 1 night but fewer than 60 days; outbound
figures relate to trips of less than 1 year, including day trips.

Source: United Kingdom Tourism Survey/International Passenger Survey,


National Statistics © Crown copyright material is reproduced with the permission
of the Controller of HMSO (and the Queen’s Printer for Scotland)/Key Note

Internal Tourism
Internal tourism combines the domestic and inbound markets of the travel and
tourism sector. In 2009, the value of this market increased by 2.8% to £38.47bn
from 2008 figures. There was also a 4.2% rise in the number of trips made to
155.9 million, and a 0.6% rise to 628.2 million bed nights over the same period.

These two sectors share and increase demand for many of the services and
facilities provided by the UK internal tourism market, such as transport,
accommodation and visitor attractions. Although a certain amount of overlap
is likely, some of these attractions and facilities are aimed more at the inbound
tourist while others are directed more towards the domestic market.

Table 1.12: The UK Internal Tourism Market by Sector by Value


and Volume (£m, 000, million and %), 2005-2009

2005 2006 2007 2008 2009


Expenditure (£m)
Domestic 22,667 20,965 21,238 21,107 21,881
Inbound† 14,248 16,002 15,960 16,323 16,592
Total 36,915 36,967 37,198 37,430 38,473

Table continues...

© Key Note Ltd 2010 16


Travel & Tourism Market Industry Overview

Table 1.12: The UK Internal Tourism Market by Sector by Value


and Volume (£m, 000, million and %), 2005-2009

...table continued

2005 2006 2007 2008 2009


% of Total
Domestic 61.4 56.7 57.1 56.4 56.9
Inbound 38.6 43.3 42.9 43.6 43.1
Total 100.0 100.0 100.0 100.0 100.0

Trips (000)
Domestic 138,700 126,300 123,500 117,700 126,000
Inbound 29,970 32,713 32,778 31,888 29,889
Total 168,670 159,013 156,278 149,588 155,899

% of Total
Domestic 82.2 79.4 79.0 78.7 80.8
Inbound 17.8 20.6 21.0 21.3 19.2
Total 100.0 100.0 100.0 100.0 100.0

Bed Nights (million)


Domestic 442.2 400.1 394.4 378.4 398.8
Inbound 249.2 273.4 251.5 245.8 229.4
Total 691.4 673.5 645.9 624.2 628.2

% of Total
Domestic 64.0 59.4 61.1 60.6 63.5
Inbound 36.0 40.6 38.9 39.4 36.5
Total 100.0 100.0 100.0 100.0 100.0

† — excluding fares
Note: domestic figures relate to trips of at least 1 night but fewer than 60 days; inbound
figures relate to trips of less than 1 year, including day trips.

Table continues...

© Key Note Ltd 2010 17


Travel & Tourism Market Industry Overview

Table 1.12: The UK Internal Tourism Market by Sector by Value


and Volume (£m, 000, million and %), 2005-2009

...table continued

Source: United Kingdom Tourism Survey/International Passenger Survey,


National Statistics © Crown copyright material is reproduced with the permission
of the Controller of HMSO (and the Queen’s Printer for Scotland)/Key Note

International Tourism
The international tourism market combines the outbound and inbound
tourism markets. In 2009, this sector had a value of £48.29bn, which was 9.2%
lower than 2008 levels. There was also a 12.3% fall to 88.5 million trips made,
and an 11.1% decline to 843.9 million bed nights over the same period. The
outbound sector is the larger of the two markets, accounting for 65.6% of
expenditure, 66.2% of trips and 72.8% of bed nights in 2009. The main facilities
shared by these two sectors include airports, airlines and trains.

Table 1.13: The UK International Tourism Market by Sector by


Value and Volume (£m, 000, million and %), 2005-2009

2005 2006 2007 2008 p2009

Expenditure (£m)†
Outbound 32,154 34,411 35,013 36,838 31,694
Inbound 14,248 16,002 15,960 16,323 16,592
Total 46,402 50,413 50,973 53,161 48,286

% of Total
Outbound 69.3 68.3 68.7 69.3 65.6
Inbound 30.7 31.7 31.3 30.7 34.4
Total 100.0 100.0 100.0 100.0 100.0

Trips (000)
Outbound 66,441 69,536 69,450 69,011 58,614
Inbound 29,970 32,713 32,778 31,888 29,889
Total 96,411 102,249 102,228 100,899 88,503

Table continues...

© Key Note Ltd 2010 18


Travel & Tourism Market Industry Overview

Table 1.13: The UK International Tourism Market by Sector by


Value and Volume (£m, 000, million and %), 2005-2009

...table continued

2005 2006 2007 2008 p2009

% of Total
Outbound 68.9 68.0 67.9 68.4 66.2
Inbound 31.1 32.0 32.1 31.6 33.8
Total 100.0 100.0 100.0 100.0 100.0

Bed nights (million)


Outbound 669.0 701.3 689.6 703.3 614.5
Inbound 249.2 273.4 251.5 245.8 229.4
Total 918.2 974.7 941.1 949.1 843.9

% of Total
Outbound 72.9 72.0 73.3 74.1 72.8
Inbound 27.1 28.0 26.7 25.9 27.2
Total 100.0 100.0 100.0 100.0 100.0

p — provisional
† — excluding fares
Note: figures relate to trips of less than 1 year, including day trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)/Key Note

© Key Note Ltd 2010 19


Travel & Tourism Market Industry Overview

INDUSTRY STRUCTURE

Concentration
The UK travel and tourism market is subject to varying degrees of
concentration. For example, the three leading bus and coach operators in the
UK — Firstgroup PLC, Stagecoach Holdings PLC and Arriva PLC together
operate 49.5% of the estimated 44,000 buses in the UK. Within the airline
industry, the three leading aircraft operators include British Airways PLC,
easyJet Airline Company and Flybe Ltd, which account for almost half (46.8%)
of the 1,010 aircraft flown by UK carriers in 2009. The travel agencies sector is
a little less concentrated although the three largest operators — Thomas Group
PLC, owned by Thomas Cook; TUI Travel PLC, owned by Thomson, and First
Choice — still accounted for an estimated 25.8% of the travel agencies
operating in the UK in 2009. Within the rail sector, three operators —
FirstGroup PLC, Govia Ltd and Stagecoach — are involved in the operation of
10 of the 19 UK passenger train franchises.

Table 1.14: Estimated Market Shares of the Three Leading


Companies in Selected Areas of the UK Travel and Tourism
Market (%), 2010

Passenger Aircraft Operators


Bus and Coach Operators

Travel Agencies

Top Three Companies


1 19.3 23.1 11.5
2 15.9 16.7 9.4
3 14.3 7.0 4.9
Total top three
companies 49.5 46.8 25.8

Others 50.5 53.2 74.2

Total 100.0 100.0 100.0

Source: Key Note

© Key Note Ltd 2010 20


Travel & Tourism Market Industry Overview

Number of UK Businesses
There are a large number, and broad range, of UK businesses involved in the
travel and tourism market, including: accommodation providers, such as hotels
and holiday camps, etc.; transport companies, such as bus and coach, rail, air
and sea operators; and travel agencies and tour operators.

Transport Providers
In 2009, there were 1,730 UK VAT- and/or PAYE-based enterprises engaged in
urban and suburban passenger land transport — a category which essentially
covers scheduled bus and coach operators. The 2009 total of 1,730 was a
reduction of 150 enterprises or 8% on the number of enterprises operating in
2008. This reduction in numbers occurred across most of the turnover sizebands
with, for example, the number of enterprises with turnovers of £1m or more
falling from 270 in 2008 to 240 in 2009. Company takeovers and
amalgamations are likely to have accounted for some of these reductions.

Table 1.15: Number of UK VAT- and/or PAYE-Based Enterprises


Engaged in Urban and Suburban Passenger Land Transport by
Turnover Sizeband (£000 and number), 2005-2009

2005 2006 2007 2008 2009


Turnover (£000)
1-49 440 425 435 445 420
50-99 350 365 340 370 320
100-249 395 380 360 370 385
250-499 235 235 255 250 215
500-999 190 195 200 175 150
1,000-4,999 190 200 200 175 155
5,000+ 95 90 100 95 85

Total 1,895 1,890 1,890 1,880 1,730

Note: the 2008 and 2009 UK Business: Activity, Size and Location publications have been
enhanced by National Statistics to include enterprises that although not registered for
VAT, do have PAYE employers. This has extended the scope of the 2008 and 2009 tables
from the previous VAT-based enterprise tables.

Source: UK Business: Activity, Size and Location, National Statistics website ©


Crown copyright material is reproduced with the permission of the Controller of
HMSO (and the Queen’s Printer for Scotland)

© Key Note Ltd 2010 21


Travel & Tourism Market Industry Overview

In 2009, 725 UK VAT- and/or PAYE-based enterprises were engaged in


passenger air transport (both scheduled and non-scheduled). Due to their
relatively small turnovers, a high percentage of the non-scheduled air
passenger operators are likely to be one- or two-man businesses which offer
transport services on an ad-hoc basis, while the mass transportation of
passengers on non-scheduled flights is dominated by a small number of leading
charter airlines. Within the scheduled air transportation sector, the smaller
airlines usually serve small, niche segments, while the major low-cost scheduled
airlines serve the mass market. The 120 companies which have turnovers in
excess of £5m are likely to include all of the well-known UK scheduled and
charter airlines.

Table 1.16: Number of UK VAT- and/or PAYE-Based Enterprises


Engaged in Passenger Air Transport by Turnover Sizeband
(£000 and number), 2009

Number of Enterprises
Turnover (£000)
1-49 175
50-99 110
100-249 120
250-499 75
500-999 50
1,000-4,999 75
5,000+ 120

Total 725

Source: UK Business: Activity, Size and Location, National Statistics website ©


Crown copyright material is reproduced with the permission of the Controller of
HMSO (and the Queen’s Printer for Scotland)

Rail transportation is a relatively small sector in terms of the number of


operators. In 2009, just 80 UK VAT- and/or PAYE-based enterprises were
engaged in rail transport, including the largest 20 which had turnovers in
excess of £5m. The train companies which are included in the highest turnover
sizeband include the major operators such as National Express, FirstGroup and
Govia.

© Key Note Ltd 2010 22


Travel & Tourism Market Industry Overview

Table 1.17: Number of UK VAT- and/or PAYE-Based Enterprises


Engaged in Rail Transport by Turnover Sizeband
(£000 and number), 2009

Number of Enterprises
Turnover (£000)
1-49 15
50-99 10
100-249 15
250-499 5
500-999 5
1,000-4,999 10
5,000+ 20

Total 80

Source: UK Business: Activity, Size and Location, National Statistics website ©


Crown copyright material is reproduced with the permission of the Controller of
HMSO (and the Queen’s Printer for Scotland)

In 2009, there were 595 VAT- and/or PAYE-based sea and coastal passenger
water transport companies and 170 VAT- and/or PAYE-based inland passenger
water transport companies registered in the UK. The sea and coastal transport
sector includes the large ferry and cruise operators.

Table 1.18: Number of UK VAT- and/or PAYE-Based Enterprises


Engaged in Sea and Coastal Passenger Water Transport and
Inland Passenger Water Transport by Turnover Sizeband
(£000 and number), 2009

Sea and Coastal


Passenger Water Inland Passenger
Transport Water Transport
Turnover (£000)
1-49 290 50
50-99 90 35
100-249 95 45
250-499 30 15

Table continues...

© Key Note Ltd 2010 23


Travel & Tourism Market Industry Overview

Table 1.18: Number of UK VAT- and/or PAYE-Based Enterprises


Engaged in Sea and Coastal Passenger Water Transport and
Inland Passenger Water Transport by Turnover Sizeband
(£000 and number), 2009

...table continued

Sea and Coastal


Passenger Water Inland Passenger
Transport Water Transport
Turnover (£000) (cont.)
500-999 35 15
1,000-4,999 20 10
5,000+ 35 0

Total 595 170

Source: UK Business: Activity, Size and Location, National Statistics website ©


Crown copyright material is reproduced with the permission of the Controller of
HMSO (and the Queen’s Printer for Scotland)

Accommodation Providers
There was a reduction of 2.8% in the number of UK VAT- and/or PAYE-based
enterprises engaged as hotels, which stood at 9,910 in 2009. Much of this
reduction was due to hotels with smaller turnovers. For example, there was a
slide of 7% to 1,800 hotels with turnovers of £99,000 or less, and a fall of 5.4%
to 6,455 hotels with turnovers of £499,000 or less. By contrast, there was a 4%
increase in hotels with sales of between £1m and £5m, and a 7.2% advance in
hotels with sales of more than £5m. The reduction in the number of smaller
hotels operating in the market may be due to the current economic climate
and the difficulty that some of these hotels have experienced while operating
in a highly competitive market.

© Key Note Ltd 2010 24


Travel & Tourism Market Industry Overview

Table 1.19: Number of UK VAT- and/or PAYE-Based Enterprises


Engaged as Hotels and Similar Accommodation, by Turnover
Sizeband (£000 and number), 2005-2009

2005 2006 2007 2008 2009


Turnover (£000)
1-49 280 300 300 535 490
50-99 1,350 1,210 1,130 1,400 1,310
100-249 2,550 2,470 2,385 2,840 2,720
250-499 1,945 1,875 1,845 2,050 1,935
500-999 1,440 1,440 1,425 1,530 1,530
1,000-4,999 1,260 1,335 1,400 1,495 1,555
5,000+ 280 295 325 345 370

Total †9,110 8,925 8,810 10,195 9,910

† — does not sum at source


Note: the 2008 and 2009 UK Business: Activity, Size and Location publications have been
enhanced by National Statistics to include enterprises that although not registered for
VAT, do have PAYE employers. This has extended the scope of the 2008 and 2009 tables
from the previous VAT-based enterprise tables.

Source: UK Business: Activity, Size and Location, National Statistics website ©


Crown copyright material is reproduced with the permission of the Controller of
HMSO (and the Queen’s Printer for Scotland)

In addition to hotels, a variety of other types of accommodation — including


camping and caravan sites, holiday centres and holiday villages — are available
to tourists and travellers in the UK. The majority of these enterprises tend to
be small operators with turnovers of less than £249,000. As
Table 1.20 illustrates, 3,540 of the 5,175 UK VAT- and/or PAYE-based
enterprises engaged in the provision of other short-stay accommodation
(68.4%) came under this category in 2009, with just 90 enterprises having
turnovers of more than £5m.

© Key Note Ltd 2010 25


Travel & Tourism Market Industry Overview

Table 1.20: Number of UK VAT- and/or PAYE-Based Enterprises


Engaged in the Provision of Holiday and Other Short-Stay
Accommodation by Turnover Sizeband (£000 and number),
2009

Camping/ †Holiday Centres/


Caravan Sites Holiday Villages Total
Turnover (£000)
1-49 65 730 795
50-99 275 980 1,255
100-249 455 1,035 1,490
250-499 355 355 710
500-999 260 190 450
1,000-4,999 250 135 385
5,000+ 55 35 90

Total 1,715 3,460 5,175

† — includes youth hostels, mountain refuges, other self-catering holiday


accommodation and other tourist or short-stay accommodation

Source: UK Business: Activity, Size and Location, National Statistics website ©


Crown copyright material is reproduced with the permission of the Controller of
HMSO (and the Queen’s Printer for Scotland)

Travel Agents and Tour Operators


In 2009, there was an increase of 160 companies (2.4%) to 6,815 in the number
of UK VAT- and/or PAYE-based enterprises engaged as travel agencies, tour
operators and other reservation service and related activities. Almost a quarter
of these enterprises (24.1%) had turnovers of between £100,000 and £249,000
and a further 15.8% had turnovers of between £1m and £5m. The smallest
percentage of travel agents and tour operators — 505 (7.4% of the total) —
had turnovers in excess of £5m in 2009. This group is likely to include many of
the well-known high-street brands.

© Key Note Ltd 2010 26


Travel & Tourism Market Industry Overview

Table 1.21: Number of UK VAT- and/or PAYE-Based Enterprises


Engaged as Travel Agencies, Tour Operators and Other
Reservation Service and Related Activities by Turnover
Sizeband (£000 and number), 2005-2009

2005 2006 2007 2008 2009


Turnover (£000)
1-49 760 765 780 915 930
50-99 725 725 770 895 870
100-249 1,015 1,030 1,025 1,540 1,645
250-499 685 645 680 990 965
500-999 705 715 640 775 825
1,000-4,999 1,070 1,090 1,055 1,045 1,075
5,000+ 445 440 450 495 505

Total 5,405 5,410 5,400 6,655 6,815

Note: the 2008 and 2009 UK Business: Activity, Size and Location publication have been
enhanced by National Statistics to include enterprises that although not registered for
VAT, do have PAYE employers. This has extended the scope of the 2008 and 2009 tables
from the previous VAT-based enterprise tables. The number of travel agents and tour
operators given in this table differs from the number given in Chapter 6 — The Outbound
Market — owing to the fact that the figures in this table refer to VAT- and/or PAYE-based
travel agents and tour operators, whereas the data in Chapter 6 relates to retail outlets
operated by travel agents.

Source: UK Business: Activity, Size and Location, National Statistics website ©


Crown copyright material is reproduced with the permission of the Controller of
HMSO (and the Queen’s Printer for Scotland)

Employment
According to National Statistics in its Annual Abstract of Statistics, the number
of employee jobs in the hotels and restaurants, travel agents, air transport and
water transport sectors stood at 2.4 million in 2008, a figure relatively
unchanged on 2007. Key Note estimates that all sectors of these markets could
be affected by job losses in 2009, with the total falling by a little over 1%.

Employment numbers for the road and rail passenger industries are not given
in the Annual Abstract of Statistics. Key Note estimates, however, that these
sectors could add another 100,000-plus to the number of people employed in
the UK travel and tourism industry.

© Key Note Ltd 2010 27


Travel & Tourism Market Industry Overview

Table 1.22: Number of UK Employee Jobs in the Hotels and


Restaurants, Travel Agents, Air Transport and Water Transport
Sectors (000), 2005-2009

2005 2006 2007 e2008 e2009

Hotels and restaurants 1,855 1,840 1,826 1,835 1,810


Travel agents 453 443 452 462 455
Air transport 88 90 90 85 85
Water transport 19 18 17 17 17

Total 2,415 2,391 2,385 2,399 2,367

e — Key Note estimates

Source: Annual Abstract of Statistics, National Statistics website © Crown


copyright material is reproduced with the permission of the Controller of HMSO
(and the Queen’s Printer for Scotland)

Distribution
The preference for UK outbound holidaymakers to organise their own travel
and accommodation arrangements rather than book inclusive holidays or
package tours continued to gather pace in 2009 with the percentage of
independently arranged trips for outbound holidays reaching a 5-year high of
62.3%. As in the past, the availability of low-cost flights and the ease and
convenience of booking travel and accommodation via the Internet are
helping to sustain and boost this segment of the market.

Table 1.23: The UK Outbound Holiday Market by Type of


Arrangement by Volume (%), 2005-2009

2005 2006 2007 2008 p2009

Independent holiday 57.0 58.2 58.9 60.7 62.3


Inclusive holiday 43.0 41.8 41.1 39.3 37.7

Table continues...

© Key Note Ltd 2010 28


Travel & Tourism Market Industry Overview

Table 1.23: The UK Outbound Holiday Market by Type of


Arrangement by Volume (%), 2005-2009

...table continued

2005 2006 2007 2008 p2009

Total 100.0 100.0 100.0 100.0 100.0

p — provisional
Note: figures relate to trips of less than 1 year, including day trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)/Key Note

MARKET POSITION
According to the World Travel & Tourism Council (WTTC), the UK is forecast to
be the world’s seventh-largest generator of travel and tourism GDP in 2010
with a figure of some $231.1bn, which equates to 4% of the 2010 global travel
and tourism total of $5.75bn. The US is forecast to produce 23.9% of global
travel and tourism GDP followed by the People’s Republic of China (PRC) with
8.7%. France is expected to be the leading European travel and tourism market
with 4.9% of the total.

Table 1.24: Countries Expected To Produce the Largest Amount


of Travel and Tourism Gross Domestic Product
($bn and %), 2010

$bn % of Total

US 1,375.9 23.9
PRC 499.9 8.7
Japan 459.3 8.0
France 284.6 4.9
Germany 273.4 4.8
Spain 237.9 4.1
UK 231.1 4.0
Italy 217.1 3.8
Canada 136.1 2.4

Table continues...

© Key Note Ltd 2010 29


Travel & Tourism Market Industry Overview

Table 1.24: Countries Expected To Produce the Largest Amount


of Travel and Tourism Gross Domestic Product
($bn and %), 2010

...table continued

$bn % of Total
Australia 123.1 2.1
Others 1,912.6 33.3

Total 5,751.0 100.0

PRC — People’s Republic of China

Source: Tourism Satellite Accounting Forecasts 2010, World Travel & Tourism
Council

KEY TRENDS
In 2009, the UK domestic travel and tourism market benefited from the
‘staycation’ trend as domestic consumers turned away from overseas holidays
due to the recession, the low value of sterling and other negative factors. The
result was that expenditure, the number of trips and bed nights all observed
increases within the domestic travel and tourism market in comparison to 2008
figures.

The UK outbound travel and tourism market was significantly affected by the
economic downturn in 2009, which resulted in outbound expenditure falling
to its lowest level since 2004 and the number of outbound trips made sliding
to their lowest level since 2001. Particularly affected were inclusive holiday
trips, which fell by 19% from 2008 levels, while the number of independently
arranged holiday trips declined by 13.2%.

Spain and France remain the two main destinations for UK outbound travellers
and tourists, although in 2009, the numbers of trips made to both of these
destinations were at their lowest levels since at least 2005. The numbers of trips
made to each of the other 20 most visited outbound destinations were also all
lower in 2009 compared to 2008.

The recession took its toll on the UK inbound travel and tourism market in 2009,
and falls were recorded in the number of trips made and bed nights stayed.
On the positive side, inbound trips for holiday purposes did increase by 4.6%
from 2008, although inbound trips for business purposes fell by 19% in 2009
— their largest decline in more than a decade.

© Key Note Ltd 2010 30


Travel & Tourism Market Industry Overview

As in the UK, 2009 was a difficult year for the world tourism industry with
international tourist arrivals estimated to have fallen by 4.2% in 2009 and
international tourism receipts projected to have declined by 9.6%.
International tourist arrival numbers were particularly affected in the first
three quarters of 2009 although in the final quarter of the year, the number
of arrivals did increase compared to the comparable period in 2008.

Corporate Activity
• In December 2009, BAA sold Gatwick airport to Global Infrastructure
Management, LLC, which is part of Global Infrastructure Partners, for £1.5bn.

• In April 2010, Arriva PLC announced that it was recommending a takeover


bid for the company from Deutsche Bahn, the German state-backed rail
company. Deutsche Bahn already operates the Chiltern rail franchise in the
UK and the London Overground.

• In April 2010, British Airways PLC and Iberia Líneas Aéreas de España SA
announced that they had signed a definite merger agreement which will
create Europe’s third-largest airline by revenue. For BA and Iberia, a merger
would mean keeping pace with Deutsche Lufthansa AG and Franco-Dutch
airline Air France-KLM. The merger is expected to be completed by the end
of 2010.

• It also now seems likely that British Airways and Iberia will form a
transatlantic alliance with American Airlines. In July 2010, the European
Commission approved the partnership which gives the carriers antitrust
immunity so they can collaborate on pricing, scheduling, marketing,
frequent-flier programs and other areas. However, the pact still needs
clearance from the US Department of Transportation.

• In December 2009, Flyglobespan, a low-cost airline based in Edinburgh, went


into administration due to financial problems. Its main bases included
Glasgow International airport, Edinburgh airport and Aberdeen airport. It
also operated flights from London Gatwick.

• In March 2010, Highland Airways Ltd went into administration. The


Inverness-based airline operated a fleet of nine aircraft, running services
between Cardiff and Anglesey Stornoway and Benbecula in the Outer
Hebrides and Oban and the Inner Hebrides.

• In April 2009, the online travel company Freedom Direct Holidays Ltd ceased
trading. The company, which traded as freedomdirect.co.uk and
hotsunholidays.co.uk, sold air holiday packages to the Mediterranean, the
Canary Islands and Turkey, as well as to medium- and long-haul destinations.

• In December 2009, the Allbury Travel Group ceased trading. The company,
which traded as Libra Holidays, Argo Holidays and JetLife, sold air package
holidays and flights departing from Gatwick, Manchester, Newcastle,
Birmingham and Leeds-Bradford airports, going to Greece, Cyprus and Egypt.
These package deals were principally sold through travel agents.

© Key Note Ltd 2010 31


Travel & Tourism Market Industry Overview

• In July 2010, Goldtrail Travel Ltd, which traded as Goldtrail Holidays, Goldtrail
Travel and Sunmar, ceased trading. It operated flights and holiday packages
from many UK airports going to Turkey and Greece, which it largely sold
through travel agents. Approximately 15,000 people who travelled with
Goldtrail were trapped overseas, and a further 50,000 had holidays booked
with the company before it went bankrupt.

• The Go-Ahead Group continues to expand its bus operations through


acquisitions. In September 2009, the group entered into an agreement to
acquire the assets of East Thames Buses from Transport for London (TfL), and
in December 2009, Go-Ahead completed the acquisition of Plymouth CityBus
from Plymouth City Council.

• TUI PLC acquired a number of companies in 2009. Acquisitions in the


company’s mainstream sector include the establishment of a strategic
venture with Sunwing, a leading Canadian tour operator; a hotel
management company in Turkey; and 15 travel agencies in Germany. In the
Activity sector, TUI consolidated its position in the student sports tours
market with the acquisition of SET Sports Tours, which organises sports tours
and festivals for schools, clubs and universities. In addition, TUI increased its
presence in the English-language teaching market with the acquisition of the
Hampstead School of English. In its Accommodation and Destinations Sector,
TUI acquired Select Tours, a leading Australian premier cruise handling
operator. In July 2010, TUI also signed a letter of intent with Royal Air Maroc
(RAM), agreeing to RAM taking a majority stake in Jet4You. Jet4You is TUI
Travel’s Moroccan carrier which operates low-cost routes between Morocco
and European cities.

• In July 2010, Thomas Cook announced that it had agreed to buy Öger Tours,
a German tour operator specialising in package holidays to Turkey.

LEGISLATION
The UK travel and tourism market is affected by a wide range of legislative
measures across its various areas of activity.

© Key Note Ltd 2010 32


Travel & Tourism Market Industry Overview

Development of Tourism Act 1969


The British Tourist Authority (BTA), together with the Scottish, Welsh and
English tourist boards, was created by the Development of Tourism Act
1969. The BTA’s role included encouraging people living overseas to visit Great
Britain and people living in Great Britain to take their holidays there; along
with bolstering the provision and improvement of British tourism facilities. In
1998, responsibility for tourism was devolved to Scotland and Wales and the
BTA was designated a ‘cross border’ authority under the devolutions
legislation. In 2003, the BTA and the English Tourist Board were merged to
create VisitBritain which became the trading name for the BTA. VisitBritain was
created to promote Great Britain overseas and to co-ordinate the marketing
of England domestically. To ensure that there was a clear delineation between
VisitBritain’s international and domestic roles, the England Marketing Advisory
Board (EMAB) was created to oversee the creation, implementation and
delivery of a marketing strategy for England by VisitBritain. In April 2009,
VisitEngland, a new strategic leadership body, representing the public and
private sector stakeholders of English tourism, came into being.

Outbound Market
Organisations which sell package holidays in the UK must comply with the
Package Travel, Package Tours and Package Holiday Regulations 1992. These
regulations provide consumers with statutory legal rights against tour
operators, in that all tour operators selling packages must be bonded or
protect the prepayments that they hold. Consumers also have rights in relation
to changes made to their holidays or if the brochure was misleading. These
regulations also enable dissatisfied holidaymakers to pursue their case with a
single supplier, the travel organiser, instead of with individual suppliers such
as airlines or hoteliers. Where a tour operator has failed to honour its
contractual obligations to a customer, it may be liable to pay compensation.

Air Travel Organisers’ Licensing (ATOL) is managed by the Civil Aviation


Authority (CAA) and provides comprehensive protection for consumers in the
UK who buy air holidays and flights from travel organisers. All tour operators
selling air holiday packages, charter flights and certain scheduled flights must
hold a licence from the CAA. If a licence holder fails, the CAA ensures its
customers are either repatriated to the UK or receive a refund of payments
made. Repatriation costs and refunds are met by the Air Travel Trust Fund
(ATTF), which is funded by a per traveller contribution.

Reforms to the Package Travel Directive are currently being considered by the
European Commission. Should the review progress as expected, a new directive
could be introduced in 2012.

© Key Note Ltd 2010 33


Travel & Tourism Market Industry Overview

Airports
Airports are subject to a wide range of domestic, European and international
legislation. New measures are also being introduced on an ongoing basis, with
one of the latest being the Government’s decision to introduce body scanners
at UK airports. A number of early legislation measures also remain important
including the Airports Act 1986 and the Airports (Northern Ireland) Order 1994
under which the CAA has powers of economic regulation for airports in the
UK. An airport with an annual turnover of at least £1m requires a ‘permission
to levy airport charges’ from the CAA. The exceptions are airports managed by
the Secretary of State or owned or managed by the CAA. The CAA can
investigate the conduct of such airports and if it finds that the airport operator
is unreasonably discriminating between users, unfairly exploiting its
bargaining position or engaging in predatory pricing it can impose conditions
to remedy the situation. The Government has designated three airports
(Heathrow, Gatwick and Stansted) for detailed price control. This means that
for these airports, the CAA sets a price cap to limit the amount that can be
levied by way of airport charges for a 5-year period.

Air Transportation
The air transportation sector is subject to a wide range of legislation, including
domestic, European and international. Examples include aircraft navigation —
The Air Navigation Order 2005; aircraft noise — The Aeroplane Noise
Regulations 1999; aviation insurance — The Civil Aviation (Insurance)
Regulations 2005; consumer rights — The Civil Aviation (Denied Boarding,
Compensation and Assistance) Regulations 2005; air travel organisers’ licensing
— The Civil Aviation (Air Travel Organisers’ Licensing) Regulations 1995; and
health and safety — Civil Aviation (Working Time) Regulations 2004.

Another piece of legislation with topical interest is the EU Regulation on


Denied Boarding and Cancellation (EU 261/2004) which became extremely
relevant during the exceptional and extended disruption created by the
Icelandic volcanic ash cloud. This particular regulation entitles passengers to
care and assistance including the right to:

• meals and refreshments in reasonable relation to the waiting time

• hotel accommodation where a stay of one or more nights becomes necessary

• two telephone calls, telex or fax messages, or e-mails.

Passengers are not entitled to additional financial compensation as would be


the case if the cause of the disruption were the responsibility of the airline.

Bus and Coach


A range of legislative measures affect the operators of bus and coach services
and also the local authorities who oversee some of these services. The list
includes the Local Transport Act 2008, The Concessionary Bus Travel Act 2007
and the Disability Discrimination Acts of 1995 and 2005.

© Key Note Ltd 2010 34


Travel & Tourism Market Industry Overview

Sea Passenger Transportation


Sea passenger transportation is also governed by a wide range of safety,
accessibility and other legislation requirements. In a recent ruling, ferry
passengers are now expected to be given the right to claim compensation if
their journey is delayed or cancelled. The European Parliament has voted in
favour of giving sea passengers similar rights to airline customers, who can
claim compensation if a European flight is disrupted. Currently, ferry
passengers can claim a refund or book a seat on the next available crossing if
things go wrong. If the new rules are adopted, they will be entitled to a refund
if the journey is delayed by more than 90 minutes or if it is cancelled; food and
accommodation of up to three nights if they are stranded; and compensation
of up to 50% of the ticket price. The new rules are likely to come into force by
the end of 2012.

KEY TRADE ASSOCIATIONS

Air Transport Users Council


The Air Transport Users Council (AUC) is the consumer watchdog for the airline
industry. It was established by the CAA to help protect the interests of air
travellers. The principal focus of the AUC is on matters that directly affect the
interface between airlines and airports, and air passengers. In general, these
cover aspects falling outside the CAA’s regulatory remit. The AUC is not
constrained from expressing an independent view on any issue that it judges
to have a significant direct operational impact on air service customers, or
where its experience in the field of customer/operator relations enables it to
make a distinctive contribution on matters subject to regulation, or in response
to formal consultations.

The Air Travel Insolvency Protection Advisory Committee


The Air Travel Insolvency Protection Advisory Committee (ATIPAC) is a
consultative Committee that includes a balance of travel industry nominees,
and consumer and independent representatives. It was set up by the CAA and
the Department for Transport (DfT) in 2000 to replace the Air Travel Trust
Committee (ATTC). It meets four times a year at the CAA. ATIPAC’s membership
includes a wide range of senior travel industry figures, as well as consumer and
CAA representatives. ATIPAC’s role is to advise the CAA, the Government and
the Trustees of the Air Travel Trust on financial protection for air travellers and
holidaymakers.

© Key Note Ltd 2010 35


Travel & Tourism Market Industry Overview

Airports Council International


The Geneva-based Airports Council International (ACI) was created in 1991 and
is an association for the world’s airports. It is a non-profit organisation (NPO),
whose prime purpose is to advance the interests of airports and to promote
professional excellence in airport management and operations. The most
important relationship is with the International Civil Aviation Organization
(ICAO), where international standards for air transport are debated and
developed. ACI defends airports’ positions and develops standards and
recommended practices in the areas of safety, security and environmental
initiatives. It also advances and protects airport interests relating to important
policy changes on airport charges and regulation, thus strengthening the hand
of airports in their dealings with airlines.

Airport Operators Association


The Airport Operators Association (AOA) is the trade association that
represents the interests of British airports and is the principal body with which
the UK Government and regulatory authorities consult on airport matters. The
mission of the AOA is to influence governments and regulators, at national,
European and international levels in order to secure policy outcomes that
contribute to conditions for sustainable growth within the airport sector. The
AOA has 72 airport members which represent the UK’s international hub and
its major regional airports, as well as those who serve community, business and
leisure aviation.

A further 160-plus companies are Associate Members of the AOA and represent
a range of suppliers to the airports industry including airlines, air traffic
services, equipment manufacturers and suppliers, fuel companies, retailers,
information and security specialists, and various consultancy services.

Association of European Airlines


The Association of European Airlines (AEA) is an NPO association. Its main role
is to represent its membership of 36 major service and scheduled network
carrier airlines to the institutions of the EU, the European Civil Aviation
Conference and to any other institutional organisations or associations and
individual governments of relevance. In order to achieve its objectives, the AEA
collects, analyses and interprets information and also undertakes research.

Association of Independent Tour Operators


The Association of Independent Tour Operators (AITO) is an organisation
representing more than 140 specialist UK tour operators. AITO members are
independent companies, most of them owner-managed, and they specialise in
particular destinations or types of holiday.

© Key Note Ltd 2010 36


Travel & Tourism Market Industry Overview

British Air Transport Association


The British Air Transport Association (BATA) is the trade association for
UK-registered airlines. The Association’s membership covers a wide range of
airline services and produces over 80% of UK airline output. Its role is to
represent the industry to government, regulators and the media. BATA is active
in bringing member airlines together and developing common positions on a
wide range of industry issues including safety, security, environmental policy,
infrastructure capacity and regulation.

Civil Aviation Authority


The Civil Aviation Authority (CAA) is a public corporation, which was
established by Parliament in 1972 as an independent specialist aviation
regulator and a provider of air traffic services. The CAA advises the
Government on aviation issues, represents consumer interests, conducts
economic and scientific research, produces statistical data and provides
specialist services.

The CAA’s responsibilities include:

• air safety

• economic regulation

• airspace regulation

• consumer protection

• environmental research and consultancy.

In addition, the CAA:

• ensures that UK civil aviation standards are set and achieved

• regulates airlines, airports and national air traffic services’ economic activities
and encourages a diverse and competitive industry

• manages the UK’s principal travel protection scheme, the ATOL scheme;
licenses UK airlines; and manages consumer issues

• brings civil and military interests together to ensure that the airspace needs
of all users are met as equitably as possible.

European Low Fares Airline Association


The European Low Fares Airline Association (ELFAA) was formed in 2003 to
represent and protect the views of the low-fare airlines and their customers.
ELFAA’s primary objective is to ensure that European policy and legislation
promote free and equal competition to enable the continued growth and
development of low fares into the future, thereby allowing a greater number
of people to travel by air. ELFAA has a membership of ten airlines including
easyJet, Flybe, Jet2.com and Ryanair.

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Travel & Tourism Market Industry Overview

Guild of European Business Travel Agents


The Guild of European Business Travel Agents (GEBTA) was founded in January
1990 in the UK. There are now seven National Guilds with over 300 members
in Germany, the Republic of Ireland, Italy, the Netherlands, Portugal, Spain and
the UK. GEBTA’s mission is to champion the interests of the European business
travel sector, travellers and the travel management companies who serve
them. The Guild also provides a single clear message of the sector to European
policy makers.

Guild of Travel Management Companies


Founded in 1967, the Guild of Travel Management Companies (GTMC) is made
up of a diverse range of travel management companies, from the world’s
largest multiple to small independent specialists. The key activity of the GTMC
is to lobby all those that have an impact on the business travel of members’
clients, be they travel suppliers, government or EU legislators, opinion formers
or the media. It is the key thrust of the GTMC’s activities to provide a better
deal for organisations and their travelling employees.

According to the GTMC, its members account for some 80% of business travel
expenditure in the UK and facilitate more than 11 million transactions,
including the sale of over 6 million airline tickets each year.

International Air Transport Association


The International Air Transport Association (IATA) is the prime vehicle for
inter-airline co-operation. The Association’s members comprise some 230
airlines — including the world’s leading passenger and cargo airlines — and
together they represent some 93% of scheduled international air traffic.

The IATA seeks to improve understanding of the industry among


decision-makers and increase awareness of the benefits that aviation brings to
national and global economies. It fights for the interests of airlines across the
globe, challenges unreasonable rules and charges, holds regulators and
Governments to account and strives for sensible regulation.

The IATA is also involved in the worldwide accreditation of travel agents, with
the exception of the US where this is done by the Airlines Reporting
Corporation (ARC). However, for practical purposes, this and giving permission
to sell airline tickets from the participating carriers is achieved through
national member organisations. The IATA also regulates the shipping of
dangerous goods and publishes the IATA Dangerous Goods Regulations
manual, a globally accepted field source reference for airlines shipping
hazardous materials.

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Travel & Tourism Market Industry Overview

International Civil Aviation Organization


The International Civil Aviation Organization (ICAO) is an agency of the United
Nations (UN) and develops the principles and techniques of international air
navigation. It also fosters the planning and development of international air
transport to ensure safe and orderly growth.

The ICAO Council adopts standards and recommended practices concerning air
navigation, prevention of unlawful interference, and facilitation of
border-crossing procedures for international civil aviation. In addition, the
ICAO defines the protocols for air accident investigation which is followed by
transport safety authorities in countries signatory to the Convention on
International Civil Aviation, commonly known as the Chicago Convention.

Passenger Shipping Association


The Passenger Shipping Association (PSA) is the trade association for the cruise
and ferry industry in the UK. The PSA represents all passenger shipping
interests within the UK, with one of its main aims being the promotion of travel
by sea to the UK public. The PSA is run from a London-based office and is
supported by a Council of Management, made up of seven Cruise and five ferry
members.

The Travel Association


The Travel Association (ABTA) was formed in 1950 by 22 leading travel
companies and currently represents over 5,000 travel agencies and more
than 900 tour operators throughout the British Isles. Its membership ranges
from small, specialist tour operators and independent travel agencies, to
publicly listed companies and household names, as well as call centres, Internet
booking services and high street shops. All such establishments carry the ABTA
logo.

ABTA’s main aims are to maintain high standards of trading practice for the
benefit of its members, the travel industry at large and the consumers that they
serve, and to create as favourable a business climate as possible for its
members. In July 2008, ABTA amalgamated with the Federation of Tour
Operators (FTO) to create a more powerful and authoritative voice for the
travel industry.

UKinbound
UKinbound is a trade association representing the interests of the UK’s
inbound tourism businesses. The association has around 250 members and is
the only association to focus exclusively on the inbound sector. UKinbound
represents a diverse membership of tourism providers who organise tours in
the UK, provide accommodation in the UK or provide cultural, sporting and
other leisure activities in the UK. Membership includes accommodation
providers, destination marketing companies, attractions, tourism service
providers, inbound tour operators and UK ground handlers.

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Travel & Tourism Market Industry Overview

World Tourism Organization


The World Tourism Organization (UNWTO/OMT) is a specialised agency of the
UN and the leading international organisation in the field of tourism. It serves
as a global forum for tourism policy issues and a practical source of tourism
know-how.

UNWTO plays a central and decisive role in promoting the development of


responsible, sustainable and universally accessible tourism, paying particular
attention to the interests of developing countries.

The organisation encourages the implementation of the Global Code of


Ethics for Tourism, with a view to ensuring that member countries, tourist
destinations and businesses maximise the positive economic, social and cultural
effects of tourism and fully reap its benefits, while minimising its negative
social and environmental impacts.

Its membership includes 154 countries, 7 territories and over 400 Affiliate
Members representing the private sector, educational institutions, tourism
associations and local tourism authorities.

UNWTO has regional representatives in Africa, the Americas, East Asia and the
Pacific, Europe, the Middle East and South Asia. It has its headquarters in
Madrid.

World Travel & Tourism Council


The World Travel & Tourism Council (WTTC) is the forum for business leaders
in the travel and tourism industry. Its membership includes the Chief Executives
(CEs) of around 100 of the world’s leading travel and tourism companies and
it is the only body representing the private sector in all parts of the travel and
tourism industry worldwide.

The WTTC works to raise awareness of travel and tourism as one of the world’s
largest industries. Membership of the Council is by invitation only.

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Travel & Tourism Market PEST Analysis

2. PEST Analysis

POLITICAL FACTORS

Air Travel Insolvency Protection Advisory Committee Urges


Adoption of ‘Flight Plus’ Air Travel Organisers’ Licence
The Air Travel Insolvency Protection Advisory Committee (ATIPAC) has
reiterated its support for the ‘flight plus’ Air Travel Organisers’ Licensing
(ATOL) reform proposals put forward by the Department of Transport (DfT).
The Committee believes reform of ATOL is long overdue and that the new
Government should not miss the opportunity to bring clarity to consumers and
to extend financial protection arrangements to a greater number of
holidaymakers.

All holiday companies selling air holiday packages and flights in the UK are
required by law to hold an ATOL licence. Under this licence, which is granted
after a company has met the Civil Aviation Authority’s (CAA’s) licensing
requirements, each ATOL holder must contribute to a protection fund called
the Air Travel Trust Fund (ATTF). In the event of an ATOL holder’s failure, the
ATOL Scheme ensures customers who booked and are contracted with the
ATOL holder for an air holiday package or a flight do not lose their payment
or are not stranded abroad.

ATIPAC has a long-standing concern with the confusion experienced by


consumers over their financial protection arrangements when booking an air
holiday, especially as an increasing proportion of holidays are sold in ways that
were not envisaged by the existing regulations. Expanding the scope of ATOL
to a ‘flight plus’ model will help to end the current confusion. The ‘flight plus’
system will require ATOL protection for all sales of flights plus any other
holiday component such as hotels or car hire, regardless of the terms and
conditions of booking. It would also extend ATOL coverage to airlines
(currently specifically excluded from the ATOL system) who sell other
components. These airlines would then have to pay the ATOL Protection
Contribution, which is currently £2.50 per person.

Air Passenger Duty


The Travel Association (ABTA) is calling upon the Government to publish its
consultation on replacement options for Air Passenger Duty (APD) at the
earliest opportunity. The Government has announced that it will report back
to Parliament in the autumn of 2010 on proposals to reform APD and to replace
it with a per-plane duty (PPD). ABTA is keen to start policy discussions with the
Government on the exact details and level of any new aviation tax. ABTA has
indicated that, while it broadly supports a change to a PPD, which would
incentivise airlines to fly more efficiently, for example with fuller passenger
loads, the level and mechanics of the new tax is of concern. A poorly designed
tax system that ignores the valid concerns of the industry can be damaging to
the travel sector.

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Travel & Tourism Market PEST Analysis

The tax on aviation — through APD — has risen disproportionately in the UK


in recent years and thus has the potential to have a very detrimental effect on
outbound and inbound tourism to the UK. The tax on long-haul travel in
particular (B and C — which carry the highest level of aviation tax) has led to
mounting international concern. Previously agreed increases in APD mean that
long-haul travel will bear the brunt of the increases which are due to be
introduced in November 2010.

Government Needs To Expand Airports


The Government’s decision to rule out building further runways at airports in
the South East of England could seriously undermine Britain’s connectivity and
competitiveness, according to a report by the Institution of Civil Engineers
(ICE). Following its election, the Coalition Government cancelled plans for a
third runway at London’s Heathrow airport and said it would block runways
at Stansted and Gatwick as part of a programme for a low-carbon economy.
In its report Rethinking Aviation the ICE acknowledged the need to address
the environmental impact of unrestrained growth in demand for air travel but
said that the Government must consider long-term airport infrastructure
needs. Air transport and airport infrastructure are vital to the UK’s
international connectivity and prosperity, and as a trading island-nation and
popular tourist destination, the UK depends on its ability to connect with the
rest of the world. Capacity constraints could result in international carriers
abandoning Heathrow, Britain’s biggest airport, in favour of larger and more
economically attractive northern European hubs.

Ferry Operators in Disagreement with Dover Harbour Board


The three largest customers of Dover Harbour Board — SeaFrance, P&O Ferries
and Norfolk-line are in disagreement with the port of Dover over the use of
£60m of cash that they provided to fund a second terminal at the port
(Terminal 2) and at the proposed 35% increase in their tariffs over the next
3 years. The ferry companies have learned that, due to the possible
privatisation of the Dover Harbour Board, Terminal 2 is no longer an immediate
priority and there would be no obligation on the new owner to actually build
it. The Dover Board has applied to the Secretary of State for Transport for the
authority to restructure the organisation in order to introduce private capital.
In July 2010, the Government announced a further representation period on
the Board’s ‘voluntary privatisation’ scheme.

BAA Wins Appeal Over Airports Break-Up


In March 2009, the Competition Commission (CC) published its final decision in
relation to its investigation into the supply of UK airport services by BAA. The
decision’s key structural remedy called for the disposal by BAA of three of its
airports, namely Gatwick, Stansted and either Glasgow or Edinburgh. In May
2009, BAA applied to the Competition Appeal Tribunal (CAT) to review the CC’s
decision. In spite of this the airport operator, BAA, sold Gatwick in December
2009.

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In December 2009, the CAT upheld part of BAA’s application for review, which
could end up deferring future sales of Stansted and Glasgow or Edinburgh
airports for some years. The CC, which claims BAA’s near-monopoly over
Britain’s biggest airports is harming passengers’ interests, has announced its
intention to appeal against this judgement.

The Package Travel Directive


The Package Travel Directive (Council Directive 90/314/EEC) was adopted in
1990 and has been an important cornerstone in the protection of European
consumers going on holidays.

The directive covers pre-arranged holiday packages which combine at least two
of the following:

• transport

• accommodation

• other tourist services not ancillary to transport or accommodation and


accounting for a significant proportion of the package.

Consumers are protected where: (a) at least two of the above elements are sold
at an inclusive price and (b) the service covers a period of more than 24 hours
or includes an overnight stay.

The directive defines a range of the organisers’ and retailers’ obligations and
liabilities as well as the related consumer rights. The Member States have been
free to add more stringent rules to protect consumers in their national laws.

The development of the Internet and the emergence of low-cost air carriers
have, however, revolutionised the way in which consumers organise their
holidays and an increasing number of EU citizens now arrange their holidays
themselves, instead of buying pre-arranged travel packages. As a result of
these developments, the number of consumers who are protected under the
Package Travel Directive (PTD) when going on holiday has been falling steadily.
In the UK, for example, it is estimated that less than 50% of passengers on
leisure flights are protected under the Directive, compared to 98% in 1997. The
use of travel websites which allow holidaymakers to put together their own
‘dynamic packages’ has also created legal grey zones and uncertainty for both
businesses and consumers. As a result, the PTD, which dates back to 1990, is
now considered to be in need of an overhaul so that it better reflects modern
consumers’ needs and new business models.

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To address these issues, the European Commission launched its own review of
the PTD in November 2009. The review asked for opinions from the travel
industry on the scope of the PTD; the level of financial protection consumers
should expect from travel agents and tour operators, who should be
responsible for any consumer problems; the level of information that
consumers should be provided with; and other aspects of how the sector
operates. The Commission has also published a report on consumer detriment
arising from the sale of dynamic packages. Once the various drafting and
Committee stages have been pursued, there is a potential for a new directive
to be finalised and agreed in 2012.

ECONOMIC FACTORS

Volcano Crisis Cost Airlines $1.7bn


The International Air Transport Association (IATA) has estimated that the
Icelandic volcano crisis cost airlines more than $1.7bn in lost revenue. In the
3-day period from 17th to 19th April, when disruptions were at their greatest,
lost revenues reached $400m per day. Giovanni Bisignani, IATA’S Director
General and its Chief Executive Officer (CEO), revealed that, “During its worst
period, the crisis impacted 29% of global aviation and affected 1.2 million
passengers a day. The scale of the crisis eclipsed 9/11, when US airspace was
closed for 3 days”.

According to IATA, some cost savings were made relating to flight groundings.
For example, the fuel bill was $110m lower per day compared to normal daily
flight activity. However, the airlines faced added costs including those from
passenger care. For an industry that lost $9.4bn in 2009, the crisis was
devastating, particularly since Europe’s carriers were already expected to lose
$2.2bn in 2010.

Government Advises Operators to Foot the Ash Bill


Many hundreds of small tour operators could suffer after government
guidance suggested that they should pay for hotels, meals and taxi costs
incurred during the volcanic ash cloud. The Department for Business,
Innovation and Skills (BIS) insists that the interpretation of the 1992 Package
Travel Regulations remains a matter for the courts. However, the industry has
attacked the guidance for being too ‘consumer focused’, and lawyers have
warned that court judges’ rulings over unprecedented ash-related
compensation cases could be influenced by such advice, and rule in favour of
consumers as a result.

Airline bosses have also been left frustrated after a meeting in June 2010 with
the transport minister, after he ruled out compensation from the UK
Government over the ash cloud. Carriers including British Airways, Virgin
Atlantic, easyJet and Thomson Airways had met with the transport secretary to
put their case forward for compensation.

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Travel & Tourism Market PEST Analysis

The Collapse of Goldtrail Travel Ltd


In July 2010, the holiday plans of tens of thousands of people were affected
after the collapse of the travel operator Goldtrail Travel Ltd. Goldtrail, which
specialised in low-cost holidays to Greece and Turkey, went into
administration, leaving an estimated 16,000 people overseas. Goldtrail was a
medium-sized independent operator which carried around 250,000 passengers
in 2009.

The demise of Goldtrail is being blamed on the increasingly popular


discounting culture seen in recent years within the travel industry, and some
believe that its collapse should be a salutary lesson to the trade. Goldtrail was,
for example, reported to be paying less than £3 per person per day including
breakfast for accommodation in Turkey. The feeling now is that travel
companies should look at the long-term effects that such discounting is having
on the industry, especially in terms of lower profit margins, companies going
into administration, greater competition and higher levels of complaints from
customers. Some argue that travel agents may also need to think again about
booking the cheapest option and question if it is actually value for money.

In the year ending 31st March 2010, 29 ATOL holders went into administration,
with one of the most notable failures being the Globespan Group, which
operated as both an airline and travel agent, and which ceased trading in
December 2009. As a result of the protection afforded by ATOL and the ATTF,
almost 2,500 ATOL-protected passengers were able to complete their holiday
during this period and around 45,000 others will receive a refund. In the first
half of 2010, around ten ATOL tour operators, in addition to Goldtrail Travel
Ltd, ceased trading.

Association of Independent Tour Operators Puts Pressure


on ’Rogue Traders’
The Association of Independent Tour Operators (AITO) has drawn up a list of
about 30 companies that it believes are flouting consumer protection laws as
a result of its ‘Rogue Trader’ clampdown. The Association has taken matters
into its own hands out of frustration at trading standards not taking action
against companies operating without bonding. The campaign is aimed at small
and medium-sized operators with a ‘non-licensable’ turnover that does not
come under ATOL as it does not involve flights departing from the UK,
although it is covered by the PTD. The AITO is targeting operators offering
packages combining accommodation and other travel components within the
destination, such as transport, an adventure activity or a cultural tour. The AITO
members provide bonding for such packages and are angry at being potentially
undercut by competitors who do not carry the costs of meeting obligations
that protect customers.

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Travel & Tourism Market PEST Analysis

Visit London Saved from Grant Cut


London’s tourism agency has apparently been spared after Mayor Boris
Johnson made a last-minute plea to the Chancellor of the Exchequer, George
Osborne. Visit London, which promotes the capital across the world and has a
key role in encouraging visitors to the 2012 Olympics, was set to fall victim to
the Government’s £6bn cuts programme with the Treasury planning to end its
£15.7m annual grant, which is paid through the London Development Agency.
A decision to cancel the grant would seemingly put in jeopardy other sources
of funding for the tourism body, which would effectively lead to its demise.
Boris Johnson argued, however, that tourism is a key driver of London’s
economy, with nearly 15 million overseas visitors and more than 11 million
domestic visitors in 2008.The industry also helps support 253,000 jobs and
results in around £22bn of visitor expenditure in the city every year. In 2009,
Visit London launched its ‘Only in London’ campaign, which cost £2m, in order
to attract more tourists and business travellers to London and which it
estimates brought in approximately £100m in trade. Visit London also claims
to have attracted more than £1bn in extra trade for the capital’s shops,
restaurants and hotels since 2003.

SOCIAL

Industrial Actions Continue to Affect Air Travel Sector


The air travel sector continues to be affected by strike action. British Airways
(BA) cabin crew, for example, are set to go on strike again in the autumn of
2010 after rejecting the airline’s latest peace deal. The 11,000 cabin crew, who
are members of the Unite union, voted against BA’s latest payment plan and
the rejection means that Unite is likely to ballot members on further strike
action, although any further walkouts will not take place until after the
summer. BA cabin crew went on strike for a total of 22 days between March
and June 2010, a move that is estimated to have cost BA around £150m. During
the June 5-day stoppage, the airline said it ran 80% of long-haul flights and
60% of short-haul flights from Heathrow, although Unite has disputed these
figures.

In another development, the Unite union has also announced that it is to hold
a strike ballot amongst BAA staff. The Union will ballot 6,185 staff including
security staff, engineers, firefighters and support staff at BAA airports
including Heathrow, Stansted, Southampton, Glasgow, Aberdeen and
Edinburgh. The airport operator says its offer to the Union is reasonable at a
time when the industry is recovering from recession and the volcanic ash cloud
disruption.

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Travel & Tourism Market PEST Analysis

Cruise and ferry firms oppose new crew salary rules


The bosses of Carnival UK and ferry companies P&O and Stena Line have
warned that new rules could lead to ‘intolerable’ crew costs in the UK. In a
letter to the Daily Telegraph on 2nd July 2010, the ferry operators warned that
many major shipping companies will have little choice but to register their ships
outside of Britain due to obscure regulations arising from the Equality Act. The
operators state that they currently pay seafarers, who reside abroad, salaries
that are related to those of highly skilled professionals in their home countries.
What is now proposed is that the British-flag operators pay British rates to
these seafarers, even though they may never set foot on British soil. The costs
will put the company’s British operations under pressures not felt by
competitors abroad. Prime Minister (PM), David Cameron, is being urged to
intervene.

Greener Journeys Campaign


In September 2009, the UK’s five largest bus groups joined forces to launch a
Greener Journeys campaign. The campaign is recommending a range of policy
initiatives designed to encourage modal shift and to reduce the number of car
journeys in the UK by one billion over 3 years. According to the companies, this
could be achieved if people switched from car to bus or coach for just 1 journey
in 25. Greener Journeys is calling on the Government to set targets for local
authorities to encourage modal shift, promote investment in low-carbon
buses, encourage bus priority and park and ride, and other measures to cut
commutes by car.

Greener Journeys has a target of reducing 2 million tonnes of carbon dioxide


(CO2) by 2010, which would deliver an additional 50% reduction in the CO2
produced from domestic transport to that anticipated over the same period by
current Government policies. These measures would see both existing and new
passengers attracted by added comfort, reliability and convenience. With the
widespread application of policies supporting bus and coach travel, the major
bus groups would like to go much further, reducing billions of car journeys and
making a huge contribution to the Government’s carbon reduction targets as
a result.

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Travel & Tourism Market PEST Analysis

Holidaymakers Urged To Go Greener


According to research from ABTA and The Travel Foundation, almost half of
Britons admit that their ‘green awareness’ is forgotten when they go on
holiday. The survey found that almost 90% of people say that they regularly
recycle bottles, cans and paper in their day-to-day life, but less than half keep
this up when they go away. One in five holidaymakers also admit that they
switch off completely when they’re on a beach break and don’t even consider
the environment. The findings were revealed as part of the first ‘make holidays
greener’ week, a national campaign from The Travel Foundation which urges
people to do things on their summer break to make a difference to the place
that they are visiting and the people that live there. The suggestions include
taking short showers rather than baths, not having towels laundered on a daily
basis and turning off air conditioning when it’s not needed. The campaign is
being supported by ABTA and a number of travel firms including The
Co-operative Travel, Thomson, First Choice, Thomas Cook, Teletext Holidays,
Holiday Extras, Virgin Atlantic and Virgin Holidays.

CAA to be given new duty to help passengers


The CAA is to be given a primary duty to promote the interests of passengers,
under new government proposals. The CAA will be asked to help drive
investment that focuses on passengers, such as new baggage handling
equipment, and to take action against airports that underperform. It will also
be given new powers to investigate and take action against anti-competitive
behaviour, and a new system of licensing will allow the CAA to tailor
regulations to meet the requirements of individual airports rather than
applying the same conditions to all of the airports that it regulates.

According to the Transport Secretary, the way UK airports are regulated is in


urgent need of reform. The current economic regulation legislation dates from
1986, when the aviation sector looked very different from today. The aim is
now to put passengers at the heart of how airports are run. The Government
has already announced that they do not support the building of new runways
at Heathrow, Gatwick or Stansted, preferring instead to make those airports
better and not bigger. The Government has also scrapped plans to give a new
remit to Passenger Focus to represent air passengers and intends to explore
other options for strengthening passenger representation.

TECHNICAL

The introduction of Advanced Imaging Technology


Following the attempted attack on Northwest Airlines flight 253 to Detroit on
Christmas Day 2009, the Government outlined a package of additional
measures to enhance aviation security. These measures included: an increase
in the use of explosive trace detection; plans for greater random searching of
passengers; and the introduction of Advanced Imaging Technology (AIT), also
known as security scanners.

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The requirement to deploy AIT machines came into effect on 1st February 2010,
initially affecting Heathrow and Manchester airports. The scanners are
designed to give airport security staff a much better chance of detecting
explosives or other potentially harmful items hidden on a passenger’s body.
Following their introduction at Heathrow and Manchester, the scanners are to
be installed at Birmingham and Gatwick airports and then rolled out across the
country.

The Government would have liked to have a longer period of consultation


before introducing the security scanners. However, given the urgency of the
situation following the Detroit attack, they considered it was imperative to act
quickly to strengthen UK airport security measures for the protection of all
passengers boarding flights.

Bus Users Get Mobile with Arriva M-Ticketing Launch


Arriva has become the first UK bus operator to introduce mobile phone
ticketing for all of its regional services. In November 2009, the company
announced that customers across its regional bus businesses in England,
Scotland and Wales would be able to buy daily, weekly and 4-weekly tickets
via their mobile phones following the national launch of its m-ticketing service.

Arriva’s introduction of m-ticketing, which is believed to be the largest


deployment of its kind worldwide, covers approximately 1,000 routes served
by the operator’s regional fleet of buses. The m-ticketing service involves
downloading a free application directly onto customers’ phones. Once
downloaded it allows people to purchase a range of tickets which can be
bought either directly through the application via a registered card or by
purchasing credit from any PayPoint outlet either by cash or card.

Arriva sees its m-ticketing approach as having major advantages over some
other mobile ticketing systems in that it can be rolled out across the Arriva
networks without any downtime for vehicles or costly onboard technology.
Arriva also believes that the convenience to customers of having their ticket
on their mobile will encourage more customers to purchase multi-journey
tickets.

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Travel & Tourism Market PEST Analysis

Dreamliner Visits the UK


The aircraft that could revolutionise leisure air travel made its visit to Britain in
July 2010 when the Boeing 787 Dreamliner touched down at the Farnborough
Air Show. The aircraft is revolutionary in that it is made of composite materials,
making it lighter and more fuel-efficient than previous aircraft. It also has a
series of cabin features designed to make flying a more comfortable
experience such as bigger windows, large overhead bins and lighting that will
mimic sunset and sunrise during the journey to reduce jet lag. The airliner is
also quieter than conventional aircraft, and its lighter weight means it requires
less runway distance to take off and land. Among the UK travel companies with
orders for the Dreamliner are TUI Travel. TUI’s Dreamliners are due to be
delivered in early 2012, and they will be introduced into Thomson and First
Choice’s holiday programmes in the winter of that same year. They will initially
be used on short- and medium-haul routes for the first few months to iron out
any operational teething problems before being used for long-haul
destinations.

easyJet Unveils Ash Detector Plan


easyJet is aiming to fit 12 of its aircraft with infrared cameras capable of
detecting volcanic ash in the atmosphere. In June 2010, the airline announced
a trial period for the cameras, which allow pilots to see ash up to 100km ahead
of the aircraft at altitudes between 5,000 feet and 50,000 feet. The system,
which has been called Airborne Volcanic Object Identifier and Detector
(AVOID), has been available since 1993, but has never previously been used by
commercial airlines as there was no perceived need.

The first stage of the trial will be to fit a camera to an Airbus A340, which will
carry out tests in areas of the world where there are active volcanoes within
2 months. If successful, easyJet hopes that other carriers will follow suit and
that the cameras will be fitted to hundreds of aircraft. The system should allow
individual pilots to take action to avoid ash once it is detected by the cameras.
The pilots will then have about 5 minutes to change course in order to avoid
the ash. easyJet believes that the cameras will also allow the industry, as a
whole, to provide accurate maps of where the ash is, rather than relying on
computer-generated predictions. The accuracy of the predictions that led to
the grounding of flights within Europe in April has since been questioned by
the aviation industry.

The AVOID system was developed by the Norwegian Institute for Air Research
(NILU).

© Key Note Ltd 2010 50


Travel & Tourism Market Consumer Research

3. Consumer Research

INTRODUCTION
Kantar Media’s annual Target Group Index (TGI) survey examines various
aspects of consumer holidays, including the number of holidays taken at home
and abroad in the past 12 months, the method and timing of bookings, the
sources used to gather information, the type of holiday, the length of stay, the
type of accommodation, the mode of travel and the cost of the holiday. Key
Note has based this chapter on the TGI findings.

NUMBER OF HOLIDAYS TAKEN


According to the September 2009 TGI survey results, 69.3% of British adults
had taken a holiday or short break, either in the British Isles or abroad, in the
previous 12 months. In the year ending March 2008, 66.3% of British adults
had taken a holiday either in the British Isles or abroad.

Table 3.1: Penetration of Holidays in the Last 12 Months


(% of adults), Years Ending March 2005-2008 and September
2009

2005 2006 2007 2008 2009

Taken holiday in last


12 months 64.6 64.9 66.5 66.3 †69.3

Taken no holiday in last


12 months 35.4 35.1 33.5 33.7 30.7

Total 100.0 100.0 100.0 100.0 100.0

† — includes holidays and short breaks


Note: data exclude short visits to relatives.

Source: Target Group Index (TGI) © Kantar Media, Quarter 3 (April-March), 2005,
2006, 2007, 2008 and 2009

© Key Note Ltd 2010 51


Travel & Tourism Market Consumer Research

In the year ending September 2009, 28.8% of British adults took one or more
holidays in the British Isles and 43% of British adults took one or more short
breaks — defined as 3 nights or less — in the British Isles. The percentage of
adults taking holidays abroad was, at 32.8%, higher than the proportion of
adults taking holidays in the UK ,whereas the percentage of adults taking short
breaks abroad was, at 16.1%, considerably lower than the proportion taking
short breaks in Britain.

Table 3.2: Number of Holidays and Short Breaks Taken in the


British Isles and Abroad in the Last 12 Months
(% of adults), September 2009

Holidays Short Breaks


British Isles Abroad British Isles Abroad

One 17.7 19.2 19.8 9.2


Two 6.9 8.3 13.8 4.4
Three or more 4.2 5.3 9.4 2.5

Note: Short breaks are classed as 3 nights or less.

Source: Target Group Index (TGI), © Kantar Media,2009

By Socio-Demographic Group
The penetration of one or more holidays in the British Isles and one or more
holidays abroad by socio-demographic group in the last 12 months is analysed
in Table 3.3.

In the year ending September 2009, the proportion of British females who took
one holiday in the British Isles exceeded the proportion of males in the same
category, whereas for one or two holidays abroad, the proportion of males
exceeded the percentage of females. This trend was reversed for three or more
holidays abroad which attracted a higher percentage of females than males.

Penetration rates for taking one holiday in the British Isles peaked within the
35 to 44 age group, but were highest in the 65 and over age group in regards
to taking two or more holidays. These age trends differ a little for holidays
taken abroad, with the peak penetration rate for taking one holiday abroad
being within the 45 to 54 age group, and within the 55 to 64 age group when
taking two or more holidays.

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Travel & Tourism Market Consumer Research

As might be expected, the propensity for taking holidays, and particularly two
or more holidays, tends to be associated with social grade. For example, 18.3%
of adults in social grade A took two holidays abroad in the year ending
September 2009, compared with 4.2% of adults in social grade D and 2.3% of
adults in social grade E. Social grade differences are less apparent for adults
who took one holiday in the British Isles, although they do become more
pronounced as the number of holidays taken in Britain increases.

Regionally, the highest penetration rate for taking three or more holidays in
the British Isles is in the North West at 7.1%, with the lowest penetration rate
being in the North at 1.4%. The highest penetration rate for taking three or
more holidays abroad is in Greater London at 8.4% and the lowest is in Wales
at 2%.

Table 3.3: Penetration of Holidays in the British Isles or Abroad


in the Last 12 Months by Number of Holidays and
Socio-Demographic Group (% of adults), September 2009

British Isles Abroad


Three or Three or
One Two more One Two more

All adults 17.7 6.9 4.2 19.2 8.3 5.3


Sex
Male 17.2 6.5 3.5 20.1 9.7 4.9
Female 18.3 7.2 4.8 18.3 7.1 5.6
Age
15-24 11.2 3.5 0.9 20.5 7.5 6.0
25-34 17.2 5.4 1.2 18.4 7.2 3.1
35-44 22.0 4.4 3.7 22.2 5.6 2.8
45-54 19.3 5.3 2.8 23.4 9.7 5.2
55-64 17.6 9.3 6.5 18.0 13.1 9.5
65+ 18.4 12.5 8.9 13.5 7.9 5.6
Social Grade
A 19.2 9.9 5.8 21.2 18.3 8.0
B 19.6 8.8 6.8 25.5 13.7 9.0
C1 18.0 6.6 4.2 19.5 6.6 6.0
C2 18.9 6.9 3.3 20.2 8.4 3.1
D 15.6 4.8 2.0 13.3 4.2 2.1
E 11.5 4.5 1.9 7.5 2.3 2.4

Table continues...

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Table 3.3: Penetration of Holidays in the British Isles or Abroad


in the Last 12 Months by Number of Holidays and
Socio-Demographic Group (% of adults), September 2009

...table continued

British Isles Abroad


Three or Three or
One Two more One Two more
Region
Scotland 17.7 4.9 3.3 18.7 7.7 4.4
North West 18.3 8.9 7.1 19.2 6.6 8.1
North 12.1 7.5 1.4 15.5 11.0 3.6
Yorkshire and
Humberside 16.5 6.3 4.8 18.0 4.2 2.6
East Midlands 22.0 11.4 3.3 19.3 9.5 5.2
East Anglia 18.0 7.6 5.3 19.7 7.7 3.0
South East 17.6 7.0 3.4 18.9 8.4 5.3
Greater London 12.8 4.3 4.1 22.2 11.9 8.4
South West 23.0 3.3 4.3 17.0 10.4 7.1
Wales 12.3 4.9 4.2 13.9 2.7 2.0
West Midlands 22.8 10.4 4.2 24.1 8.8 2.9

Source: Target Group Index (TGI), © Kantar Media, 2009

PLANNING A HOLIDAY
The Internet remains by far the most popular source of information used when
planning a holiday or short break. According to the TGI survey, 25.8% of adults
used the Internet when planning their most recent holiday in the 12 months
ending September 2009 and 19% used it when planning their most recent short
break within the same period. There are some variations between holidays and
short breaks in the popularity of other sources of information. For example,
travel agents were used by 10.2% of adults who were planning holidays but
by just 1.3% of adults who were planning short breaks.

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Travel & Tourism Market Consumer Research

Table 3.4: Sources Used to Obtain Information for the Most


Recent Holiday or Short Break Taken in the Last 12 Months
(% of adults), September 2009

Holidays Short Breaks

Internet 25.8 19.0


Been there before 10.6 9.2
Family/friends 10.2 11.9
Travel agent 10.2 1.3
Brochures 7.3 3.3
Tour operator/travel company 5.1 1.7
Guidebooks 3.1 1.4
Accommodation provider 1.2 1.3
Advertisement 1.1 1.3
Teletext 0.9 0.4
Tourist information centre 0.8 1.3
TV travel programme 0.3 0.1
Other Sources 4.0 4.9

Source: Target Group Index (TGI), © Kantar Media, 2009

BOOKING A HOLIDAY
The trend for individuals to make their own travel arrangements remains
popular among holidaymakers. In 2009, 17.1% of adults made their own
arrangements when booking their last holiday and 18.5% of adults made their
own arrangements when booking their last short break. 12.3% of adults used
a travel agent to book their last package holiday in the year ending September
2009 and 8.7% of adults used a tour operator to book their last package
holiday. The use of travel agents and tour operators to book short breaks is
fairly small, although 3.5% of respondents did use a travel agent to book their
last short break accommodation in the year ending September 2009. This
compares with 2.2% of adults who used a travel agent to book their last
holiday accommodation.

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Travel & Tourism Market Consumer Research

Table 3.5: Method of Booking the Most Recent Holiday or Short


Break Taken in the Last 12 Months (% of adults),
September 2009

Holiday Short Break

Made own travel/accommodation arrangements 17.1 18.5

Travel Agent
Used travel agent to book package holiday 12.3 2.6
Used travel agent to book accommodation only 2.2 3.5
Used travel agent to book flight only 5.0 0.9

Tour Operator
Used tour operator to book package tour 8.7 2.3
Used tour operator to book flight only 3.2 0.9

Source: Target Group Index (TGI) © Kantar Media, 2009

In general, adults taking holidays tend to book their trips earlier in advance
than adults taking short breaks. For example, in the year ending September
2009, 9.6% of adults booked their most recent short break within 2 weeks of
their trip and 10.7% of adults booked about 1 month before their trip. By
contrast, just 4.9% of adults taking their most recent holidays booked it within
2 weeks of the trip and 7.7% booked a month before their trip.

For holidays, the largest percentage of adults (8.3%) booked their most recent
holiday 3 months in advance and 6.7% of adults booked their holiday 10 or
more months in advance. By comparison, only 3.5% of adults taking their most
recent short break booked it more than 6 months in advance.

Table 3.6: How Far in Advance the Booking was Made for the
Most Recent Holiday or Short Break Taken in the Last
12 Months (% of adults), September 2009

Holiday Short Break

Under 2 weeks 4.9 9.6


About 1 month 7.7 10.7
2 months 7.3 8.0

Table continues...

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Travel & Tourism Market Consumer Research

Table 3.6: How Far in Advance the Booking was Made for the
Most Recent Holiday or Short Break Taken in the Last
12 Months (% of adults), September 2009

...table continued

Holiday Short Break


3 months 8.3 5.1
4 months 5.5 1.8
5 months 3.9 1.5
6-7 months 7.5 1.7
8-9 months 2.6 0.7
10 months or more 6.7 1.1
No booking required 2.9 5.2

Source: Target Group Index (TGI) © Kantar Media, 2009

METHOD OF TRAVEL
Respondents to the TGI survey were also asked about the main method of
travel used for their most recent holiday taken in the previous 12 months. It
should be noted that, for some methods of travel, e.g. coach and rail, the
results do not generally distinguish between holidays in the British Isles and
holidays abroad. The survey also covers the main method of travel used, but
does not take into account the use of multiple types of transport. It may be,
for example, that some holidaymakers fly to their destination but use a hired
self-drive car for the duration of their stay. Similarly, people might fly or take
the train to cover long distances within Great Britain (for example, from the
south of England to Scotland), and then hire a car on arrival.

Taking these qualifications into consideration, the survey found that 27% of
respondents holidayed with their own car when taking their most recent short
break and 17% used their own car on their most recent holiday. The use of air
travel, scheduled and charter, is considerably more likely for adults who took
holidays rather than short breaks, while the use of rail travel is more likely for
adults who took a short break rather than a holiday.

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Travel & Tourism Market Consumer Research

Table 3.7: Main Mode of Travel Used for the Most Recent
Holiday or Short Break Taken in the Last 12 Months (% of
adults), September 2009

Holiday Short Break

Air (scheduled) 22.2 5.4


Personal car or motorbike 17.0 27.0
Air (charter) 9.4 1.3
Coach 3.4 3.6
Ferry 2.9 1.7
Sea cruise 2.3 0.1
Hire car or motorbike 1.9 0.8
Other 1.8 2.4
Rail 1.6 5.3
Eurotunnel (with vehicle) 0.8 0.2
Train (Eurostar) 0.8 1.4

Source: Target Group Index (TGI) © Kantar Media, 2009

TYPE OF ACCOMMODATION
Hotels are the most popular type of accommodation for adults taking holidays
or short breaks, with 26.2% indicating that they had used a hotel on their most
recent holiday. The highest penetration of adults (9.3%) stayed on a full- or
half-board basis, followed by 6.6% of adults on a bed-and-breakfast basis,
6.3% on an all-inclusive basis and 4% who booked a room only. A further 1.4%
of adults stayed in a guest house. The situation was similar for short breaks
with 22.7% of adults having stayed in a hotel on their most recent vacation,
with bed and breakfast the most popular option, while a further 4.8% of
respondents stayed in a guest house.

Of the self-catering options, renting a villa, flat, cottage or chalet was the most
popular choice for adults taking a holiday in 2009, while a caravan was the
most popular choice for adults taking a short break.

Staying with friends or relatives was the second most popular accommodation
option for adults taking a short break in 2009, with 9.5% of respondents opting
for this.

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Travel & Tourism Market Consumer Research

Table 3.8: Type of Accommodation Used for the Most Recent


Holiday or Short Break Taken in the Last 12 Months
(% of adults), September 2009

Holiday Short Break


Hotel/Guest House
Hotel (full or half board) 9.3 6.7
Hotel (bed and breakfast) 6.6 11.5
Hotel (all inclusive) 6.3 1.2
Hotel (room only) 4.0 3.3
Guest house 1.4 4.8

Self Catering
Rented villa/flat/cottage/chalet 11.7 4.6
Caravan 5.3 5.3
Own holiday home or timeshare 3.7 2.1
Camping/tent 2.0 3.0
Timeshare 1.8 0.2

Stayed with friends/relatives 7.9 9.5


Others 3.7 2.1

Source: Target Group Index (TGI), © Kantar Media, 2009

TYPE OF HOLIDAY
A beach or resort holiday remains by far the most popular type of vacation
undertaken by respondents to the TGI survey. In the year ending September
2009, the most recent holiday undertaken by 22.5% of adults was a beach or
resort holiday, with the second most popular choice being a holiday centre
vacation, which was chosen by 6.4% of respondents in the same year. By
contrast, a city break holiday was the most popular recent short break option,
and was undertaken by 12.2% of adults in 2009. The second most popular short
break option was a holiday centre visit followed by a beach/resort short break.

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Travel & Tourism Market Consumer Research

Table 3.9: Most Recent Holiday or Short Break Taken in the Last
12 Months — Type of Holiday (% of adults), September 2009

Holiday Short Break

Beach/resort 22.5 6.6


Others 16.1 16.4
Holiday centre 6.4 7.8
Lakes and mountains 4.4 4.3
City break 3.4 12.2
Cruise 2.5 0.3
Coach tour 2.4 1.8
Theme park 1.7 0.9
Skiing/winter sports 1.6 0.3
Backpacking 1.1 0.6
Multi-country 1.0 0.1
Boating holiday 0.6 0.3
Safari 0.6 0.1
Golfing 0.5 0.4
Spas/health spas 0.3 0.6
Watersports 0.2 0.3

Source: Target Group Index (TGI), © Kantar Media, 2009

LENGTH OF STAY
The traditional 7-night holiday remains the most popular length of stay for
British adults. In the year ending September 2009, 13.5% of adults stayed for
7 nights on their most recent holiday, with a further 10.9% of adults staying
for 14 nights. The third most popular length of stay was 21 nights with 9.9%
of adults staying for this period of time during their most recent holiday.

As might be expected, the predominant length of stay for short breaks is 1 to


3 nights. In the year ending September 2009, 19% of adults stayed for this
period of time while on their most recent short break, with a further 13.7% of
adults staying for between 4 and 6 nights. Stays beyond 6 days were taken by
10.1% of adults on their most recent short break.

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Travel & Tourism Market Consumer Research

Table 3.10: Most Recent Holiday or Short Break Taken in the Last
12 Months — Length of Stay (% of adults), September 2009

Holiday Short Break

1 to 3 nights 2.3 19.0


4 to 6 nights 7.5 13.7
7 nights 13.5 3.0
8 to 13 nights 9.1 4.4
14 nights 10.9 0.8
15 to 20 nights 5.5 1.3
21 nights or more 9.9 0.6

Source: Target Group Index (TGI), © Kantar Media, 2009

COST OF HOLIDAY
As might be expected, there were considerable differences between the total
cost of holidays and short breaks. In the year ending September 2009, the total
cost of the most recent short break taken by 23.2% of British adults was £249
or less compared to just 6.5% of adults who spent this amount on their most
recent holiday. At the other end of the cost range, just 2.6% of adults spent
£1,000 or more on their most recent short break compared to 23.8% of adults
who spent £1,000 or more on their most recent holiday. At the very top end of
the cost range, almost one in 10 adults (9.3%) spent £2,500 or more on their
most recent holiday.

Table 3.11: Total Cost of Most Recent Holiday or Short Break


Taken in the Last 12 Months (% of adults), September 2010

Holiday Short Break

Under £100 2.1 9.4


£100-£249 4.4 13.8
£250-£499 8.0 9.6
£500-£749 7.5 4.6

Table continues...

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Table 3.11: Total Cost of Most Recent Holiday or Short Break


Taken in the Last 12 Months (% of adults), September 2010

...table continued

Holiday Short Break


£750-£999 7.5 2.0
£1,000-£1,749 9.6 1.6
£1,750-£2,499 4.9 0.5
£2,500+ 9.3 0.5

Note: data relates to the total cost of the holiday, excluding spending money, for the
party.

Source: Target Group Index (TGI), © Kantar Media, 2009

© Key Note Ltd 2010 62


Travel & Tourism Market Competitive Structure

4. Competitive Structure

THE MARKETPLACE
The UK travel and tourism market is served by a wide range of companies from
a variety of sectors, although only a small number of these companies have a
significant presence in the main market sectors. These include British Airways
PLC, which is principally involved in the inbound and outbound scheduled
airline sector; Thomson Airways Ltd, which is the UK’s leading charter airline;
P&O Ferries Ltd, which is the UK’s leading ferry operator; FirstGroup PLC; and
National Express Group PLC, which both have leading positions in the UK bus
and train sectors; and TUI Travel PLC, which is the UK’s leading travel agent
and tour operator.

Table 4.1: Leaders in the UK Travel and Tourism Industry by


Market and Industry Sector, 2010

Company Market Industry Sector

British Airways PLC Inbound and outbound Scheduled airline


FirstGroup PLC Domestic Bus and train operator
Bus, coach and train
National Express Group PLC Domestic and outbound operator
P&O Ferries Ltd Inbound and outbound Ferry operator
Thomson Airways Ltd Outbound Charter airline
Travel agent and tour
TUI Travel PLC Outbound operators

Source: Key Note

MARKET LEADERS

British Airways PLC

Company Structure
British Airways PLC is the largest airline in the UK based on fleet size,
international flights and international destinations. Until 2008, British Airways
was also the largest UK airline in terms of passenger numbers, although the
low-cost carrier easyJet has now surpassed British Airways on that measure.

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Travel & Tourism Market Competitive Structure

British Airways offers flights to 150 destinations across the UK, Europe, the
Americas, Africa, the Middle East and Asia/Pacific, and has a fleet of over 230
aircraft. Its main base is London Heathrow where it owns around 40% of the
takeoff and landing slots. British Airways also has a second hub at Gatwick
airport and operates overseas flights from London City airport. The company
also operates domestic flights from a number of non-London airports.
However, the airline has recently discontinued all direct overseas flights from
non-London airports and international passengers originating at non-London
airports must now connect via London.

British Airways had two passenger airline subsidiary businesses: BA CityFlyer,


which operates a network of domestic and European services from London City
airport; and OpenSkies, which operates flights from Paris (Orly) to New York
and Washington airports. The company has franchise arrangements with the
South Africa-based airline Comair, and the Scandinavian company, Sun Air, and
also owns stakes in the Spanish airline Iberia and the low-cost UK airline FlyBe.
Other British Airways interests include a 10% stake in Eurostar (UK) Ltd and a
cargo subsidiary, British Airways World Cargo.

British Airways is a member of the oneworld alliance, a global alliance that


brings together 11 of the world’s largest airlines including American Airlines,
Iberia, Japan Airlines and Qantas.

British Airways has reached an agreement to merge with the Spanish airline
Iberia. The merger between the two carriers will create the world’s
third-largest airline in terms of annual revenue and the second-largest airline
group within Europe. The merger was confirmed in April 2010, and it is
expected to be completed by the end of the same year.

Financial Results
In the year ending 31st March 2010, British Airways PLC reported a fall in
turnover of 11.1% to £7.99bn. A pre-tax loss of £531m was announced in 2010
compared to a pre-tax loss of £401m in 2009.

FirstGroup PLC

Company Structure
FirstGroup PLC is a leading transport operator in the UK, mainland Europe and
North America. The company transports some 2.5 billion passengers a year and
employs more than 130,000 staff.

In the UK, FirstGroup is Britain’s largest bus operator, running more than one
in five of all local bus services. It has a fleet of nearly 8,500 buses and these
carry approximately 3 million passengers a day in more than 40 major towns
and cities. FirstGroup also operates Greyhound UK which provides regular
services between London and Portsmouth and London and Southampton.

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Travel & Tourism Market Competitive Structure

FirstGroup is also a major operator of passenger rail services in the UK and


currently holds four passenger franchises which include First Capital Connect,
First Great Western, First ScotRail and First TransPennine Express. In addition,
the company operates the open-access service First Hull Trains and the London
Tramlink network on behalf of Transport for London (TfL).

In North America, FirstGroup PLC’s activities include the operation of Yellow


School Buses (First Student), which is the largest provider of student
transportation in North America. This service has a fleet of approximately
60,000 yellow school buses and carries nearly 4 million students every day
across the US and Canada. FirstGroup also operates Greyhound, which is the
only national provider of scheduled intercity coach services in the US and
Canada. Greyhound provides scheduled passenger services to approximately
3,800 destinations throughout the US and Canada and carries approximately
20 million passengers annually.

In mainland Europe, FirstGroup operates around 150 buses in south west


Germany and, with its partner DSB, operates the Øresund rail franchise which
includes routes in and between Denmark and Sweden.

In June 2010, FirstGroup announced the disposal of GB Railfreight Ltd, a


provider of rail freight services to Europorte. The disposal of GB Railfreight was
part of the FirstGroup strategy of focusing on its core passenger transport
businesses in the UK and North America.

Financial Results
In the year ending 31st March 2010, FirstGroup PLC’s turnover increased by
2.1% to £6.32bn, while its pre-tax profit fell by 10.2% to £179.6m. The
company’s UK bus operation contributed £1.17bn to group turnover in the year
ending 31st March 2010 and its UK rail operation contributed £2.19bn.

National Express Group PLC

Company Structure
National Express Group PLC is a leading international public transport group,
with bus, coach and train service operations in the UK; bus and coach
operations in Spain; and school bus services in North America.

In the UK, National Express runs a high-frequency urban bus service in


Birmingham and the West Midlands. It also operates buses in Dundee and
Scotland, as well as the Travel Midland Metro light-rail service (tram) in
Birmingham. The company operates over 1,900 buses and carries
approximately 320 million passengers a year. Its coach operations cover a large,
integrated network of scheduled services covering three segments — shuttle,
the national coach service airport links and European coach services. The service
operates to more than 1,700 destinations and provides approximately 18.5
million passenger journeys each year.

© Key Note Ltd 2010 65


Travel & Tourism Market Competitive Structure

National Express UK rail services include the operation of the East Anglia
service and the London commuter service, c2c. In November 2009, National
Express relinquished its loss-making East Coast franchise although it will
continue to operate its remaining two rail franchises to their normal
termination dates in 2011.

In North America, National Express operates yellow school buses in the US and
Canada. The service operates in 27 states and two Canadian provinces,
employing 19,000 people and over 12,000 vehicles. In Spain, National Express
is the leading private operator of coach and bus services with 1,400 vehicles
and 6,400 employees.

Financial Results
In the year ending 31st December 2009, turnover at National Express Group
PLC fell by 2% to £2.71bn. The company reported a pre-tax loss of £83.5m in
2009 compared to a pre-tax profit of £109.9m in 2008.

According to the company’s annual accounts for 2009, the train division
contributed £1.19bn to overall turnover in 2009, while the UK bus division
contributed £293.4m and the UK coach division £235.9m.

P&O Ferries Ltd

Company Structure
P&O Ferries Ltd offers services to mainland Europe from Dover, Hull and
Portsmouth to destinations in France, Holland, Belgium and Spain. The
company also operates a mixture of freight and passenger services under the
name P&O Irish Sea from Cairnyan or Troon to Larne; and from Dublin to
Liverpool. It also has a sister company, P&O Ferrymasters, which is a leading
European provider of tailor-made transportation and logistics services.
Freight-only services are operated by the company from Tilbury to Zeebrugge;
and Teesport to Rotterdam or Zeebrugge. United Arab Emirates-based Dubai
World Corporation is P&O Ferries Ltd’s ultimate holding company.

P&O Ferries operates four ferry routes from the UK to the Continent:

• Dover to Calais — P&O operates five vessels and makes up to 46 sailings a


day. The ferries operating include the Pride of Kent, Pride of Canterbury,
Pride of Burgundy, Pride of Calais and the Pride of Dover. The European
Seaway, a freight ferry, also operates on the Dover to Calais route.

• Hull to Rotterdam — P&O operates two vessels, the Pride of Hull and the
Pride of Rotterdam. These two ships operate one overnight sailing in each
direction per day.

• Hull to Zeebrugge — P&O operates two vessels, the Pride of York and the
Pride of Bruges. These two ships operate one overnight sailing in each
direction per day.

© Key Note Ltd 2010 66


Travel & Tourism Market Competitive Structure

• Portsmouth to Bilbao — P&O currently operates one vessel, the Pride of


Bilbao, which sails every 3 days. P&O Ferries has announced that it is
withdrawing this service at the end of September 2010, when its charter of
the Pride of Bilbao comes to an end.

Two new vessels, the Spirit of Britain and the Spirit of France, will come into
service with P&O in 2011. At 213 metres long and 49,000 tonnes, the two ferries
will be the largest ships ever to operate between Dover and Calais, each with
a carrying capacity of 180 articulated lorries plus a further 200 cars and 1,750
passengers. They are currently being built in Finland at a cost of more than
£330m. The Spirit of Britain will enter service in January 2011 and the Spirit of
France in September 2011.

Financial Results
In the year ending 31st December 2008, turnover at P&O Ferries Ltd increased
by 0.9% to £286.8m. The company reported a pre-tax profit of £21.1m in 2008
compared to a pre-tax profit of £25.6m in 2007.

Thomson Airways Ltd

Company Structure
Thomson Airways is the third-largest airline in the UK by total passengers
carried, after easyJet and British Airways, and is the world’s largest charter
airline by this measure. Thomson offers mostly chartered flights from the UK
to holiday destinations including the Mediterranean and the Caribbean. It
operates flights from over 20 UK airports to more than 80 destinations, with
its three main UK bases being London Gatwick, Birmingham and Manchester.
The airline has a fleet of around 64 aircraft.

Thomson Airways commenced operations in November 2008 following the


merger and subsequent rebranding of Thomsonfly and First Choice Airways.
The airline is part of TUI Travel PLC, which was itself created in 2007, via the
merger of First Choice Holidays PLC and the tourism division of TUI AG.

Financial Results
In the year ending 30th September 2009, Thomson Airways Ltd increased its
turnover to £1.81bn from £1.11bn in 2008. Pre-tax profit rose to £106m in 2009
from £50m in 2008.

TUI Travel PLC

Company Structure
TUI Travel PLC is the world’s leading international leisure travel group with
operations in approximately 180 countries worldwide, including 27 source
markets. It has its headquarters in Crawley, near Gatwick airport, employs
around 50,000 people and operates a pan-European airline consisting of 146
aircraft. It serves more than 30 million customers each year.

© Key Note Ltd 2010 67


Travel & Tourism Market Competitive Structure

TUI Travel mainly serves the leisure travel customer and is organised and
managed through three business sectors which include: Mainstream; Activity;
and Accommodation & Destinations. Following a review, the operations of a
fourth business sector, Specialist & Emerging Markets, were transferred to
other areas of the group.

Mainstream is the company’s largest business sector in terms of size, financial


performance and employee numbers. It comprises leading tour operators and
‘power’ brands and operates a fleet of 146 aircraft and around 3,500 retail
shops. The Mainstream business operates within two key segments of the
leisure travel market: Mainstream holidays, which include the sale of
differentiated and exclusively available content such as holiday villages, hotels
and long-haul travel; and Component, which includes sales of flights,
accommodation, car hire, transfers and excursions. These segments are sold as
separate components or in combination as part of customer-assembled
mainstream holidays. The business operates in the Northern Region, Central
Europe and Western Europe.

The Activity sector has over 40 activity travel businesses that operate under five
divisions — Marine, Adventure, Ski, Student and Sport. The Adventure division
takes customers to adventure destinations, while the Sport division offers
supporter-led cricket and rugby tours in Australia and the UK. The Student
division offers holidays which range from traditional school trips in France to
trek holidays for groups of young adults in the Himalayas. This sector also
includes the leading yacht brands in Europe and the US, and the world’s largest
ski operator.

The Accommodation & Destinations sector sells and provides a range of services
to tour operators, travel agents, corporate clients and direct to consumers.
These services include hotel accommodation, transfers, excursions, round trips,
incentives, conferences and events and cruise handling. The sector offers
Business to Business (B2B) and Business to Consumer (B2C) services.

Financial Results
In the year ending 30th September 2009, turnover for TUI Travel PLC fell by
0.5% to £13.86bn. The company reported a pre-tax loss of £52m in 2009, down
from a pre-tax loss of £267m in 2008.

TUI Travel PLC’s interim results for the 6 months ending 31st March 2010
revealed a turnover of £4.93bn compared to £5.38bn in the corresponding
period in 2009. A pre-tax loss of £367m was reported in the 6 months ending
31st March 2010 compared to a pre-tax loss of £333m in 2009.

© Key Note Ltd 2010 68


Travel & Tourism Market Competitive Structure

Other Companies
There is a wide range of companies operating in the travel and tourism market,
including businesses that provide other scheduled passenger land transport,
scheduled and non-scheduled passenger air transport, rail transport, sea and
coastal water transport and inland water transport, as well as hotels, other
accommodation providers, travel agents and tour operators. According to
National Statistics’ UK Business: Activity, Size and Location 2009, some 25,200
UK VAT- and/or PAYE-based enterprises were engaged in these various
activities in 2008 (Tables 1.15 to 1.21 in Chapter 1 — Industry Overview).

Outside Suppliers
The travel and tourism industry is supported by a wide range of companies in
a variety of sectors. The services offered by these companies include catering,
security, manufactur of transport equipment (buses, coaches, trains and
aircraft), energy supply, IT and construction.

MARKETING ACTIVITY
Main media advertising expenditure by the main sectors in the travel and
tourism industry fell for the second successive year in the year ending March
2010, declining by 10.4% to £382.9m. Of the sectors which contribute to overall
expenditure, the largest sums are committed by the transport operators who
spent a combined £160.3m on this in the year ending March 2010, a 14.4%
reduction on the previous year. Main media advertising expenditure levels by
tourist offices and tour operators fell by smaller percentages of 5.7% and 4.8%
respectively and expenditure by the accommodation providers was down by
4.7%.

The largest percentage fall in main media advertising expenditure in the year
ending March 2010 was reported by airlines (down 22.6% to £70.9m) with the
largest increase in expenditure being recorded by travel agents (up 16.1% to
£18.1m).

© Key Note Ltd 2010 69


Travel & Tourism Market Competitive Structure

Table 4.2: Main Media Advertising Expenditure by the Main


Sectors in the Travel and Tourism Industry (£000),
Years Ending March 2006-2010

% change 2009-2010
2006

2007

2008

2009

2010
Transport Operators
Airlines† 89,636 100,271 109,710 91,598 70,859 -22.6
Cruises 30,238 34,043 44,903 45,208 40,864 -9.6
Rail 24,677 24,874 27,940 28,637 27,942 -2.4
Ferries 12,624 11,789 11,814 11,042 10,732 -2.8
Bus & Coach 10,923 16,031 12,007 10,861 9,950 -8.4
Total transport
operators 168,098 187,008 206,374 187,346 160,347 -14.4

Tourist Offices
Overseas tourist
offices 44,904 41,291 38,796 39,625 36,751 -7.3
UK tourist offices 14,971 15,600 14,308 17,401 17,003 -2.3
Total tourist
offices 59,875 56,891 53,104 57,026 53,754 -5.7

Tour Operators
Overseas tour
operators 55,303 60,763 52,961 51,212 48,389 -5.5
UK tour operators 6,145 6,275 7,484 4,175 4,313 3.3
Total tour
operators 61,448 67,038 60,445 55,387 52,702 -4.8

Table continues...

© Key Note Ltd 2010 70


Travel & Tourism Market Competitive Structure

Table 4.2: Main Media Advertising Expenditure by the Main


Sectors in the Travel and Tourism Industry (£000),
Years Ending March 2006-2010

...table continued

% change 2009-2010
2006

2007

2008

2009

2010
Accommodation
UK hotels 21,630 23,378 25,641 27,353 28,370 3.7
UK holiday resorts 10,838 10,375 10,612 9,861 7,108 -27.9
Total
accommodation 32,468 33,753 36,253 37,214 35,478 -4.7

Travel agents 15,151 14,434 18,817 15,566 18,072 16.1


Online travel
agents 20,595 23,441 33,083 21,684 16,092 -25.8
Others 45,505 50,474 56,317 53,215 46,447 -12.7
Total travel
agents 81,251 88,349 108,217 90,465 80,611 -10.9

Total 403,140 433,039 464,393 427,438 382,892 -10.4


% change
year-on-year - 7.4 7.2 -8.0 -10.4

† — international & domestic

Source: Nielsen Media Research

© Key Note Ltd 2010 71


Travel & Tourism Market The Domestic Market

5. The Domestic Market

DEFINITION
The United Kingdom Tourism Survey (UKTS) is the main national consumer
survey used to measure the volume and value of tourism trips taken by
residents of the UK. It is jointly sponsored by VisitBritain, VisitScotland,
VisitWales and the Northern Ireland Tourist Board and covers trips away from
home lasting one night or more (but fewer than 60 days) taken by UK residents
for the purpose of holidays, visits to friends and relatives (VFR), business and
conferences or any other purpose. Tourism is measured in terms of volume
(trips taken, nights away) and value (expenditure on trips).

The domestic travel and tourism market can be divided in four main ways:

• purpose of trip — holiday, business, VFR or miscellaneous

• destination — England, Scotland, Wales or Northern Ireland, and by region


within England

• mode of transport — car, train, plane, bus/coach or other

• type of accommodation — hotel, guest house, friend’s/relative’s home,


farmhouse, rented accommodation, camping, caravan, etc.

KEY TRENDS
The UK domestic travel and tourism market, which has contracted more or less
yearly since 2005, benefited from the so-called ‘staycation’ trend in 2009 as
domestic consumers turned away in large numbers from overseas holidays and
travel and holidayed within the UK instead. The outcome was that consumer
expenditure on domestic travel and tourism, the number of trips made and
bed nights all rose in comparison to 2008 figures.

The main factor driving the UK domestic travel and tourism market in 2009 was
the holiday sector, which showed strong growth compared to 2008 with the
number of trips made for holiday purposes up by 16.7% and holiday
expenditure up by 10.7%. By comparison, expenditure on VFR, business trips
and other purposes was lower than in 2008.

Despite the increase in the domestic travel and tourism market, both room
occupancy and bedspace occupancy rates fell in 2009. The room occupancy
average fell from 60% in 2008 to 58% in 2009, while the bedspace occupancy
level declined from 44% to 43% over the same period.

© Key Note Ltd 2010 72


Travel & Tourism Market The Domestic Market

Average expenditure per trip fell by 3.2% to £173.64 between 2008 and 2009
while the average length of stay remained unchanged at 3.2 days. Average
expenditure per bed night fell from £55.78 in 2008 to £54.87 in 2009, a 1.6%
decline.

Early indications of market trends in 2010 suggest that the gains made in the
domestic travel and tourism sector in 2009 will be maintained in 2010. Much
of the impetus in the early part of the year, however, originated from
recoveries in the business trips and the trips to friends and relatives markets.
Trips for holiday purposes in the first quarter of 2010 were slightly down
compared to the corresponding period in 2009.

MARKET SIZE
For the first time since 2005, the UK domestic travel and tourism market
returned to growth in 2009 as the recession and the general economic climate
led to an upswing in demand for holidays in the UK. The largest increase was
in the number of trips made, which was up by 7.1% to 126 million, the highest
total since 2006. There was also a 5.4% advance in the numbers of bed nights
to 398.8 million and a 3.7% rise in domestic travel and tourism expenditure to
£21.88bn, which was the highest total in current terms since 2005.

Table 5.1: The UK Domestic Travel and Tourism Market by Value


and Volume (£m, 000 and million), 2005-2009

2005 2006 2007 2008 2009

Expenditure (£m) 22,667 20,965 21,238 21,107 21,881


% change
year-on-year - -7.5 1.3 -0.6 3.7

Trips (000) 138,700 126,300 123,500 117,710 126,010


% change
year-on-year - -8.9 -2.2 -4.7 7.1

Bed nights (million) 442.2 400.1 394.4 378.4 398.8


% change
year-on-year - -9.5 -1.4 -4.1 5.4

Note: figures relate to trips of at least 1 night but fewer than 60 days.

Source: United Kingdom Tourism Survey/Key Note

© Key Note Ltd 2010 73


Travel & Tourism Market The Domestic Market

Figure 5.1: The UK Domestic Travel and Tourism Market by


Number of Trips (000), 2005-2009
140,000

137,500

135,000

132,500

130,000

127,500

125,000

122,500

120,000

117,500

2005 2006 2007 2008 2009

Note: figures relate to trips of at least 1 night but fewer than 60 days.

Source: United Kingdom Tourism Survey/Key Note

By Purpose of Trip
Trips for holidays are the largest sector of the UK domestic travel and tourism
market and, in 2009, were also the most buoyant, with expenditure on this
sector of the market rising by 10.7% to £12.61bn. By contrast, the other sectors
of the domestic market were less dynamic, with expenditure on VFR, on
business trips and on trips for miscellaneous purposes down by 5.1%, 3.3% and
12.9%, respectively. Trips for holiday purposes accounted for 57.6% of the UK
domestic travel and tourism market by value in 2009 up from 50.7% in 2005.

© Key Note Ltd 2010 74


Travel & Tourism Market The Domestic Market

Table 5.2: The UK Domestic Travel and Tourism Market by


Purpose of Trip by Value (£m and %), 2005-2009

2005 2006 2007 2008 2009


Expenditure (£m)
Holiday 11,492 10,906 11,465 11,388 12,612
VFR 5,355 4,819 4,835 4,750 4,509
Business 5,251 4,643 4,451 4,483 4,336
Miscellaneous 568 597 487 487 424
Total †22,667 20,965 21,238 †21,107 21,881

% of Total
Holiday 50.7 52.0 54.0 54.0 57.6
VFR 23.6 23.0 22.8 22.5 20.6
Business 23.2 22.1 21.0 21.2 19.8
Miscellaneous 2.5 2.8 2.3 2.3 1.9
Total 100.0 †100.0 †100.0 100.0 †100.0

VFR — visiting friends and relatives


† — does not sum due to rounding
Note: figures relate to trips of at least 1 night but fewer than 60 days.

Source: United Kingdom Tourism Survey/Key Note

In volume terms, there was a 16.7% increase to 60.7 million in the numbers of
trips made for holiday purposes in 2009. This, in turn, raised the share of the
trips total accounted for by holidays from 44.2% in 2008 to 48.2% in 2009.
According to VisitEngland, 34% of these trips were made to the seaside, and
a further 24% were made to the countryside. Almost two-fifths of these trips
involved holidays of 4 nights or more.

There was a slight increase in the number of trips for VFRs in 2009, which was
up 0.7% to 44.4 million, but the numbers of trips made for business and
miscellaneous purposes was down.

© Key Note Ltd 2010 75


Travel & Tourism Market The Domestic Market

Table 5.3: The UK Domestic Travel and Tourism Market by


Purpose of Trip by Volume (million and %), 2005-2009

2005 2006 2007 2008 2009


Trips (million)
Holiday 59.3 53.3 53.7 52.0 60.7
VFR 52.7 49.6 47.8 44.1 44.4
Business 22.5 19.2 18.8 18.2 18.0
Miscellaneous 4.2 4.2 3.2 3.5 2.9

Total 138.7 126.3 123.5 †117.7 126.0

% of Total
Holiday 42.8 42.2 43.5 44.2 48.2

VFR — visiting friends and relatives


† — does not sum due to rounding
Note: figures relate to trips of at least 1 night but fewer than 60 days.

Source: United Kingdom Tourism Survey/Key Note

By Season
Seasonality is a feature of the UK domestic travel and tourism market with the
third quarter of the year (July to September) being the most popular.
According to VisitEngland, the domestic holiday market is more seasonal than
the UK domestic travel and tourism market as a whole, with 39% of holiday
trips taken in the third quarter of the year, compared to 32.7% overall, and
30% taken in the second quarter, compared to 27.8% overall.

© Key Note Ltd 2010 76


Travel & Tourism Market The Domestic Market

Table 5.4: The UK Domestic Travel and Tourism Market —


Expenditure, Number of Trips and Number of Bed Nights
by Season of Stay (£m, million and %), 2009

Expenditure Trips Bed Nights


% of % of % of
£m Total Million Total Million Total

Quarter 1 3,378 15.4 21.0 16.7 55.0 13.8


Quarter 2 6,353 29.0 35.1 27.8 111.4 28.0
Quarter 3 7,678 35.1 41.2 32.7 154.0 38.6
Quarter 4 4,471 20.4 28.8 22.8 78.0 19.6

Total 21,880 †100.0 126.1 100.0 398.4 100.0

† — does not sum due to rounding at source


Note: figures relate to trips of at least 1 night but fewer than 60 days.

Source: United Kingdom Tourism Survey/Key Note

By Destination
Assessed in terms of region of residence, the South East of England is the main
base for UK domestic tourists, accounting for between 15% and 15.5% of trips,
expenditure and bed nights in 2009. Overall, residents of England accounted
for 83.7% of domestic travel and tourism expenditure and 85.7% of trips in
2009.

© Key Note Ltd 2010 77


Travel & Tourism Market The Domestic Market

Table 5.5: The UK Domestic Travel and Tourism Market —


Expenditure, Number of Trips and Number of Bed Nights
by Region of Residence (£m, million and %), 2009

Expenditure Trips Bed Nights


% of % of % of
£m Total Million Total Million Total
England
South East 3,272 15.0 19.2 15.3 61.9 15.5
South West 2,298 10.5 15.4 12.2 48.3 12.1
North West 2,290 10.5 13.1 10.4 42.8 10.7
Yorkshire and
Humberside 2,259 10.3 13.3 10.6 41.2 10.3
East of
England 2,183 10.0 13.1 10.4 41.0 10.3
East Midlands 1,691 7.7 9.7 7.7 30.6 7.7
London 1,684 7.7 10.3 8.2 30.6 7.7
West Midlands 1,598 7.3 8.7 6.9 30.0 7.5
North East 1,026 4.7 5.2 4.1 16.1 4.0
Total
England 18,301 83.7 108.0 85.8 342.5 85.8

Scotland 2,043 9.3 10.2 8.1 32.9 8.2


Wales 886 4.0 5.2 4.1 16.2 4.1
Northern
Ireland 650 3.0 2.5 2.0 7.4 1.9

Total 21,880 100.0 125.9 †100.0 399.0 100.0

† — does not sum due to rounding


Note: figures relate to trips of at least 1 night but fewer than 60 days

Source: United Kingdom Tourism Survey/Key Note

By Mode of Transport
Transportation by owned car remains the most popular method of transport
used for UK domestic tourism by far, with the percentage of trips made via this
mode increasing from 73% in 2008 to 75% in 2009. The only noticeable change
in domestic tourism transportation modes during the review period was the
increase, from 11% in 2005 to 13% in 2008, in the percentage of people
travelling by train.

© Key Note Ltd 2010 78


Travel & Tourism Market The Domestic Market

Table 5.6: The UK Domestic Travel and Tourism Market by Mode


of Transport (% of trips), 2005-2009

2005 2006 2007 2008 2009

Any car (own/friend’s/


firm’s/hire) 74 74 74 73 75
Train 11 12 12 13 12
Plane 4 4 4 4 3
Scheduled bus/coach 3 3 3 3 3
Organised coach trip 2 2 2 2 2
Other 6 5 5 5 5

Total 100 100 100 100 100

Note: refers to the mode of transport used on the longest part of the journey; figures
relate to trips of at least 1 night but fewer than 60 days.

Source: United Kingdom Tourism Survey/Key Note

By Type of Accommodation
Both room occupancy and bedspace occupancy rates fell across the UK in 2009.
At 60% room occupancy was highest in Scotland and lowest in Northern
Ireland (49%). For bedspace occupancy, a similar pattern occurs with the
average for the UK falling by 1 percentage point between 2008 and 2009 to
43%, and the range of bedspace occupancy rates being highest in Scotland and
lowest in Northern Ireland. The UK occupancy survey estimates that non-UK
residents accounted for around 6% of bedspace occupancy in 2009.

Table 5.7: The UK Domestic Travel and Tourism Market —


Serviced Accommodation Occupancy by Country (%), 2005-2009

2005 2006 2007 2008 2009


Room Occupancy
England 60 62 63 60 58
Scotland 58 59 60 59 60
Wales 55 56 54 52 52

Table continues...

© Key Note Ltd 2010 79


Travel & Tourism Market The Domestic Market

Table 5.7: The UK Domestic Travel and Tourism Market —


Serviced Accommodation Occupancy by Country (%), 2005-2009

...table continued

2005 2006 2007 2008 2009


Room Occupancy (cont.)
Northern Ireland 53 54 58 54 49
UK 59 61 62 60 58

Bedspace Occupancy
England 45 47 49 44 43
Scotland 44 45 46 45 46
Wales 40 42 40 39 38
Northern Ireland 36 37 40 38 36
UK 44 47 48 44 43

Note: the difference between bedroom and bedspace occupancy is explained by single
occupancy of double/twin rooms or, in some cases, empty beds in family rooms. A double
room occupied by one person has 100 per cent room occupancy but only 50% bedspace
occupancy.

Source: United Kingdom Occupancy Survey

Occupancy by Type of Establishment


UK room and bedspace occupancy levels vary depending on the type of
establishments. In 2009, room occupancy levels at hotels fell to 62% and to
49% and 44% for guest houses and bed-and-breakfast establishments,
respectively.

Bedspace occupancy rates for hotels fell to a 4-year low of 46% in 2009. For
guest houses and bed and breakfasts, the occupancy rates remained
unchanged in 2009 at 38% and 36%, respectively.

© Key Note Ltd 2010 80


Travel & Tourism Market The Domestic Market

Table 5.8: The UK Domestic Travel and Tourism Market —


Serviced Accommodation Occupancy by Type of
Establishment (%), 2005-2009

2005 2006 2007 2008 2009


Room Occupancy
Hotels 62 65 67 64 62
Guest houses 53 50 50 50 49
Bed and breakfasts 47 50 44 45 44

Bedspace Occupancy
Hotels 46 49 52 47 46
Guest houses 41 39 40 38 38
Bed and breakfasts 36 38 35 36 36

Source: United Kingdom Occupancy Survey

The two most popular types of accommodation for domestic tourism are the
homes of friends and relatives, which accounted for 38% of all trips taken in
2009, and hotels/motels and guest houses, which accounted for a further 33%
of trips. Generally, the level of popularity of the various types of
accommodation remains fairly stable year-on-year with little real movement.

Table 5.9: The UK Domestic Travel and Tourism Market by Type


of Accommodation (% of trips), 2005-2009

2005 2006 2007 2008 2009

Friends’/relatives’ homes 40 41 40 39 38
Hotel/motel/guest house 31 31 32 33 33
Rented house/flat/chalet 5 5 5 5 6
Farmhouse/bed and
breakfast 5 5 5 5 5
Camping 4 4 4 4 4
Towed caravan 4 3 4 3 4
Hostel/university/school 2 2 1 2 2
Second home/timeshare 1 1 1 1 1

Table continues...

© Key Note Ltd 2010 81


Travel & Tourism Market The Domestic Market

Table 5.9: The UK Domestic Travel and Tourism Market by Type


of Accommodation (% of trips), 2005-2009

...table continued

2005 2006 2007 2008 2009


Other 8 8 8 8 9

Total 100 100 100 100 †100

† — does not sum due to rounding at source


Note: figures relate to trips of at least 1 night but fewer than 60 days.

Source: Visit Britain United Kingdom Tourism Survey/Key Note

In terms of consumer expenditure on UK domestic travel and tourism


accommodation, the main beneficiaries are hotels, motels and guest houses,
which accounted for 46% of the total in 2009. Staying in the homes of friends
and relatives accounted for a further 20% of expenditure in 2009, which was
1 percentage point lower than in 2008. Relatively inexpensive forms of
accommodation such as camping and towing a caravan each accounted for 3%
of total expenditure in 2009.

Table 5.10: The UK Domestic Travel and Tourism Market by Type


of Accommodation (% of expenditure), 2005-2009

2005 2006 2007 2008 2009

Hotel/motel/guest house 45 46 46 48 46
Friends’/relatives’ homes 24 21 21 21 20
Rented house/flat/chalet 7 8 9 9 10
Farmhouse/bed and
breakfast 7 6 6 6 6
Towed caravan 3 3 3 3 3
Camping 2 2 2 2 3
Hostel/university/school 2 2 1 2 2
Second home/timeshare 1 1 1 1 1
Other 9 11 11 9 10

Table continues...

© Key Note Ltd 2010 82


Travel & Tourism Market The Domestic Market

Table 5.10: The UK Domestic Travel and Tourism Market by Type


of Accommodation (% of expenditure), 2005-2009

...table continued

2005 2006 2007 2008 2009


Total 100 100 100 †100 †100

† — does not sum due to rounding


Note: figures relate to trips of at least 1 night but fewer than 60 days.

Source: United Kingdom Tourism Survey/Key Note

SUPPLY STRUCTURE
The principal suppliers of services to the domestic travel and tourism market
are transport operators and accommodation providers. The structure of these
two sectors is analysed in this section of the Key Note Market Review.

Transport Operators
The main providers of transport in the domestic travel and tourism market are
passenger-train operators, bus and coach operators, and domestic airlines.
Much of the public transport network in the UK is deregulated, although
bodies such as the Civil Aviation Authority (CAA) oversee safety, consumer
protection and the economics of public transport provision. The Department
for Transport (DfT) also has an important role in awarding the franchises that
are required by most of the train-operating companies (TOCs).

Bus and Coach Operators


Local bus services in the UK were deregulated following the Transport Act of
1985. The industry subsequently consolidated and five major bus companies
emerged including FirstGroup PLC, Stagecoach Group PLC, Arriva PLC, The
Go-Ahead Group PLC and National Express Group PLC.

As of July 2010, these five companies are estimated to have operated around
26,900 vehicles out of a total UK bus fleet of around 44,000 vehicles. Combined
they accounted for an estimated 61.1% of the total.

© Key Note Ltd 2010 83


Travel & Tourism Market The Domestic Market

Table 5.11: Leading Bus Operators in the UK by Estimated Size


of Fleet (number and %), July 2010

Number of Buses in
the UK % of Total
Top Five Operators
Firstgroup PLC 8,500 19.3
Stagecoach Holdings PLC 7,000 15.9
Arriva PLC 6,300 14.3
The Go-Ahead Group PLC 3,500 8.0
National Express Group PLC 1,600 3.6
Total top five operators 26,900 61.1

Other operators 17,100 38.9

Total 44,000 100.0

Source: Key Note

Train Operators
The rail network in Great Britain consists of five high-speed main lines (the
West Coast, East Coast, Midland, Great Western and Great Eastern) which
branch out from London to the rest of the country. These are in turn
augmented by regional rail lines and commuter networks within the major
cities. The Channel Tunnel Rail Link is operationally separate from the rest of
the network.

The infrastructure (track, stations, depots and signalling) is owned and


maintained by Network Rail. Passenger services are operated by TOCs, most of
which are franchises awarded by the Government. Most of the train operating
companies lease the locomotives and coaches they use from rolling stock
operating companies (ROSCOs). Train maintenance is usually carried out by
specialist companies such as Bombardier and Alstom.

Train-Operating Companies
There are 24 train companies in the UK comprising 19 franchised train
operators and 5 non-franchised/open access operators.

For 16 of the 19 franchised train operators in Great Britain the DfT is the
awarding body. The three exceptions are:

• Merseyrail — Merseytravel awards and manages the concession on behalf of


Merseyside PTE

© Key Note Ltd 2010 84


Travel & Tourism Market The Domestic Market

• Scotrail — the Scottish Executive awards and manages the franchise

• Arriva Trains Wales — the Welsh Assembly has managed the franchise since
July 2006, though it was originally awarded by the DfT.

The non-franchised/open access operators do not have their services specified


by the DfT, the Scottish Executive, Welsh Assembly or Merseytravel. These
operators include:

• Eurostar

• Heathrow Express

• First Hull Trains

• Grand Central

• Wrexham and Shropshire.

Another train operation, Heathrow Connect, is a London service jointly owned


by Heathrow Express and First Great Western, which connects Heathrow
airport with Paddington station. The service follows the same route as the
Heathrow Express service but serves intermediate stations en route, thus
connecting several locations in west London with each other, the airport,
and central London.

The leading operators of franchised train services in Great Britain include


FirstGroup, which operates four services; Go-Ahead/Govia, which operates
three services; Stagecoach Group, which operates two franchises and has a 49%
shareholding in Virgin Rail Group, which in turn operates the West Coast rail
franchise; and Arriva, which operates two franchises. National Express UK rail
operations include the East Anglia service and the London commuter service,
c2c. In November 2009, National Express relinquished its loss-making East Coast
operation and at the same time, the Government established a holding
company, Directly Operated Railways, to take over the franchise.

Table 5.12: Passenger Train-Operating Companies in Great


Britain, July 2010

Franchise End
Owner Franchised Services Date

Arriva Trains Wales/Trenau


Arriva/Deutsche Bahn Arriva Cymru 31/12/2018
Cross Country Trains 01/04/2015
Abellio/Serco Rail Merseyrail 19/07/2028
Northern Rail 11/09/2013
Directly Operated Railways East Coast Mainline n.a

Table continues...

© Key Note Ltd 2010 85


Travel & Tourism Market The Domestic Market

Table 5.12: Passenger Train-Operating Companies in Great


Britain, July 2010

...table continued

Franchise End
Owner Franchised Services Date
FirstGroup PLC First Capital Connect 31/03/2015
First Great Western 31/03/2016
First Scotrail 08/11/2014
FirstGroup PLC/Keolis SA First TransPennine Express 31/01/2012
Govia Ltd London Midland 19/09/2015
London and South Eastern
Railway 31/03/2014
Southern Railway 19/09/2009
DB Regio UK Ltd (Deutsche
Bahn AG) The Chiltern Railway Company 31/12/2021
MTR/DB Regio UK Ltd
(Deutsche Bahn AG) London Overground 31/03/2014
National Express Group PLC c2c Rail 31/05/2011
National Express East Anglia 31/03/2011
Stagecoach Group PLC Stagecoach South Western 03/02/2017
East Midland Trains 31/03/2015
Virgin Rail Group Ltd West Coast Trains 31/03/2012

Owners Non-Franchised Services

London & Continental


Railways Ltd Eurostar
Grand Central Railways Co.
Ltd Grand Central
BAA Heathrow Express
Firstgroup PLC/Renaissance
Trains Hull Trains
Renaissance Trains/Laing Rail/
Deutsche Bahn Wrexham and Shropshire

n.a — not available

Source: Association of Train Operating Companies

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Travel & Tourism Market The Domestic Market

Domestic Air Travel


The majority of domestic air travel in the UK is undertaken on scheduled flights.
In 2009, 19.5 million passengers were booked on domestic scheduled flights
compared to the 185,600 who travelled on non-scheduled or charter services.

The trend in domestic air travel between 2005 and 2009 has generally been
one of downturn, with the 2009 total of 19.7 million passengers a 15.4%
reduction on 2005 figures. This fall has been caused in part by rising air travel
taxes, an improving rail network and cuts in the number of domestic air routes
served by the airlines.

In 2009, four airlines accounted for 87.9% of the 19.7 million passengers who
used scheduled domestic flights. easyJet conveyed 5.2 million passengers, Flybe
uplifted 4.9 million, British Airways transported 4 million passengers and BMI
carried 3.2 million.

Table 5.13: Domestic Air Passengers Uplifted on Scheduled and


Non-Scheduled Services in the UK (000), 2005-2009

2005 2006 2007 2008 2009

Scheduled 23,137.8 22,860.0 20,070.9 20,921.5 19,543.5


Non-scheduled† 179.1 204.0 297.5 150.8 185.6

Total 23,316.9 23,064.0 20,368.4 21,072.3 19,729.1


% change
year-on-year - -1.1 -11.7 3.5 -6.4

† — excludes Air Europe operations


Note: data exclude small airlines’ public transport operations.

Source: UK Airline Statistics, Civil Aviation Authority (CAA)

Accommodation Providers
The accommodation sector of the domestic travel and tourism market is
dominated by the hotel chains, with the two leading hotel groups by outlet
numbers including the budget chains, Premier Inn Hotels and Travelodge
Hotels. Other leading hotel chains by number of outlets include Best Western
with 270 hotels and the InterContinental Hotel Group with around 250.

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Travel & Tourism Market The Domestic Market

Table 5.14: Selected Hotel Chains by Estimated Number of


Outlets, 2010

Premier Inn Hotels Ltd 580


Travelodge Hotels Ltd 452
Best Western Great Britain 270
InterContinental Hotel Group PLC 250
Accor UK Economy Hotels Ltd 143
Hilton International Hotels (UK) Ltd 80
Jarvis Hotels Ltd 47
Choice Hotels Europe 45
De Vere Hotels & Leisure Ltd 42
Thistle Hotels 32

Source: Key Note

MAJOR PLAYERS

Bus and Coach Operators


The UK bus and coach sector is dominated by five large operators: FirstGroup,
Stagecoach Group, The Go-Ahead Group, National Express Group and Arriva.
National Express Group and FirstGroup are profiled in Chapter 4 — Competitive
Structure. Profiles for Arriva, Stagecoach Group and The Go-Ahead Group are
included below.

Arriva PLC
Arriva PLC is one of Europe’s largest transport service organisations with
operations in the UK, the Czech Republic, Denmark, Germany, Hungary, Italy,
the Netherlands, Poland, Portugal, Slovakia, Spain and Sweden. The company
has 42,000 employees and provides more than 1 billion passenger journeys
each year through an extensive range of public transport services which covers
buses, trains, commuter coaches, airside transport and water buses.

Arriva has bus operations in the North East, North West, the South East of
England, Yorkshire, the Midlands, Scotland and Wales. It is also one
of London’s largest bus operators under contract to Transport for London (TfL).
The company operates a fleet of more than 6,300 buses.

In addition to the UK, Arriva has bus operations in ten other European
countries with a combined fleet of over 8,000 buses. This includes around 1,720
buses in Denmark and 1,760 buses in Italy.

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Travel & Tourism Market The Domestic Market

The UK rail operations of Arriva PLC comprise the Arriva Trains Wales/Trenau
Arriva Cymru franchise, which stretches from Manchester, through north and
south Wales and across to Birmingham and Gloucester; and the CrossCountry
network, which stretches from Aberdeen to Penzance.

In April 2010, Arriva PLC recommended a £1.59bn cash takeover by Deutsche


Bahn, the German state-backed rail company. Deutsche Bahn is already
involved in the operation of the Chiltern rail franchise in the UK and also
London Overground.

In the year ending 31st December 2009, Arriva PLC had a turnover of £3.15bn
up from £3.04bn in 2008 and a pre-tax profit of £121.7m down from £150m in
2008. According to Arriva’s Annual Report and Accounts 2009, the UK bus
division contributed £961.5m to group turnover in 2009 and the UK train
division contributed £702.6m.

The Go-Ahead Group PLC


The Go-Ahead Group PLC is one of the UK’s leading providers of passenger
transport services with operations in the bus and rail service sectors. The
company employs around 27,000 people across the country and around 960
million passenger journeys are undertaken on its services each year.

Go-Ahead operates a fleet of over 3,500 buses, which carry, on average, around
1.6 million passengers every day. The company’s operations are focused on
high-density commuter markets. This includes a strong presence in London
where it provides regulated services for TfL and the operation of deregulated
services in the North East, Oxford, the South East and southern England.

The rail operation, Govia, is 65% owned by Go-Ahead and 35% owned by
Keolis, a France-based operator of passenger transport services which is
majority owned by the French national railway SNCF. Through Govia,
Go-Ahead operates three rail franchises — Southeastern, Southern and London
Midland. The company is the UK’s busiest rail operator, carrying almost 30%
of rail passengers.

Go-Ahead also provides car parking services through its Meteor operation,
which includes the ’Meet & Greet’ and ’Pink Elephant’ brands. Other activities
include limited ground handling services at Terminal 1, Heathrow. In December
2009, Go-Ahead announced that it had sold the majority of its ground handling
and cargo operations at Heathrow to Dnata, a supplier of air travel services,
and most of its ground handling operations outside of Heathrow to Servisair
UK Ltd.

Outside of the UK, the Go-Ahead Group has formed a new joint venture
company with Cook-Illinois Corp, a Chicago-based school bus operator, to
pursue potential opportunities for school bus contracts in North America.

In the year ending 27th June 2009, the Go-Ahead Group PLC reported an
increase of 6.7% in turnover to £2.35bn and a decline in pre-tax profit of 59.3%
to £42.9m. The bus division contributed £584.7m to group turnover in 2009, a
4.8% increase compared with 2008. Go-Ahead’s half-year report for the
6 months ending 2nd January 2010 showed a turnover of £1.1bn and a pre-tax
profit before amortisation of £50m.

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Travel & Tourism Market The Domestic Market

Stagecoach Group PLC


Stagecoach Group PLC is a leading international public transport group, with
extensive operations in the UK, the US and Canada. The Group employs around
30,000 people, and operates bus, coach, train and tram services. The Group has
three main divisions — UK Bus, UK Rail and North America.

Stagecoach’s UK Bus Division connects communities in more than 100 towns


and cities across the UK on networks stretching from the Highlands and Islands
of Scotland to South West England. The company has a fleet of around 7,000
buses and coaches and carries an estimated 2 million people each day.
Stagecoach also operates a network of intercity services under the Megabus
brand.

The Stagecoach Group’s UK rail business includes the operation of the South
Western and East Midlands rail franchises and the operation, in a joint venture
with the Virgin Rail Group, of the West Coast long-distance rail franchise. The
Group also runs: Supertram, a 29-kilometre (km) light rail network based in
Sheffield; and the Manchester Metrolink tram network under a 10-year
contract with Greater Manchester Passenger Transport Executive.

Outside of the UK, Stagecoach’s Coach USA and Coach Canada businesses
provide transport services in North America. These businesses include the
budget coach brand, megabus.com, commuter/transit services, inter-city
services, tour, charter, sightseeing and school bus operations. The company
operates a fleet of around 2,700 vehicles in North America.

In the year ending 30th April 2010, Stagecoach Group PLC achieved a turnover
of £2.16bn and a pre-tax profit of £125.9m, after exceptional items. In 2009,
turnover was £2.1bn with a pre-tax profit of £170.8m. According to the Group’s
Annual Report and Accounts 2010, the UK rail business contributed £1.03bn to
group turnover in 2010 and the UK bus division £875.4m.

Accommodation Providers — Hotels

Accor UK
Accor UK Ltd is part of Accor SA, a large French multinational corporation
whose main operation is running chains of hotels and restaurants. Accor SA
has more 4,100 hotels in 90 countries, nearly 500,000 rooms and some 145,000
employees. The company’s hotel brands range from the luxury to the economy
and include the Sofitel, Pullman, Novotel, Mercure, Suitehotel, Ibis, All Seasons,
Etap Hotel and Formule 1 brands. Accor currently has 143 hotels based in the
UK.

Best Western Great Britain


Best Western Great Britain is part of Best Western International, one of the
world’s largest hotel chains. The organisation currently has over 270 individual
hotels in the UK and over 15,500 bedrooms. Worldwide, the company has over
4,000 hotels in 80 countries. Over 90% of the hotels in the UK are in the
mid-market 3-star sector with the remainder being in the 4-star market.

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Choice Hotels Europe


Choice Hotels Europe is the trading name of Quality Hotels Ltd, a subsidiary of
Choice Hotels International, Inc. Choice Hotels International is one of the
world’s largest lodging franchisors, with 500 locations in Europe and more than
6,000 hotels. In the UK, Choice Europe operates more than 45 hotels under the
Comfort, Quality, Sleep Inn and Clarion brands.

De Vere Hotels & Leisure Ltd


De Vere Hotels & Leisure Ltd has 42 locations across the UK consisting of 29 De
Vere Venues and 13 De Vere Hotels and Resorts. The company also offers luxury
lodges and apartments at four locations. De Vere Hotels & Leisure Ltd is part
of The Alternative Hotels Group Ltd which owns a number of leisure and hotel
brands including Malmaison, Hotel Du Vin, Village Hotels and Greens Health
and Fitness.

In the year ending 31st December 2008, De Vere Hotels & Leisure Ltd reported
a turnover of £159.3m and a pre-tax loss of £10.9m. In the previous 15-month
period ending 31st December 2007, De Vere Hotels & Leisure Ltd reported a
turnover of £240.6m and a pre-tax profit of £486.8m (includes exceptional
income of £403.9m).

Hilton International Hotels (UK) Ltd


Hilton International Hotels (UK) Ltd is part of the Hilton Hotels Corporation, a
leading global hospitality company, with more than 3,500 hotels in 81
countries. The company holds a portfolio of hotel brands which include the
Waldorf Astoria, Conrad, Hilton, Doubletree, Embassy Suites, Hilton Garden
Inn, Hampton Inn & Suites, Homewood Suites by Hilton, Home2 Suites by Hilton
and Hilton Grand Vacations. Hilton operates around 80 hotels in the UK.

In the year ending 31st December 2008, Hilton International Hotels (UK) Ltd
reported a turnover of £59.4m up from £58.1m in 2007. The company reported
a pre-tax loss of £444.3m in 2008 and a pre-tax loss of £120.6m in 2007.

Intercontinental Hotels Group PLC


The UK-based InterContinental Hotels Group PLC is one of the world’s leading
global hotel companies with seven hotel brands, which include
InterContinental, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn Express,
Staybridge Suites and Candlewood Suites. The company has over 4,400 hotels
across almost 100 countries.

InterContinental Hotels operates hotels in three different ways — as a


franchisor, as a manager and on an owned and leased basis. In the year ending
31st December 2009, 3,799 hotels operated under franchise agreements, 622
hotels were managed and 17 hotels were owned or leased. Across Europe,
Middle East and Africa, InterContinental Hotels operated 695 hotels at the end
of 2009 including around 250 hotels in the UK.

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Travel & Tourism Market The Domestic Market

In the year ending 31st December 2009, InterContinental Hotels Group PLC
reported a turnover of $1.54bn down from $1.9bn in 2008. A pre-tax loss of
$64m was announced for 2009 compared with a pre-tax profit of $316m in
2008.

Jarvis Hotels Ltd


Jarvis Hotels Ltd owns and operates over 47 Ramada Jarvis and associated
hotels throughout the UK. The company’s hotels operate under the Ramada
Jarvis brand following an agreement with Marriott International to rebrand
the majority of the group’s properties to Ramada Jarvis.

In the year ending 28th March 2009, turnover was £129.6m down from
£130.1m in 2008. The company reported a pre-tax loss of £4.1m in 2009,
compared to a profit of £4.5m in 2008.

Premier Inn Hotels Ltd


Premier Inn is the UK’s largest budget hotel brand with over 580 hotels and
more than 40,000 rooms across the UK and the Republic of Ireland. New hotels
which opened in the UK in 2010 include establishments based in Falkirk,
Stratford and Liverpool. Premier Inn also opened a hotel at Dubai International
airport, the company’s third property in the Gulf region. Towards the end of
2009, the company opened its first Premier Inn hotel in Bangalore, India.

In the year ending 26th February 2009, Premier Inn Hotels Ltd reported a
turnover of £33.8m and a pre-tax loss of £28m. In 2007, turnover was £159.5m
and a pre-tax profit was £409.2m.

Thistle Hotels
Thistle Hotels is part of Guoman Hotel Management (UK) Ltd and operates 33
3- and 4-star hotels across the UK including 12 hotels in London. Guoman
Hotels also operate four deluxe hotels in central London — The Charing Cross,
The Cumberland, The Royal Horseguards and The Tower.

Travelodge Hotels Ltd


Travelodge was the first budget hotel brand to launch in the UK in 1985 and
now operates hotels in the UK, the Republic of Ireland and Spain. The chain is
owned by Dubai International Capital, which acquired the organisation from
Permira in 2006. In July 2010, Travelodge acquired the leases of 52 Innkeeper’s
Lodges (1,994 rooms) from restaurant and pub operator Mitchells & Butlers, an
acquisition which boosted its estate to 452 hotels and increased its room stock
to 30,504. Ten of the hotels are in the Republic of Ireland, three are in Spain
and the rest are in the UK. Travelodge plans to operate 70,000 rooms
(approximately 1,000 hotels) by 2020.

In the year ending 31st December 2009, Travelodge Hotels Ltd recorded a
turnover of £294.4m up from £287m in 2008. The company made a pre-tax
profit of £66.5m in 2009 compared to £8.7m in 2008.

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Travel & Tourism Market The Domestic Market

Other Accommodation Providers

Bourne Leisure Group Ltd


Bourne Leisure Limited is one of the UK’s leading leisure companies with
brands which include Warner, Haven, Owners Exclusive and Butlins. Warner’s
inclusive short breaks are available all year round at 13 hotels and resorts and
the Haven and Owners Exclusive businesses operate 35 holiday parks spread
across the UK. Butlins has camps based in Minehead, Skegness and Bognor
Regis, along with several hotels.

In the year ending 31st December 2008, turnover for Bourne Leisure Group Ltd
was £90.7m compared with £95.6m in 2007, while pre-tax profit was £15.9m
in 2008, down from £17.9m in 2007.

Holidaybreak PLC
Holidaybreak PLC is an education, leisure and activity travel group. The group
operates in the UK and other major European markets and its activities cover
educational and activity trips for UK schoolchildren, short breaks in the UK and
Europe, worldwide adventure holidays and mobile-home and camping
holidays on sites throughout Europe.

In the year ending 30th September 2009, Holidaybreak PLC had a turnover of
£473.4 up from £455.1m in 2008. Pre-tax profit was £5.4m in 2009, down from
£23.4m in 2008.

The interim results for Holidaybreak PLC for the 6 months ending
31st March 2010 show a turnover of £150.2m and a pre-tax loss (statutory) of
£20m. For the corresponding period in 2009, the company reported a turnover
of £153.2m and a pre-tax loss of £36.6m.

The Hoseasons Group Ltd


The Hoseasons Group Ltd, formally Holiday Cottages Group Ltd, is an
international provider of travel and holiday letting or real estate services. The
Holiday Cottages Group provides self-catering cottages, and camping and
boating holidays in the UK, France, Spain, Italy and the Republic of Ireland. The
Hoseasons Group Ltd is a subsidiary of the US-based Wyndham Worldwide
Corporation.

In the year ending 31st December 2009, the Hoseasons Group Ltd had a
turnover of £46.1m, up from £43.4m in 2008, and a pre-tax profit of £6.6m
compared with a pre-tax loss of £6.5m in 2008.

© Key Note Ltd 2010 93


Travel & Tourism Market The Domestic Market

MARKETING ACTIVITY

Bus and Coach Operators


Main media advertising expenditure by UK bus and coach operators fell for the
third successive year in the year ending March 2010, with a decline of 8.4% to
£9.9m. One of the main reasons for this fall was the ongoing reduction in main
media advertising by London Transport/TfL, which spent £268,000 on this
activity in the year ending March 2010 compared to £1.2m in the previous year
and £7.6m in the year ending March 2007.

The leading bus and coach operator by main media advertising expenditure
was National Express, which spent £3.7m in the year ending March 2010
equating to more than a third (37.4%) of the total. Of the other major bus
operators, FirstGroup spent £215,000 and Stagecoach £196,000.

Table 5.15: Main Media Advertising Expenditure by UK Bus and


Coach Operators (£000), Years Ending March 2006-2010

2006 2007 2008 2009 2010

National Express
Group 1,671 1,393 2,151 3,242 3,726
Coach Holidays.Com n.a n.a n.a 134 652
Glenton n.a n.a n.a 136 372
David Urquhart 656 511 525 453 282
Network West
Midlands n.a n.a n.a 463 282
London Transport/TfL 667 7,568 2,886 1,244 268
FirstGroup 209 676 375 213 215
Travelsphere 916 848 198 426 196
Stagecoach n.a 145 781 321 196
WA Shearings 1,294 792 356 180 102
Others 5,511 4,099 4,735 4,049 3,657

Table continues...

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Travel & Tourism Market The Domestic Market

Table 5.15: Main Media Advertising Expenditure by UK Bus and


Coach Operators (£000), Years Ending March 2006-2010

...table continued

2006 2007 2008 2009 2010


Total †10,923 †16,031 12,007 10,861 †9,950

% change year-on-year - 46.8 -25.1 -9.5 -8.4

n.a — not available


TfL — Transport for London
† — does not sum due to rounding at source

Source: Nielsen Media Research

Train Operators
Main media advertising expenditure by train operators amounted to some
£27.9m in the year ending March 2010, a reduction of 2.4% on 2009 and the
first annual fall since at least 2006. This decline occurred despite leading
advertisers such as Virgin Trains, Network Rail, Great Rail Journeys and Eurostar
all increasing their expenditure in the latest year. A sharp reduction on main
media advertising by Heathrow Express contributed to this slide and both East
Midlands Trains and South Eastern spent less in the year to March 2010
compared to the previous year.

Table 5.16: Main Media Advertising Expenditure by Train


Operators (£000), Years Ending March 2006-2010

2006 2007 2008 2009 2010

Virgin Trains 8,694 6,400 5,125 1,589 5,160


Network Rail n.a 1,654 1,392 2,097 3,607
Great Rail Journeys 1,202 2,275 3,656 2,824 3,606
Eurostar 4,717 3,201 5,404 1,680 2,888
Cross Country Train n.a n.a 816 979 1,756
Heathrow Express 486 365 1,272 5,193 1,459
Gatwick Express 375 350 926 867 1,123
East Midlands Trains n.a n.a n.a 1,237 842
East Coast n.a n.a n.a n.a 820

Table continues...

© Key Note Ltd 2010 95


Travel & Tourism Market The Domestic Market

Table 5.16: Main Media Advertising Expenditure by Train


Operators (£000), Years Ending March 2006-2010

...table continued

2006 2007 2008 2009 2010


Treyn Holidays by
Rail n.a n.a n.a 421 762
South Eastern n.a 164 94 823 360
South West Trains n.a 213 333 545 102
Others 9,201 10,251 8,919 10,382 5,458

Total †24,677 †24,874 †27,940 28,637 †27,942

% change
year-on-year - 0.8 12.3 2.5 -2.4

n.a — not available


† — does not sum due to rounding at source
Note: includes advertising expenditure by outbound and inbound train operators.

Source: Nielsen Media Research

Hotels
Main media advertising expenditure by hotels in the UK has increased on a
yearly basis since 2006 and in the year ending March 2010 it rose by a further
3.7% to £28.4m. The two low-cost hotel chains, Premier Inn and Travelodge,
were the heaviest spenders on main media advertising expenditure in the
latest year, followed by the Holiday Inn and Warner Leisure Hotels. Together
these four chains accounted for half of the hotel sector expenditure on main
media advertising.

All of the other hotels detailed in Table 5.17 reduced their level of main media
advertising expenditure in 2009/2010, with the sharpest fall being reported by
the Mercure chain, which reduced its outlay by almost 80% to £234,000.

© Key Note Ltd 2010 96


Travel & Tourism Market The Domestic Market

Table 5.17: Main Media Advertising Expenditure by UK Hotels


(£000), Years Ending March 2006-2010

2006 2007 2008 2009 2010

Premier Inn 1,339 616 3,538 6,003 5,979


Travelodge 2,054 2,323 2,589 2,570 3,405
Holiday Inn 2,903 4,588 2,493 2,659 2,714
Warner Leisure
Hotels n.a n.a 1,155 1,995 2,058
Hilton 582 808 612 866 599
Hotel Ibis 157 167 865 747 346
Mercure n.a n.a 571 1,119 234
Novotel n.a 1,059 267 648 155
Macdonald Hotels 901 856 304 159 94
Best Western 474 473 316 137 n.a
Others 13,219 12,486 12,928 10,450 12,785

Total †21,630 †23,378 †25,641 27,353 †28,370

% change
year-on-year - 8.1 9.7 6.7 3.7

n.a — not available


† — does not sum due to rounding at source

Source: Nielsen Media Research

Holiday Camps
In the year ending March 2010, main media advertising expenditure by holiday
camps and resorts dropped by more than a quarter (27.9%) to £7.1m. The three
leading advertisers in this sector, Haven, Center Parcs and Butlins, all cut back
on their advertising expenditure during the year, with the sharpest fall being
a 52% reduction to £1.3m by Butlins. The fourth-largest advertiser, Pontins,
increased its advertising outlay by over 70% to £508,000.

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Travel & Tourism Market The Domestic Market

Table 5.18: Main Media Advertising Expenditure by Holiday


Resorts (£000), Years Ending March 2006-2010

2006 2007 2008 2009 2010

Haven 2,224 1,909 2,477 3,197 2,444


Center Parcs 3,147 3,242 2,850 2,047 1,654
Butlins 3,303 2,283 2,732 2,810 1,348
Pontins 585 795 603 296 508
Others 1,579 2,145 1,950 1,511 1,154

Total 10,838 †10,375 10,612 9,861 7,108


% change
year-on-year - -4.3 2.3 -7.1 -27.9

† — does not sum due to rounding at source

Source: Nielsen Media Research

BUYING BEHAVIOUR
Adults aged 35 to 44 years and those in the AB social grades account for the
largest shares of the UK domestic travel and tourism market. According to the
UKTS, in 2009, those aged 35 to 44 accounted for almost a quarter of
expenditure, trips and bed nights, with the 45 to 54 years age group accounting
for the next highest shares, in terms of percentage penetration, within these
three measures. Typically, the share of expenditure, trips and bed nights tends
to increase up to 35 to 44 years and decline thereafter.

There is a clear association between social grade and domestic travel and
tourism with the AB social grade accounting for between 33.8% and 38.7% of
expenditure, trips and bed nights. Social grades D and E make the smallest
contribution to expenditure and trips, while social grade C2 had the lowest
percentage penetration of bed nights at 16.6%.

© Key Note Ltd 2010 98


Travel & Tourism Market The Domestic Market

Table 5.19: The UK Domestic Travel and Tourism Market — Share


of Expenditure, Trips and Bed Nights by Age Group
and Social Grade (%), 2009

Expenditure (%) Trips (%) Nights (%)


Age
16-24 9.5 11.9 10.6
25-34 16.6 17.4 15.9
35-44 24.1 24.5 23.4
45-54 20.1 17.7 16.7
55-64 16.7 15.7 16.4
65+ 12.9 12.8 17.0
Total †100.0 100.0 100.0

Social Grade
AB 38.7 35.8 33.8
C1 32.8 32.1 31.5
C2 15.3 16.6 16.6
DE 13.3 15.6 18.1
Total †100.0 †100.0 100.0

† — does not sum due to rounding


Note: figures relate to trips of at least 1 night but fewer than 60 days.

Source: United Kingdom Tourism Survey/Key Note

Profile of Domestic Holidays


According to the Kantar Media Target Group Index (TGI) survey, the
percentage of females taking holidays in the British Isles in the year ending
September 2009 substantially exceeded the percentage of males taking
holidays across all levels of frequency. The difference was most marked for
adults who took three holidays or more, with the percentage penetration of
females in this category being 59.1%, compared to 40.9% for males.

Age appears to affect the numbers of holidays taken in the UK, particularly as
the number of holidays taken increases. The proportion of holidays taken by
adults aged 65 years and over, for example, increased from 20.5% of the total
for one holiday to 42.5% for three or more holidays, By contrast, the
proportion of holidays taken by adults aged up to 54 years tends to decrease
as the numbers of holidays taken rises.

© Key Note Ltd 2010 99


Travel & Tourism Market The Domestic Market

Adults in the B and C1 social grades are the most significant for the domestic
holiday market, in that they accounted for more than half (54.9%) of adults
who took one holiday in the British Isles in the year ending September 2009
and two-thirds (66.6%) of all adults who took three or more holidays. Those
in the A and E social grades accounted for the smallest percentages of adults
taking holidays in the British Isles.

Regionally, adults residing in the South East accounted for the largest
proportion of those taking one or two holidays in Great Britain, while adults
in the North West accounted for the largest percentage taking three holidays
or more. By contrast, the smallest percentages of adults taking one or two
holidays are in Wales, while the smallest percentage penetration taking three
holidays or more are those in the North.

Table 5.20: Profile of One, Two and Three or More Holidays† in


the British Isles in the Last 12 Months by Sex, Age, Social Grade
and Region of Residence (% of adults), September 2009

Three or
One Two more

All adults 100.0 100.0 100.0


Sex
Male 47.1 45.9 40.9
Female 52.9 54.1 59.1
Age
15-24 10.2 8.3 3.6
25-34 15.3 12.4 4.6
35-44 22.1 11.3 16.0
45-54 17.7 12.7 11.0
55-64 14.2 19.4 22.4
65+ 20.5 36.0 42.5
Social Grade
A 4.2 5.6 5.5
B 25.2 29.3 37.4
C1 29.7 28.0 29.2
C2 22.4 21.2 16.8
D 13.3 10.7 7.5
E 5.2 5.2 3.7

Table continues...

© Key Note Ltd 2010 100


Travel & Tourism Market The Domestic Market

Table 5.20: Profile of One, Two and Three or More Holidays† in


the British Isles in the Last 12 Months by Sex, Age, Social Grade
and Region of Residence (% of adults), September 2009

...table continued

Three or
One Two more
Region
Scotland 8.7 6.8 6.8
North West 11.0 13.8 18.3
North 3.6 5.7 1.8
Yorkshire and Humberside 8.2 8.0 10.2
East Midlands 9.3 12.5 6.0
East Anglia 4.0 4.4 5.1
South East 19.4 20.2 16.0
Greater London 9.2 7.9 12.5
South West 11.5 4.3 9.1
Wales 3.5 3.6 5.1
West Midlands 11.6 13.6 9.1

† — holidays are classed as being for 3 nights or more


Note: totals may not sum to 100 due to rounding.

Source: Target Group Index (TGI) © Kantar Media, 2010

Penetration of Domestic Hotel Stays


According to TGI, a little over a third of adults in Great Britain (37.6%) stayed
in a hotel in the British Isles in the year ending September 2009. The percentage
penetration of males and females who stayed at a hotel in 2009 was fairly
similar at 37.3% and 37.9%, respectively. The highest penetration rate in terms
of age was registered within the 45 to 54 years age group at 43.1%. Social
grade A is highly influential in terms of hotel stays, with 55.8% of adults in this
social group staying in a hotel compared to 16.9% of adults in social grade E.
Regionally, adults in Scotland are most likely to stay in a hotel in the British
Isles and adults in Greater London, Wales and the West Midlands are the least
likely.

© Key Note Ltd 2010 101


Travel & Tourism Market The Domestic Market

Table 5.21: Penetration of Hotel Stays† in Great Britain in the


Last 12 Months by Sex, Age, Social Grade and Region of
Residence (% of adults), September 2009

All adults 37.6


Sex
Male 37.3
Female 37.9
Age
15-19 25.1
20-24 27.3
25-34 36.7
35-44 41.9
45-54 43.1
55-64 42.7
65+ 35.6
Social Grade
A 55.8
B 53.2
C1 40.0
C2 32.8
D 22.6
E 16.9
Region
Scotland 40.3
North West 39.4
North 37.7
Yorkshire and Humberside 38.9
East Midlands 39.1
East Anglia 38.1
South East 38.4

Table continues...

© Key Note Ltd 2010 102


Travel & Tourism Market The Domestic Market

Table 5.21: Penetration of Hotel Stays† in Great Britain in the


Last 12 Months by Sex, Age, Social Grade and Region of
Residence (% of adults), September 2009

...table continued

Region (cont.)
Greater London 34.9
South West 36.5
Wales 34.9
West Midlands 34.9

† — whether for business, holiday or pleasure

Source: Target Group Index (TGI) © Kantar Media, 2010

Penetration of Domestic Air Travel


According to TGI, 10.4% of adults made at least one air trip in the UK for
holiday or personal reasons in the year ending September 2009, while 1.6% of
adults made between one and four business trips. A higher percentage of
females than males made at least one air trip for holiday or personal reasons,
with this trend being reversed for business trips.

In terms of age, penetration rates for taking four or more air trips for holiday
or personal reasons and for between one and four business trips tend to peak
among adults aged 25 to 34 years and are lowest among adults aged 15 to 19
and 65 years and over.

Social grade is clearly associated with the number of flights taken with, for
example, 17% of adults in social grade A having taken at least one flight for
holiday or personal reasons compared with 6.5% of adults in social grade E.

Regionally, the highest penetration rates for taking air trips are in Scotland,
with 18.8% of adults taking at least one flight for holiday or personal reasons
and 3% of adults taking between one and four business trips. The lowest
penetration rate for adults taking at least one flight was in Yorkshire and
Humberside at 7.3% and the lowest penetration rate for taking between one
to four business flights was in East Anglia at 0.9%.

© Key Note Ltd 2010 103


Travel & Tourism Market The Domestic Market

Table 5.22: Number of Separate Air Trips Made in the UK in the


Last 12 Months by Sex, Age, Social Grade and Region of
Residence (% of adults), September 2009

Holiday/Personal Reason
Four or Business
One Two Three more Trips (1-4)

All adults 5.2 2.7 1.3 1.2 1.6


Sex
Male 4.7 2.5 1.2 1.0 2.2
Female 5.6 2.9 1.4 1.3 1.0
Age
15-19 5.5 2.1 0.9 0.5 0.6
20-24 2.6 2.0 0.9 0.8 0.7
25-34 5.5 2.6 1.5 1.9 3.0
35-44 5.9 3.3 1.5 1.2 2.3
45-54 5.5 2.9 0.8 1.4 2.5
44-64 6.0 3.4 1.4 1.3 0.8
65+ 4.2 2.3 1.6 0.8 0.3
Social Grade
A 7.5 6.5 1.8 1.2 2.8
B 6.5 3.3 1.8 2.1 3.6
C1 5.7 3.0 1.5 1.2 1.8
C2 3.9 2.0 1.1 0.7 0.3
D 4.2 1.9 0.7 0.7 0.1
E 3.3 1.7 0.7 0.8 0.1
Region
Scotland 10.7 5.4 1.5 1.2 3.0
North West 4.7 3.1 1.0 1.7 1.4
North 5.7 1.6 1.4 0.6 1.4
Yorkshire and
Humberside 2.8 2.7 1.0 0.8 1.4
East Midlands 4.8 2.5 0.9 1.4 1.5
East Anglia 2.8 3.3 2.4 0.4 0.9
South East 4.9 2.2 1.3 0.9 1.7

Table continues...

© Key Note Ltd 2010 104


Travel & Tourism Market The Domestic Market

Table 5.22: Number of Separate Air Trips Made in the UK in the


Last 12 Months by Sex, Age, Social Grade and Region of
Residence (% of adults), September 2009

...table continued

Holiday/Personal Reason
Four or Business
One Two Three more Trips (1-4)

Region (cont.)
Greater London 5.1 3.3 1.8 0.9 1.5
South West 5.7 1.8 1.1 1.6 1.1
Wales 4.7 1.2 0.6 2.5 1.4
West Midlands 3.9 2.4 1.5 1.2 1.2

Source: Target Group Index (TGI) © Kantar Media, 2010

FORECASTS 2010 TO 2014


Early indications of market trends in 2010 suggest that the gains made in the
domestic travel and tourism sector in 2009 are being maintained. For example,
in the first 3 months of 2010 there was a 3.8% increase in the number of trips
made from 21 million to 21.8 million; a 0.7% increase from 55 million to 55.4
million in the number of bed nights; and a 2.4% increase from £3.38bn to
£3.46bn in expenditure compared to the same period in 2009.

The rise in the number of trips taken in the first 3 months of 2010 was mostly
due to increases in the number of trips made for business purposes, which rose
by 7.3% to 4.4 million. There was also a 4.6% increase to 3.3 million in trips to
visit friends and relatives. By contrast, trips taken for holiday purposes fell from
7.6 million in the first quarter of 2009 to 7.5 million in the first quarter of 2010.

In light of these early market indicators, Key Note forecasts that the UK
domestic travel and tourism industry will show further modest growth in 2010
with expenditure, trips and bed nights projected to rise by 1%, 2% and 0.8%,
respectively.

Thereafter and up to 2014, a downward trend in the market may return,


although the London Olympics is expected to provide a boost to the domestic
travel and tourism market in 2012.

© Key Note Ltd 2010 105


Travel & Tourism Market The Domestic Market

Table 5.23: The Forecast UK Domestic Travel and Tourism


Market by Value and Volume (£m, 000 and million), 2010-2014

2010 2011 2012 2013 2014

Expenditure (£m) 22,100 22,100 23,000 22,300 22,200


% change year-on-year 1.0 0.0 4.1 -3.0 -0.4

Trips (000) 128,530 127,500 132,600 128,000 126,500


% change year-on-year 2.0 -0.8 4.0 -3.5 -1.2

Bed nights (million) 402 398 410 399 395


% change year-on-year 0.8 -1.0 3.0 -2.7 -1.0

Note: figures relate to trips of at least 1 night but fewer than 60 days.

Source: Key Note

Figure 5.2: The Forecast UK Domestic Travel and Tourism


Market by Value (£m), 2010-2014

23,200

23,100

23,000

22,900

22,800

22,700

22,600

22,500

22,400

22,300

22,200

22,100

22,000
2010 2011 2012 2013 2014

Note: figures relate to trips of at least 1 night but fewer than 60 days.

Source: Key Note

© Key Note Ltd 2010 106


Travel & Tourism Market The Outbound Market

6. The Outbound Market

DEFINITION
The UK outbound travel and tourism market can be measured in terms of
expenditure, number of trips and number of bed nights. The official source of
this information is National Statistics’ International Passenger Survey (IPS),
which covers overseas trips by UK residents for periods of less than 1 year,
including day trips. This definition differs from that used by the World Tourism
Organization (UNWTO), which excludes day trips.

The outbound travel and tourism market can be divided in a number of ways
for marketing purposes. The four most important are:

• purpose of trip

• country of destination

• mode of transport

• type of arrangement.

Purpose of Trip
Outbound tourism divides broadly between leisure trips and business trips.
Leisure trips subdivide into independent holidays; inclusive or package
holidays; visiting friends and relatives (VFR); shopping; and leisure travel for
other purposes, such as watching sport or weddings. The division between
travel for leisure and travel for business is fundamental to the branding, pricing
and promotion of many travel services.

Country of Destination
Destination is defined as the main country visited, or the country in which the
visitor stayed the longest during his or her trip. Visits to small nation states and
trips involving transit through other countries are sometimes understated in
the official figures. In addition, the destinations of cruise passengers, who
often visit many countries, may be grouped under the heading ‘rest of world’.

The regional categorisations used in this chapter are as follows:

North America — Canada (including Greenland and St Pierre et Miguelon)


and the US (including Puerto Rico and the US Virgin Islands).

© Key Note Ltd 2010 107


Travel & Tourism Market The Outbound Market

EU Europe — Austria, Belgium, Bulgaria, Cyprus, the Czech Republic,


Denmark, Estonia, Germany, Finland, France (including Monaco), Greece,
Hungary, the Republic of Ireland, Italy (including San Marino and Vatican City),
Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal
(including the Azores and Madeira), Romania, Slovakia, Slovenia, Spain
(including the Canary Islands, Spanish North Africa, the Balearic Islands and
Andorra) and Sweden.

Non-EU Europe — the Faroe Islands, Gibraltar, Iceland, Norway, Switzerland


(including Liechtenstein), Turkey and states of the former Yugoslavia, Albania
and the former USSR (Union of Soviet Socialist Republics).

Rest of world — this covers the following:

• Latin America — Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba,
the Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras,
Mexico, Nicaragua, Panama (including the Canal Zone), Paraguay, Peru,
Uruguay and Venezuela.

• North Africa — Algeria, Egypt, Libya, Morocco, Sudan and Tunisia.

• Middle East — Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman,
Qatar, Saudi Arabia, Syria, United Arab Emirates and Yemen.

• Commonwealth Caribbean — Antigua, the Bahamas, Barbados, Belize,


Bermuda, the British Virgin Islands, the Cayman Islands, Dominica, Grenada,
Guyana, Jamaica, Montserrat, St Kitts-Nevis-Anguilla, St Lucia, St Vincent and
the Grenadines, Trinidad and Tobago, and the Turks and Caicos Islands.

• Asia/Pacific — Australia, the People’s Republic of China (PRC), Hong Kong,


India, Japan, New Zealand, Pakistan, Sri Lanka and Thailand.

Mode of Transport
Mode of transport is defined as the main method of transport used for the trip,
for example, air, sea (ferry), Eurotunnel Shuttle or Eurostar. Ferry and Shuttle
passengers are often subdivided by type of vehicle, e.g. car, bus, motorcycle,
etc. Almost all air and Eurostar passengers are travellers on foot.

Type of Arrangement
The main division by type of arrangement is between holidays that are
organised independently and those that are organised by tour operators, i.e.
inclusive or package holidays. Internet booking services and low-cost air travel
have increased the opportunities for independent travel since 2005.

© Key Note Ltd 2010 108


Travel & Tourism Market The Outbound Market

KEY TRENDS
The UK outbound travel and tourism market was significantly affected by the
economic downturn in 2009. Expenditure by outbound travellers and tourists
fell to its lowest level since 2004; the number of outbound trips made fell to
its lowest level since 2001; and the number of bed nights stayed was at its
lowest since 2002.

All sectors of the outbound travel and tourism market were affected by the
economic instability in 2009 including holidays, which accounted for almost
two-thirds (65.7%) of outbound trips. Most affected within the holiday sector
were inclusive trips, which declined by 19% in 2009. The number of
independently arranged holiday trips declined by a smaller 13.2%.

Spain and France remain the two main destinations for UK outbound travellers
and tourists, together accounting for more than a third (36.4%) of all
outbound trips made in 2009. In 2009, the number of outbound trips made to
each of the 20 most popular destinations by UK travellers all fell compared to
2008 levels.

Despite the recession, the number of passengers taking cruises from the UK
increased in 2009, although the rate of annual expansion was at its lowest since
2005. The Mediterranean remains the most popular destination for both UK
port cruises and fly cruises accounting for 592,000 or 38.6% of the cruise
passenger total in 2009.

Outbound travel and tourist trends in the first half of 2010 suggest that further
declines in trip numbers and expenditure for 2010 as a whole are likely. All
sectors of the outbound market remain vulnerable to the continuing adverse
market conditions.

The eruption of the volcano in Iceland in April 2010 caused the outbound travel
and tourism industry to incur considerable costs. Thomas Cook Group PLC, for
example, has indicated that the volcanic ash cloud cost the company a total of
around £70m.

MARKET SIZE
The UK outbound travel and tourism market encountered its most difficult year
for many years in 2009, as the recession and its effects led to sharp falls in
outbound tourism expenditure, the numbers of trips made and the numbers
of bed nights stayed.

Outbound visitor expenditure fell by 14% in 2009 to £31.69bn. It was the first
annual decline in outbound visitor expenditure in the last decade and the
lowest level of outbound expenditure since 2004. In constant expenditure
terms (1995 prices), outbound visitor expenditure in 2009 was 20.9% lower
than in 2008 and 16.9% down on the 2000 equivalent.

© Key Note Ltd 2010 109


Travel & Tourism Market The Outbound Market

The number of outbound trips made in 2009 contracted by 15.1% to


58.6 million, the lowest total since 2001 when 58.3 million trips were made.
2009 was also the third year in succession in which the number of outbound
trips had fallen. According to National Statistics IPS data, falls in outbound trip
numbers were witnessed throughout 2009 with the total in the first quarter of
2009 21.4% lower than in the first quarter of 2008 (on a non-seasonally
adjusted basis). In the second, third and fourth quarters of 2009, outbound trip
numbers were down by 13.9%, 12% and 15% compared to the corresponding
quarters in 2008.

In line with the falls in outbound visitor expenditure and trips, there was also
a 12.6% drop to 614.5 million in the number of bed nights spent. The 2009
total was the lowest since 2002 when 595.2 million bed nights were recorded.

Average expenditure per trip did increase by 1.3% in 2009 to £540.72, from
£533.80 in 2008 and the average length of stay rose from 10.2 nights to 10.5
nights. Average expenditure per bed night dipped from £52.38 in 2008 to
£51.58 in 2009.

Table 6.1: The UK Outbound Travel and Tourism Market by


Value and Volume (£m, 000 and million), 2005-2009

2005 2006 2007 2008 2009

Expenditure (£m)† 32,154 34,411 35,013 36,838 31,694


% change-year-on-year - 7.0 1.7 5.2 -14.0

Trips (000) 66,441 69,536 69,450 69,011 58,614


% change year-on-year - 4.7 -0.1 -0.6 -15.1

Bed nights (million) 669.0 701.3 689.6 703.3 614.5


% change year-on-year - 4.8 -1.7 2.0 -12.6

† — excluding fares
Note: figures relate to trips of less than 1 year, including day trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)

© Key Note Ltd 2010 110


Travel & Tourism Market The Outbound Market

Figure 6.1: The UK Outbound Travel and Tourism Market by


Value† (£m), 2005-2009
37,500

37,000

36,500

36,000

35,500

35,000

34,500

34,000

33,500

33,000

32,500

32,000

31,500

31,000
2005 2006 2007 2008 2009

† — excluding fares
Note: figures relate to trips of less than 1 year, including day trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)

By Purpose of Trip
The holiday market is by far the largest segment of the outbound travel and
tourism industry. In 2009, 65.7% of outbound trips made were for holiday
purposes, a percentage which has remained fairly stable since 2005.

Outbound trips made for holiday purposes fell by 15.5% to 38.5 million in 2009
compared to the overall decline of 15.1% in the total number of trips made.
The above-average decline in the total holiday market was due to the
continuing contraction of the inclusive holiday market, which has fallen
steadily since 2005. In 2009, the number of inclusive holiday trips made
decreased by a further 19% compared to a fall of 13.2% to 24 million in the
number of independently organised trips.

The numbers of trips made for other purposes, which include VFR, trips for
business purposes and trips made for miscellaneous other reasons, fell for the
third successive year in 2009 with the total for that year down by 14.3% to 20.1
million. Within this broad category, the number of VFR trips fell by 6.5% to
11.6 million, the number of trips made for business purposes fell by 22.8% to
6.9 million and the number of trips made for other purposes contracted by
24.2% to 1.6 million.

© Key Note Ltd 2010 111


Travel & Tourism Market The Outbound Market

Table 6.2: The UK Outbound Travel and Tourism Market by


Purpose of Trip by Volume (000 and %), 2005-2009

% change
2005 2006 2007 2008 2009 2008-2009

Holidays
Independent 25,182 26,336 26,763 27,617 23,985 -13.2
Inclusive 18,993 18,951 18,674 17,914 14,507 -19.0
Total holidays 44,175 45,287 45,437 45,531 38,492 -15.5

Other purposes 22,266 24,249 24,013 23,480 20,122 -14.3

Total 66,441 69,536 69,450 69,001 58,614 -15.1


Holidays as a %
of all outbound
trips 66.5 65.1 65.4 66.0 65.7

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)

A more detailed breakdown of the UK outbound travel and tourism market is


displayed in Table 6.3, which shows the number of trips made to the main
regional destinations, subdivided by purpose of trip.

The largest proportion of trips to all four main world regions is made for
holiday purposes although there is some variation around this measure. For
example, whereas just 22.8% of holiday trips to EU Europe were inclusive tours,
44.9% were independent holidays.

© Key Note Ltd 2010 112


Travel & Tourism Market The Outbound Market

Table 6.3: The UK Outbound Travel and Tourism Market by


Purpose of Trip by Main Regional Destination
(000 trips and %), 2009

Holidays
Ind Inc VFR Business Other Total
Trips
North
America 1,557 723 735 572 65 3,652
EU Europe 19,041 9,659 7,621 4,840 1,235 42,396
Non-EU
Europe 1,239 1,102 582 560 65 3,548
Other
countries 2,147 3,023 2,654 915 278 9,017
Total †23,985 14,507 11,592 6,887 1,643 †58,614

% of Total by Purpose
North
America 42.6 19.8 20.1 15.7 1.8 100.0
EU Europe 44.9 22.8 18.0 11.4 2.9 100.0
Non-EU
Europe 34.9 31.1 16.4 15.8 1.8 100.0
Other
countries 23.8 33.5 29.4 10.1 3.1 †100.0

Total 40.9 25.5 20.4 11.7 2.8 †100.0

Table continues...

© Key Note Ltd 2010 113


Travel & Tourism Market The Outbound Market

Table 6.3: The UK Outbound Travel and Tourism Market by


Purpose of Trip by Main Regional Destination
(000 trips and %), 2009

...table continued

Holidays
Ind Inc VFR Business Other Total
% of Total by Region
North
America 6.5 5.0 6.3 8.3 4.0 6.2
EU Europe 79.4 66.6 65.7 70.3 75.2 72.3
Non-EU
Europe 5.2 7.6 5.0 8.1 4.0 6.1
Other
countries 9.0 20.8 22.9 13.3 16.9 15.4
Total †100.0 100.0 †100.0 100.0 †100.0 100.0

Ind — independent
Inc — inclusive
VFR — visiting friends and relatives
† — does not sum due to rounding
Note: figures are provisional and relate to trips of less than 1 year, including day trips;
totals may not sum due to rounding.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)/Key Note

By Destination
Spain and France remain by far the two main destinations for UK outbound
travellers and tourists, accounting in 2009 for 19.8% and 16.7% respectively of
all outbound trips made. However, the number of outbound trips made to
Spain and France were both lower in 2009 compared to trips made in 2008. In
percentage terms, the largest falls in outbound trip numbers in 2009 were
recorded for Portugal (-28.5%), Canada (-25.7%) and Switzerland (-24.9%). The
smallest falls involved trips to Poland (-1.5%) and the Caribbean (-5.6%). The
numbers of trips made to Spain and France were both at their lowest levels in
2009 compared to the rest of the review period.

© Key Note Ltd 2010 114


Travel & Tourism Market The Outbound Market

Table 6.4: The UK Outbound Travel and Tourism Market by


Country of Destination by Volume (000 trips), 2005-2009

%
change
year-on-
2005 2006 2007 2008 2009 year

Spain 13,837 14,428 13,869 13,819 11,582 -16.2


France 11,094 10,854 11,201 10,855 9,764 -10.1
Republic of
Ireland 4,221 4,682 4,205 3,921 3,549 -9.5
US 4,241 3,986 3,923 4,003 3,187 -20.4
Italy 3,374 3,380 3,569 3,372 2,610 -22.6
Germany 2,493 2,698 2,686 2,703 2,127 -21.3
Greece 2,435 2,436 2,511 2,096 1,881 -10.3
Netherlands 2,174 2,410 2,239 2,008 1,840 -8.4
Portugal 1,855 1,937 2,177 2,531 1,809 -28.5
Turkey 1,367 1,408 1,532 1,936 1,622 -16.2
Poland 637 1,236 1,552 1,578 1,554 -1.5
Belgium 1,733 1,815 1,870 1,787 1,392 -22.1
Cyprus 1,431 1,311 1,275 1,279 981 -23.3
Caribbean 1,026 1,040 1,045 947 894 -5.6
Switzerland 1,001 1,120 1,194 1,158 870 -24.9
India 796 958 972 956 847 -11.4
Austria 769 702 696 800 709 -11.4
Canada 628 716 664 626 465 -25.7
Australia 649 593 532 511 434 -15.1
Czech
Republic 786 775 654 572 433 -24.3
Others 9,894 11,051 11,084 11,553 10,064 -12.9

Total 66,441 69,536 69,450 69,011 58,614 -15.1

Note: figures relate to trips of less than 1 year, including day trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)

© Key Note Ltd 2010 115


Travel & Tourism Market The Outbound Market

By Mode of Transport
The majority of UK outbound travellers and tourists fly to their destinations,
as the difficulty of reaching some locations by means other than via air puts
this particular mode of travel in a monopoly situation for many destinations.

In 2009, the number of outbound trips undertaken by air fell by 16.7% to 46.7
million, compared to a smaller 7.8% fall to 12 million in the number of
outbound trips made by sea and tunnel. It is possible that some of the
outbound trips made by sea and tunnel are to France or other nearby countries
such as Belgium. Trips to countries further away, such as Spain, would almost
invariably involve air travel and would have contributed to the greater level
of decline in the outbound air travel market.

Table 6.5: The UK Outbound Travel and Tourism Market by


Mode of Transport (000 trips), 2005-2009

2005 2006 2007 2008 2009

Air 53,626 56,460 56,329 56,041 46,657


% change - 5.3 -0.2 -0.5 -16.7
year-on-year

Sea and tunnel 12,815 13,076 13,121 12,970 11,957


% change - 2.0 0.3 -1.2 -7.8
year-on-year

Total 66,441 69,536 69,450 69,011 58,614


% change - 4.7 -0.1 -0.6 -15.1
year-on-year

% travelling by 80.7 81.2 81.1 81.2 79.6


air

Notes: 2009 figures are provisional and may not sum due to rounding. Figures relate to
trips of less than 1 year, including day trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)

© Key Note Ltd 2010 116


Travel & Tourism Market The Outbound Market

By Type of Arrangement
The increase in the proportion of outbound travellers and tourists who choose
to travel independently rather than go with organised or inclusive tours
continues. In 2009, the percentage of outbound travellers (all modes of
transport) preferring the independent option rose to 62.3% compared to
60.7% in 2008 and 57% in 2005. Around this average figure, the proportion of
outbound sea and tunnel travellers who made their own arrangements jumped
to 67.8% in 2009 from 63.4% in 2008, while the percentage of air travellers
who travelled independently edged up to 60.9%. The number of outbound air
travellers who travelled on inclusive tours fell yearly between 2005 and 2009,
with the 2009 total of 11.9 million a 25.4% reduction on 2005 figures.

Table 6.6: The UK Outbound Holiday Market by Type of


Arrangement and Mode of Transport by Volume
(000 trips and %), 2005-2009

2005 2006 2007 2008 2009


By Air
Trips (000)
Independent 20,022 21,448 21,320 22,044 18,534
Inclusive 15,979 15,559 15,557 14,696 11,924
Total 36,001 37,007 36,877 36,740 30,458

% of Total
Independent 55.6 58.0 57.8 60.0 60.9
Inclusive 44.4 42.0 42.2 40.0 39.1
Total 100.0 100.0 100.0 100.0 100.0

By Sea and Tunnel


Trips (000)
Independent 5,160 4,888 5,443 5,574 5,449
Inclusive 3,014 3,392 3,117 3,217 2,584
Total 8,174 8,280 8,560 8,791 8,033

% of Total
Independent 63.1 59.0 63.6 63.4 67.8
Inclusive 36.9 41.0 36.4 36.6 32.2
Total 100.0 100.0 100.0 100.0 100.0

Table continues...

© Key Note Ltd 2010 117


Travel & Tourism Market The Outbound Market

Table 6.6: The UK Outbound Holiday Market by Type of


Arrangement and Mode of Transport by Volume
(000 trips and %), 2005-2009

...table continued

2005 2006 2007 2008 2009


All Modes
Trips (000)
Independent 25,182 26,336 26,763 †27,617 †23,985

Inclusive 18,993 18,951 18,674 †17,914 †14,507

Total 44,175 45,287 45,437 45,531 38,492

% of Total
Independent 57.0 58.2 58.9 60.7 62.3
Inclusive 43.0 41.8 41.1 39.3 37.7
Total 100.0 100.0 100.0 100.0 100.0

† — does not sum due to rounding


Note: trips of less than 1 year, including day trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)

The Cruises Market


Cruising is an increasingly popular holiday choice and is one which, to some
extent, appears to have defied the recessionary influences which have
impacted on the other outbound travel and tourism markets.

In 2009, 594,000 passengers embarked on cruises from UK ports, an increase of


2.9% on 2008 levels; and a further 939,000 took fly cruises, a 2.1% rise on the
previous year. Between 2005 and 2009, the overall number of passengers
taking UK open-sea cruises increased by 43.3% to 1.5 million.

The most popular destination for UK port cruises was the Mediterranean,
which attracted 190,000 passengers in 2009 or 32% of the total. The
Mediterranean was also the most popular location for fly cruises, accounting
for 402,000 or 42.8% of the total in 2009.

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Table 6.7: The UK Open-Sea Cruise Market by Type of Cruise and


Destination by Volume (000 passengers), 2005-2009

2005 2006 2007 2008 2009


UK Port Cruises
Mediterranean 107 130 154 168 190
Baltic 51 54 59 70 92
Norway 57 59 65 77 89
Western Europe 67 88 70 81 71
Atlantic Islands 50 51 57 70 61
Other areas† 28 26 23 39 34
Line Voyages 18 18 23 35 24
Round Britain (Pre-2009 n.a n.a n.a n.a 16
UK-West Europe)
Caribbean 14 15 11 14 13
Charter 9 10 5 3 3
Total UK port cruises 401 451 467 557 ‡594

Fly Cruises
Mediterranean 263 322 388 439 402
Caribbean/Bahamas/Bermuda 202 195 217 241 262
Atlantic Islands 46 35 36 38 41
West Coast US/Mexico/Hawaii/ 34 35 33 34 37
Panama Canal
Indian Ocean/Red Sea/Persian n.a 40 40 18 33
Gulf
Transatlantic – repositioning§ 19 25 34 42 31
Far East/Australia 15 15 22 26 29
Alaska 26 29 32 31 25
Round-the-world and sectors± 10 13 14 13 25
Norway (Pre 2009 in Baltic) n.a n.a n.a n.a 18
South America 7 14 12 8 11
Scandinavia/Baltic 14 15 19 19 10
East Coast n.a n.a n.a 8 8
Other areas 29 12 18 4 8
Charter 3 3 2 1 1

Table continues...

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Table 6.7: The UK Open-Sea Cruise Market by Type of Cruise and


Destination by Volume (000 passengers), 2005-2009

...table continued

2005 2006 2007 2008 2009


Fly Cruises (cont.)
Total fly cruises ‡669 753 867 ‡920 ‡939

Total 1,070 1,204 1,334 1,477 1,533


% change year-on-year - 12.5 10.8 12.2 2.4

† — Greenland, the US, etc.


‡ — does not sum due to rounding at source
§ — transatlantic repositioning occurs when cruise ships return to North America for the
winter after spending the summer cruising in Europe. During the winter months, they
may offer cruises in North or South America. When summer returns, the cruise ships travel
back to Europe
± — includes complete round-the-world trips and parts (or sectors) thereof

Source: UK Cruise Census 2009, IRN Research/Passenger & Shipping Association

Table 6.8 confirms that the main destination for UK cruise passengers in 2009
(including those on port cruises and those on fly cruises) was the
Mediterranean, with 592,000 passengers — a 2.3% reduction on 2008.
Northern Europe was the next most popular destination in 2009 with 296,000
cruise passengers, a 19.8% rise on 2008, while 275,000 people visited the
Caribbean, up 7.8% on 2008.

Table 6.8: The UK Open-Sea Cruise Market by Main Destination


by Volume (000 passengers), 2005-2009

2005 2006 2007 2008 2009

Mediterranean 370 452 542 607 592


Northern Europe 190 216 213 247 296
Caribbean 216 210 228 255 275
Atlantic Islands 96 86 93 108 102
Other areas 199 240 258 260 269

Table continues...

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Table 6.8: The UK Open-Sea Cruise Market by Main Destination


by Volume (000 passengers), 2005-2009

...table continued

2005 2006 2007 2008 2009

Total †1,070 1,204 1,335 †1,477 †1,533

† — does not sum due to rounding at source

Source: UK Cruise Census 2009, IRN Research/Passenger & Shipping Association

SUPPLY STRUCTURE
The principal organisations involved in the supply side of the UK outbound
travel and tourism market are the tour operators, which include the two
market leaders Thomas Cook Group PLC and TUI Travel PLC. In addition to tour
operators, other leading suppliers to the outbound travel and tourism market
comprise retail travel agents, airlines, ferry operators and the Channel Tunnel
services — Eurotunnel Shuttle and Eurostar.

Tour Operators
According to the Travel Association (ABTA) it represented 900 tour operations
throughout the British Isles in 2009. This figure suggests that the number of
package holidays sold per operator averaged around 16,119 in 2009, a 28.9%
reduction on 2008.

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Table 6.9: Number of ABTA-Registered Tour Operators in the UK


and Average Number of Package Holidays Sold
(number and 000), 2005-2009

2005 2006 2007 2008 2009

ABTA-registered
tour operators 850 850 900 790 900
Outbound package
holidays sold (000) 18,993 18,951 18,674 17,914 14,507

Average number of
package holidays
sold per operator 22,344 22,295 20,749 22,676 16,119
% change
year-on-year - -0.2 -6.9 9.3 -28.9

Source: ABTA — the Travel Association/International Passenger Survey, National


Statistics © Crown copyright material is reproduced with the permission of the
Controller of HMSO (and the Queen’s Printer for Scotland)/Key Note

Travel Agents
According to ABTA it currently has 1,351 members with 5,700 outlets. Members
include travel agents, tour operators and support services right across the
spectrum from small family-owned businesses to larger tour operators. Key
Note estimates that the total number of travel agents in the UK (including
non-members of ABTA) stood at around 6,900 in 2010, a figure unchanged on
2009.

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Table 6.10: The UK’s Leading Travel Agents by Estimated


Number of Branches (number and %), Year Ending
July 2006-2010

2006 2007 2008 2009 2010

ABTA Travel Agents


Top Four
Thomas Cook 615 548 †812 †807 796
Going Places 560 458 n.a n.a n.a
Thomson 730 650 600 600 650
First Choice 302 320 ‡336 ‡336 ‡336

Total top four 2,207 1,976 1,748 1,743 1,782

Other ABTA travel agents 3,818 4,024 3,752 3,757 3,918

Total ABTA travel 6,025 6,000 5,500 5,500 5,700


agents

Non-ABTA travel agents 1,950 1,800 1,650 1,400 1,200

Total 7,975 7,800 7,150 6,900 6,900

Leading travel agents as a 27.7 25.3 24.4 25.3 25.8


% of total travel agents
ABTA travel agents as a % 75.5 76.9 76.9 79.7 82.6
of total travel agents

† — Going Places travel agencies mostly rebranded as Thomas Cook with effect from
February 2008
‡ — includes travel shops and holiday superstores, excludes in-store branches in
supermarkets

Source: Key Note

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Travel & Tourism Market The Outbound Market

Figure 6.2: UK Travel Agents by Number of Branches, Year


Ending July 2006-2010
8,200

8,100

8,000

7,900

7,800

7,700

7,600

7,500

7,400

7,300

7,200

7,100

7,000

6,900

6,800
2006 2007 2008 2009 2010

Source: Key Note

Airlines
UK airlines had 1,010 aircraft in service in 2009, an increase of 43 over 2008.
British Airways is the largest UK carrier by aircraft numbers with 233 in service
in 2009, a total which has remained fairly stable since 2005. easyJet, by contrast,
continues to increase its aircraft fleet and in 2009, a further 16 aircraft were
added, bringing the total up to 169. Flybe, the third-largest airline by aircraft
numbers, reduced its fleet to a 3-year low of 71 in 2009 and Thomson Airways,
the fifth-largest airline by aircraft in service, reduced its total by 12 to 64.

Table 6.11: Number of Aircraft in Service with UK Airlines,


2005-2009

2005 2006 2007 2008 2009

British Airways PLC 232 234 234 235 233


easyJet Airline Company Ltd 98 103 125 153 169
Flybe Ltd† 35 41 88 76 71

BMI Group Ltd‡ 59 61 62 70 70

Table continues...

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Table 6.11: Number of Aircraft in Service with UK Airlines,


2005-2009

...table continued

2005 2006 2007 2008 2009

Thomson Airways Ltd§ n.a n.a n.a 76 64

Thomas Cook Airlines Ltd± 24 24 24 42 44


Virgin Atlantic Airways Ltd 32 37 38 38 38
Monarch Airlines 28 28 31 32 31
Jet2.Com Ltd 23 26 29 30 31
Eastern Airways 27 32 29 28 29
Others 394 377 297 187 230

Total 952 963 957 967 1,010

† — British Airways’ BA Connect regional business was acquired by Flybe in 2006


‡ — BMI Group data cover BMI British Midland, BMI Regional and BMI Baby combined
§ — Thomsonfly Ltd and First Choice Airways Ltd merged to become Thomson Airways
Ltd in 2008
n.a — not available
± — Thomas Cook Airlines UK Ltd and MyTravel Airways merged to become Thomas Cook
Airlines Ltd in March 2008

Source: UK Airline Statistics, Civil Aviation Authority (CAA)

UK airlines had available seat capacity of 366 million kilometres (km) in 2009,
6.2% less than the capacity of 390.2 million km reported in 2008. In 2009, a
total of 297.8 million km (81.4%) of the available seats were used compared
to 308.7 million kilometres (79.1%) of available seats used in 2008.

British Airways, which operate transatlantic flights, accounted for the highest
numbers of seat kilometres available and seat kilometres used in 2009 at 38.9%
and 37.4% of each total, respectively. Virgin Atlantic Airways, which also
operates transatlantic flights, and easyJet, which operates mostly short-haul
flights within the UK and in Europe, accounted for the second and third highest
numbers of seat kilometres available and seat kilometres used in 2009.

The highest seat utilisation rates are found among the charter airlines with
Thomas Cook Airlines top after reporting 92% of available seat capacity used,
followed by Thomson Airways with 90.1%. The lowest seat utilisation rate
among the companies featured in Table 6.12 was recorded by the low-cost
scheduled carrier Flybe at 60.6%.

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Table 6.12: UK Airlines by Available Seat Capacity and Seat


Capacity Used (000 seat kilometres and %), 2009

% of Available Seat Capacity Used


Seat Kilometres Available (000)

Seat Kilometres Used (000)


% of Total

% of Total
British Airways PLC 142,217 38.9 111,327 37.4 78.3
easyJet Airline
Company Ltd 54,341 14.8 45,222 15.2 83.2
Virgin Atlantic Airways
Ltd 49,756 13.6 39,282 13.2 78.9
Thomson Airways Ltd 35,548 9.7 32,038 10.8 90.1
Thomas Cook Airlines
Ltd 29,299 8.0 26,950 9.0 92.0
Monarch Airlines Ltd 18,555 5.1 15,510 5.2 83.6
BMI Group Ltd 13,742 3.8 9,598 3.2 69.8
Jet2.Com Ltd 6,564 1.8 5,359 1.8 81.6
Flybe Ltd 5,449 1.5 3,304 1.1 60.6
Flyglobespan† 4,922 1.3 3,947 1.3 80.2
Others 5,607 1.5 5,258 1.8 93.8

Total 366,000 100.0 297,795 100.0 81.4

† — Flyglobespan went into administration in December 2009

Source: UK Airline Statistics, Civil Aviation Authority (CAA)

MAJOR PLAYERS
This section profiles the leading companies in the outbound travel and tourism
market. Two of these leading companies, Thomson Airways Ltd and TUI Travel
PLC, have already been profiled in Chapter 4 — Competitive Structure.

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Travel & Tourism Market The Outbound Market

Tour Operators

Thomas Cook Group PLC


Thomas Cook Group PLC is a travel company created in June 2007 by the merger
of Thomas Cook AG and MyTravel Group PLC. Following the merger, the group
became the second-largest travel company in Europe and the UK (behind TUI
Travel). At the time of the flotation in 2007, 52% of the shares in the new
company were held by the German mail order and department store
corporation, Arcandor (former owners of Thomas Cook AG), and 48% were
owned by the shareholders of MyTravel. In the second half of 2009, the shares
held by Arcandor and its subsidiaries were placed on the stock market and,
following these developments, 100% of the Group’s share capital is now traded
freely on the London Stock Exchange.

Thomas Cook Group PLC, through its subsidiaries, is principally engaged in the
provision of leisure travel services. It has five geographic operating divisions —
UK and the Republic of Ireland, Continental Europe, Northern Europe, North
America and Airlines Germany. The company has a fleet of 95 aircraft, and a
network of approximately 3,400 owned and franchised travel stores. The
Group operates in 21 countries including India and Egypt.

Thomas Cook UK and Ireland is the second-largest leisure travel group in the
UK with around 19,000 employees. It operates a fleet of 45 aircraft, has a
network of around 800 high street stores (Thomas Cook and Going Places),
travel and tourism websites (www.thomascook.com and www.mytravel.com)
and some of the leading travel brands including Airtours, Club 18-30, Bridge,
Cresta, Cruise Thomas Cook, Direct Holidays, Flexibletrips, flythomascook.com,
Latitude, Manos, Neilson, Panorama, Style Holidays, Sunset, Sunworld
Holidays, Thomas Cook, Thomas Cook Signature, Thomas Cook Sport and
Tradewinds. The company’s airline, Thomas Cook Airlines, flies from various
regional airports to destinations worldwide.

In April 2010, the Thomas Cook Group announced that it had acquired Think
W3 Ltd, the owner of Essential Travel, a leading UK online provider of
travel-related products including travel insurance, airport parking and airport
hotels.

In July 2010, the Thomas Cook Group announced that it had agreed to acquire
Öger Tours GmbH, a leading German tour operator specialising in package
holidays to Turkey.

In the year ending 30th September 2009, turnover at Thomas Cook Group PLC
was £9.27bn, a 14.3% increase on 2008. The company reported a profit before
tax of £56.1m in 2009 compared to a pre-tax profit of £48.4m in 2008.

In the 6 months ending 31st March 2010, Thomas Cook PLC reported a turnover
of £3.31bn, a fall of 5% compared to the corresponding period in 2009. A
pre-tax loss of £252.2m was announced for the 6 months ending
30th March 2010, compared to a pre-tax loss of £309m in 2009.

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Travel & Tourism Market The Outbound Market

Scheduled and Charter Airlines


The UK outbound travel and tourism market is served by scheduled and charter
airlines. The major scheduled airlines by passenger numbers are easyJet Airline
Company Ltd and British Airways PLC, while the major charter airlines include
Thomson Airways Ltd, which is part of TUI Travel PLC; Thomas Cook Airlines
Ltd, which is part of the Thomas Cook Group PLC; and Monarch Airlines Ltd,
which is part of the Monarch Travel Group.

easyJet Airline Company Ltd


easyJet Airline Company Ltd is based at London Luton airport and, in 2009, was
the UK’s leading carrier by passenger numbers with a total of 39.7 million
passengers travelling on scheduled flights. easyJet operates around 500
domestic and international flights scheduled between European, North
African and West Asian airports. The company currently has a fleet of 180
aircraft (compared to 169 in service at the end of 2009) and operates in 28
countries. In the UK, easyJet has hubs at London Luton and London Gatwick
airports, plus further bases at airports such as Belfast, Bristol, East Midlands,
Edinburgh, Glasgow, Liverpool, London Stansted, Manchester and Newcastle.
Outside the UK, the airline has hubs at Berlin, Geneva, Paris, Milan and Lyon.

Turnover for easyJet Airline Company Ltd increased to £2.69bn in the year
ending 30th September 2009, up from £2.34bn in 2008. The company reported
a pre-tax loss of £156.6m in 2009 following a pre-tax loss of £30.8m in 2008.

In the 6 months ending 31st March 2010, easyJet Airline Company Ltd
announced a turnover of £1.17bn, a 13.4% increase on the comparable period
in 2009, and a pre-tax loss of £78.7m compared to a pre-tax loss of £116.5m in
2009.

Monarch Airlines Ltd


Monarch Airlines is a charter and scheduled airline based in Luton. It is one of
the UK’s largest charter airlines, with operations in Europe, the US,
the Caribbean, India and Africa, and organises scheduled flights to
Mediterranean destinations, the Canary Islands and Cyprus. Luton is Monarch’s
main base as well as the location of its headquarters. The airline’s other main
operational bases are London Gatwick, Manchester and Birmingham.

In 2009, Monarch Airlines carried 6.1 million passengers, of which 3.7 million
travelled on scheduled flights and 2.4 million on non-scheduled services.
Monarch currently operates a fleet of 31 aircraft and these serve over 100
destinations worldwide.

Monarch Airlines is a subsidiary of the Monarch Travel Group. Other Monarch


Travel Group subsidiaries include Monarch’s maintenance arm Monarch
Aircraft Engineering; package tour operator Cosmos Holidays; seat-only
operator Avro; direct-sell operator Archers; the charter sales division of
Monarch Airlines Ltd, First Aviation; and the accommodation-only website
somewhere2stay.com.

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In the year ending 31st October 2009, Monarch Airlines Ltd recorded a turnover
of £652.8m, up from £643m in 2008. A pre-tax loss of £19.2m was announced
for 2009 compared with a pre-tax profit of £70,000 in 2008.

Thomas Cook Airlines Ltd


Thomas Cook Airlines Ltd is a charter airline based in Manchester and serves
holiday resorts worldwide from its main bases at Manchester and London
Gatwick. The airline also operates services from nine other UK bases. Thomas
Cook operates worldwide charter flights to and from the UK for a number of
tour operators, although Thomas Cook Tour Operations is the main customer
of the airline.

Thomas Cook Airlines Ltd is part of Thomas Cook Group PLC and was formed
in March 2008 by the merger of Thomas Cook Airlines UK Ltd and MyTravel
Airways. Thomas Cook Airlines serves holiday resorts in Europe, North
Africa, Asia, North America and the Caribbean. In 2009, the airline carried 8.2
million passengers, down from 8.3 million in 2008. It has a fleet of around 45
aircraft and flies to some 95 destinations.

In the year ending 30th September 2009, Thomas Cook Airlines Ltd reported a
turnover of £989.1m and a pre-tax loss of £29.6m. This compares to a turnover
of £722.1m and a pre-tax profit of £28.3m in the previous 48-week period
ending 30th September 2008.

MARKETING ACTIVITY
Main media advertising expenditure by companies engaged in the outbound
travel and tourism market amounted to £82.6m in the year ending March 2010.
This represented a fall of 6.7% from the corresponding period in 2009 and was
16.3% down on the amount spent in 2007. Between the years ending March
2009 and 2010, main media advertising expenditure by overseas tour operators
fell by 5.5% and declined by 25.8% for online travel agents. In contrast,
advertising expenditure for travel agents increased by 16.1%.

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Travel & Tourism Market The Outbound Market

Table 6.13: Main Media Advertising Expenditure By Companies


Engaged in the Outbound Travel and Tourism Market (£000),
Years Ending March 2006-2010

2006 2007 2008 2009 2010

Overseas tour 55,303 60,763 52,961 51,212 48,389


operators
Travel agents 15,151 14,434 18,817 15,566 18,072
Online travel 20,595 23,441 33,083 21,684 16,092
agents

Total 91,049 98,638 104,861 88,462 82,553


% change - 8.3 6.3 -15.6 -6.7
year-on-year

Source: Nielsen Media Research

Tour Operators
Main media advertising expenditure by overseas tour operators amounted to
£48.4m in the year ending March 2010. The leading tour operator by main
media advertising in 2009/2010 was the TUI PLC-owned Thomson, which spent
£7.6m, a 20.3% increase on the previous year. Virgin Holidays had the
second-highest level of main media advertising in the year ending March 2010
with £5.4m, a 10.9% increase on 2009, and the TUI PLC-owned company, First
Choice, had the third-highest level of main media advertising expenditure at
£3.5m, a 44.5% reduction on 2009.

Of the other companies included in Table 6.14, the majority increased their
expenditure on main media advertising in the year ending March 2010.

© Key Note Ltd 2010 130


Travel & Tourism Market The Outbound Market

Table 6.14: Main Media Advertising Expenditure by Overseas


Tour Operators (£000), Years Ending March 2006-2010

2006 2007 2008 2009 2010

Thomson 6,389 7,307 3,483 6,333 7,620


Virgin 606 1,955 3,951 4,824 5,352
Holidays
First Choice 2,829 4,961 4,811 6,341 3,518
Voyages Jules 2,013 1,389 2,297 1,988 1,762
Verne
British 643 404 1,520 2,722 1,246
Airways
Kuoni 3,856 2,390 3,297 1,037 1,096
Direct 1,052
Holidays 658 684 152 378
Page & Moy 536 939 451 761 976
James Villa 1,434 1,182 1,107 834 708
Holidays
Titan HiTours 1,321 881 1,186 946 361
Journeys of 1,473 1,668 696 344 358
Distinction
Club Med 612 625 1,094 216 n.a
Others 32,927 36,379 28,914 24,491 24,341

Total† 55,303 60,763 52,961 51,212 48,389

n.a — not available


† — totals do not sum due to rounding at source

Source: Nielsen Media Research

Travel Agents
Main media advertising expenditure by travel agents in the year ending March
2010 was boosted by higher levels of spending by Thomas Cook, which
increased its outlay by a third (33.4%) to 7.2m. Thomas Cook advertising
campaigns during this period included those which featured Jamie and Louise
Redknapp.

Three other travel agents — Barrhead Travel, Teletext and Co-op Travel —
spent more than £1m on main media advertising in 2010. Barrhead Travel,
which spent £1.6m, owns websites such as Flightsdirect.com.

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Table 6.15: Main Media Advertising Expenditure by Travel


Agents (£000), Years Ending March 2006-2010

2006 2007 2008 2009 2010

Thomas Cook 451 1,351 4,116 5,365 7,155


Barrhead Travel n.a n.a 245 1,695 1,602
Teletext 1,318 926 2,863 905 1,278
Co-op Travel 516 544 601 457 1,080
Dial A Flight.com n.a n.a n.a n.a 347
Hays Travel 170 215 298 298 297
Dawson and 145 278 333 269
Sanderson 275
Ocean World Travel n.a n.a n.a n.a 232
Going Places 1,155 474 190 n.a 200
Bath Travel 204 279 332 174 130
Others 11,190 10,370 9,894 6,341 5,484

Total †15,151 14,434 18,817 †15,566 †18,072

n.a — not available


† — does not sum due to rounding at source

Source: Nielsen Media Research

Online Travel Agents


Main media advertising expenditure by online travel agents has fallen sharply
since 2008 as some of the major companies in the sector, including Hotels.com,
Ebookers and Travelsupermarket, have cut back on their spending. The
US-owned firm, Expedia, which had the highest level of expenditure in the year
ending March 2010 at £5.3m, has more than halved its spending on advertising
since 2007, although other online agents, including Lastminute and Trainline,
increased their expenditure in 2009/2010. The second-highest level of
expenditure in the year ending March 2010 was reported by LateRooms.com,
a member of the TUI Travel PLC group.

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Travel & Tourism Market The Outbound Market

Table 6.16: Main Media Advertising Expenditure by Online


Travel Agents (£000), Years Ending March 2006-2010

2006 2007 2008 2009 2010

Expedia 11,868 13,114 10,329 6,041 5,292


Laterooms n.a 121 249 1,176 3,280
Lastminute 3,273 1,249 1,871 1,873 2,520
Trainline n.a n.a n.a 1,714 2,440
Just You n.a n.a n.a 167 438
Hotels.com n.a n.a 3,224 3,681 438
Ebookers 269 884 2,847 1,978 335
Best at Cruises n.a n.a n.a 112 283
James Villas n.a n.a n.a n.a 193
Travelsupermarket 338 3,714 6,834 3,218 84
Others 4,845 4,357 7,729 1,722 788

Total †20,595 †23,441 33,083 †21,684 †16,092

n.a — not available


† — does not sum due to rounding at source

Source: Nielsen Media Research

BUYING BEHAVIOUR
According to the Kantar Media’s Target Group Index (TGI) survey for the year
ending September 2009, the proportion of women who took three or more
holidays abroad substantially exceeded the proportion of men who took this
number of holidays abroad at 54.4% to 45.6%. For one or two holidays, the
proportion of men taking holidays exceeded the proportion of women.

In general, the number of holidays taken abroad tended to increase with age.
The TGI survey found, for example, that whereas the 55 years and over age
groups accounted for 27.4% of adults who took one holiday abroad, they
accounted for 41.1% of adults who took two holidays abroad and 47% of
adults who took three or more holidays abroad.

In terms of social grade, groups B and C1 were the two most important to the
outbound travel and tourism market. In the year ending September 2009, 60%
of adults in these social grades took one holiday abroad, 60.2% took two
holidays abroad and 72% took three or more holidays abroad.

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Travel & Tourism Market The Outbound Market

Regionally, the South East and Greater London had the greatest percentage
penetration in the outbound travel and tourism market. The third-largest
market for outbound travellers was the North West.

Table 6.17: Profile of One, Two and Three or More Holidays†


Abroad in the Last 12 Months by Sex, Age, Social Grade and
Region (% of adults), September 2009

Three or
One Two more

All adults 100.0 100.0 100.0


Sex
Men 51.0 56.5 45.6
Women 49.0 43.5 54.4
Age
15-24 17.2 14.6 18.2
25-34 15.0 13.6 9.4
35-44 20.6 11.8 9.4
45-54 19.8 19.0 16.1
55-64 13.5 22.4 25.9
65+ 13.9 18.7 21.1
Social Grade
A 4.3 8.6 5.9
B 30.3 37.2 38.8
C1 29.7 23.0 33.2
C2 22.1 21.2 12.3
D 10.5 7.6 6.1
E 3.1 2.2 3.6
Region
Scotland 8.4 8.0 7.2
North West 10.7 8.5 16.4
North 4.2 6.9 3.5
Yorkshire and Humberside 8.2 4.4 4.4
East Midlands 7.5 8.6 7.5
East Anglia 4.1 3.7 2.3
South East 19.3 19.8 19.8

Table continues...

© Key Note Ltd 2010 134


Travel & Tourism Market The Outbound Market

Table 6.17: Profile of One, Two and Three or More Holidays†


Abroad in the Last 12 Months by Sex, Age, Social Grade and
Region (% of adults), September 2009

...table continued

Three or
One Two more
Region (cont.)
Greater London 14.7 18.1 20.2
South West 7.9 11.1 12.0
Wales 3.7 1.6 1.9
West Midlands 11.3 9.4 5.0

† — holidays are classed as being for 3 nights or more


Note: totals may not sum to 100 due to rounding at source

Source: Target Group Index (TGI) © Kantar Media, 2010

FORECASTS 2010 TO 2014


The UK outbound travel and tourism market has been affected by a range of
adverse factors in 2010 including heavy snow falls that grounded planes and
stalled the traditional early booking period; strikes by British Airways staff; and
the volcanic eruptions in Iceland, which brought the industry to a standstill for
a week in April 2010. The continued effects of the recession, the election and
the football world cup also impacted negatively on bookings.

According to the IPS, in the first 3 months of 2010, the number of visits abroad
by UK residents fell by 10.1% to 10.1 million compared with the corresponding
period in 2009 and expenditure by overseas residents on visits abroad was
down by 10.6% to £6bn. This downward trend in the outbound travel and
tourism market continued into the second quarter of 2010 as the number of
visits taken abroad by UK residents fell by 13% to 56.1 million in the 12-month
period ending May 2010, compared with the equivalent 12-month period in
2009.

There was a slight increase (seasonally adjusted) of 2% to 13.5 million in the


number of visits taken abroad by UK residents between March and May 2010,
in comparison to the previous 3-month period from December 2009 to
February 2010, as well as an increase of 6% in spending to £7.8bn. However,
overseas visits taken between March and May 2010 were down by 10%
compared with the 3 months from March to May 2009 due in part to the drop
in air traffic caused by the ash cloud. Compared with April 2009, the seasonally
adjusted number of visits taken abroad by UK residents in April 2010 fell by
16%.

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Travel & Tourism Market The Outbound Market

If these early year trends in the outbound travel and tourism market are
maintained for the whole of 2010, Key Note forecasts that further sharp falls
in outbound expenditure, trips and bed nights are likely to feature, with
expenditure projected to fall to around £29bn in 2010, an 8.5% decline on 2009
figures; and visits down by some 10.1% to 52,700; while bed nights are forecast
to be 9.7% lower at 555 million. Thereafter and up to 2014, the market is
expected to recover, although much will depend on the buoyancy of the UK
economy, as well as a wide range of other factors and influences which impact
consumer demand for outbound travel and tourism.

Table 6.18: The Forecast UK Outbound Travel and Tourism


Market by Value and Volume (£m, 000 and million), 2010-2014

2010 2011 2012 2013 2014

Expenditure (£m)† 29,000 30,000 31,350 32,900 34,500


% change -8.5 3.4 4.5 4.9 4.9
year-on-year

Trips (000) 52,700 53,800 55,100 56,700 58,400


% change -10.1 2.1 2.4 2.9 3.0
year-on-year

Bed nights (million) 555 570 585 605 625


% change -9.7 2.7 2.6 3.4 3.3
year-on-year

† — excluding fares
Note: figures relate to trips of less than 1 year, including day trips.

Source: Key Note

© Key Note Ltd 2010 136


Travel & Tourism Market The Inbound Market

7. The Inbound Market

DEFINITION
The inbound market, in common with other tourism markets, is measured in
terms of expenditure, number of trips and number of bed nights. The official
source of this information is National Statistics’ International Passenger Survey
(IPS), which covers trips to the UK by overseas residents for periods of less than
1 year, including day trips. This definition differs from that used by the World
Tourism Organization (UNWTO), which excludes day trips. Like the outbound
market, the inbound travel and tourism market can be divided in a number of
ways. The four most important are:

• purpose of trip

• country of origin

• mode of transport

• type of arrangement.

By Purpose of Visit
Inbound tourism divides broadly between leisure trips and business trips.
Leisure trips subdivide into: holidays; visiting friends and relatives (VFR);
shopping; and leisure travel for other purposes, such as watching sport or
weddings.

Country of Origin
Origin is defined as the visitor’s main country of residence. The regional
categorisations used by the official statistics are the same as those for the
outbound market, but they are reproduced here for convenience:

North America — Canada (including Greenland and St Pierre et Miguelon)


and the US (including Puerto Rico and the US Virgin Islands).

EU Europe — Austria, Belgium, Bulgaria, Cyprus, the Czech Republic,


Denmark, Estonia, Germany, Finland, France (including Monaco), Greece,
Hungary, the Republic of Ireland, Italy (including San Marino and Vatican City),
Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal
(including the Azores and Madeira), Romania, Slovakia, Slovenia, Spain
(including the Canary Islands, Spanish North Africa, the Balearic Islands and
Andorra) and Sweden.

Non-EU Europe — the Faroe Islands, Gibraltar, Iceland, Norway, Switzerland


(including Liechtenstein), Turkey and the states of the former Yugoslavia,
Albania and the former USSR (Union of Soviet Socialist Republics).

© Key Note Ltd 2010 137


Travel & Tourism Market The Inbound Market

Rest of world — this covers the following:

• Latin America — Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba,
the Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras,
Mexico, Nicaragua, Panama (including the Canal Zone), Paraguay, Peru,
Uruguay and Venezuela.

• North Africa — Algeria, Egypt, Libya, Morocco, Sudan and Tunisia.

• Middle East — Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman,
Qatar, Saudi Arabia, Syria, United Arab Emirates and Yemen.

• Commonwealth Caribbean — Antigua, the Bahamas, Barbados, Belize,


Bermuda, the British Virgin Islands, the Cayman Islands, Dominica, Grenada,
Guyana, Jamaica, Montserrat, St Kitts-Nevis-Anguilla, St Lucia, St Vincent and
the Grenadines, Trinidad and Tobago, and the Turks and Caicos Islands.

• Asia/Pacific — Australia, the People’s Republic of China (PRC), Hong Kong,


India, Japan, New Zealand, Pakistan, Sri Lanka and Thailand.

By Mode of Transport
Mode of transport is defined as the main method of transport used for the trip,
such as air, sea (ferry), Eurotunnel Shuttle or Eurostar. Ferry and Shuttle
passengers are often subdivided by type of vehicle, e.g. car, bus, motorcycle,
etc. Almost all air and Eurostar passengers are foot passengers.

By Type of Arrangement
The main division by type of arrangement is between holidays that are
organised independently and those that are organised by tour operators, i.e.
inclusive or package holidays. Internet booking services and low-cost air travel
have increased the opportunities for independent travel since 2005.

KEY TRENDS
The UK inbound travel and tourism market was affected by the recession in
2009, with falls recorded in the number of trips made and bed nights stayed.
Expenditure by inbound visitors did, however, continue to rise. Trips for holiday
purposes remained strong in 2009 with a 4.6% increase from 2008 levels being
recorded. Inbound trips for business purposes, however, fell by a 19% to 6.6
million trips in 2009, which was the lowest total for more than a decade.

France continues to be the main source for inbound trips to the UK, accounting
for 12.7% of all trips made in 2009. Of the 14 leading source markets for the
UK inbound market, France and Spain were the only countries from which
higher numbers of visitors arrived in 2009.

© Key Note Ltd 2010 138


Travel & Tourism Market The Inbound Market

Air transportation remains the most popular mode of transport for inbound
visitors to the UK, although in 2009, visits by air were the most affected by the
recession. The number of inbound trips made by air fell by 8.1% in 2009
compared to a decline of 0.7% in the number of visits made by sea and a 0.7%
fall in the numbers made via the Channel tunnel.

The trend for overseas visitors to the UK to travel independently, rather than
on inclusive or package holidays, continued in 2009, with 83.5% of all inbound
visits being independently arranged, up from 79.3% in 2007.

MARKET SIZE
2009 was a difficult year for the UK travel and tourism inbound market.
Statistics issued by the IPS show that there was a decline of 6.3% to
29.9 million in the number of inbound trips undertaken and a drop of 6.7% to
229.4 million in the number of bed nights stayed. The sharpest percentage falls
in inbound visitor numbers occurred in the first three quarters of 2009 when
the numbers arriving fell by 13.7%, 5.5% and 6.2%, respectively, compared to
the 1st, 2nd and 3rd quarters of 2008. Arrival numbers started to recover in the
fourth quarter of 2009 and the total received between October and December
was 0.3% higher than for the comparable period in 2008.

Expenditure by inbound tourists in 2009 went against the downward trend


observed for trips and bed nights after reporting a 1.6% increase to £16.59bn.
This increase in expenditure was aided by a favourable exchange rate with the
euro and an increase in the average amount that visitors spent.

Table 7.1: The UK Inbound Travel and Tourism Market by Value


and Volume (£m, 000 and million), 2005-2009

2005 2006 2007 2008 2009

Expenditure (£m)† 14,248 16,002 15,960 16,323 16,592


% change - 12.3 -0.3 2.3 1.6
year-on-year

Trips (000) 29,970 32,713 32,778 31,888 29,889

Table continues...

© Key Note Ltd 2010 139


Travel & Tourism Market The Inbound Market

Table 7.1: The UK Inbound Travel and Tourism Market by Value


and Volume (£m, 000 and million), 2005-2009

...table continued

2005 2006 2007 2008 2009

% change - 9.2 0.1 -2.6 -6.3


year-on-year

Bed nights (million) 249.2 273.4 251.5 245.8 229.4


% change - 9.7 -8.0 -2.3 -6.7
year-on-year

† — excluding fares
Note: figures relate to trips of less than 1 year, including day trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)/Key Note

© Key Note Ltd 2010 140


Travel & Tourism Market The Inbound Market

Figure 7.1: The UK Inbound Travel and Tourism Market by


Value† (£m), 2005-2009
17,000

16,750

16,500

16,250

16,000

15,750

15,500

15,250

15,000

14,750

14,500

14,250

14,000
2005 2006 2007 2008 2009

† — excluding fares
Note: figures relate to trips of less than 1 year, including day trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)/Key Note

By Purpose of Trip
Inbound visits for holiday purposes was the largest sector of the inbound
market and the only segment to record an increase in visitor numbers in 2009,
rising by 4.6% to 11.4 million. The sectors most affected by the economic
downturn were visits for business purposes, which suffered a 19% fall to 6.6
million trips, and VFRs, which were 9.7% lower than in 2008 at 8.8 million. Visits
for miscellaneous purposes (which includes study, attending sporting events,
shopping and visits for health or religious purposes) fell by 0.3% in 2009, to 3.1
million.

© Key Note Ltd 2010 141


Travel & Tourism Market The Inbound Market

Table 7.2: The UK Inbound Travel and Tourism Market by


Purpose of Trip by Volume (000 and %), 2005-2009

% change
2005 2006 2007 2008 2009 2008-2009
Trips (000)
Holiday 9,713 10,566 10,758 10,923 11,424 4.6
VFR 8,687 9,406 9,720 9,727 8,783 -9.7
Business 8,168 9,019 8,845 8,124 6,579 -19.0
Miscellaneous 3,401 3,722 3,456 3,113 3,103 -0.3
Total †29,970 32,713 †32,778 †31,888 29,889 -6.3

% of Total
Holiday 32.4 32.3 32.8 34.3 38.2
VFR 29.0 28.8 29.7 30.5 29.4
Business 27.3 27.6 27.0 25.5 22.0
Miscellaneous 11.3 11.4 10.5 9.8 10.4
Total 100.0 †100.0 100.0 †100.0 100.0

VFR — visiting friends and relatives


† — does not sum due to rounding at source
Note: figures relate to trips of less than 1 year, including day trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)/Key Note

Inbound visitors from the EU were by far the largest sector of the market, with
20.3 million trips taken in 2009, representing 68% of the total. However, this
figure has reduced by 6% from 21.6 million visitors in 2008. The largest sector
of the EU inbound market was trips for holiday purposes, which, at 7.8 million
in 2009, accounted for 38.4% of the total number of trips taken from the EU
and 68.4% of all inbound trips made for holiday purposes.

Inbound trips from North America fell to 3.6 million in 2009. Trips for holiday
purposes was the main sector of the North American market (37.6%), followed
by trips to VFR (31.6%).

For non-EU Europeans, trips for holiday purposes were also the main reason
for visits (36.4% of the total), followed by trips for business purposes (26.5%).
The majority of trips from other countries were for holiday purposes or to visit
friends and relatives. In 2009, these accounted for almost three-quarters
(73.1%) of the total.

© Key Note Ltd 2010 142


Travel & Tourism Market The Inbound Market

Table 7.3: The UK Inbound Travel and Tourism Market by


Purpose of Trip by Region of Origin by Volume
(000 trips and %), 2009

Holidays Business VFR Other Total


Trips (000)
EU Europe 7,811 4,733 5,772 2,015 20,331
North America 1,341 707 1,125 391 3,564
Non-EU Europe 638 464 419 231 1,752
Other Countries 1,635 674 1,467 466 4,242
Total †11,424 †6,579 8,783 3,103 29,889

% of Total by Purpose
EU Europe 38.4 23.3 28.4 9.9 100.0
North America 37.6 19.8 31.6 11.0 100.0
Non-EU Europe 36.4 26.5 23.9 13.2 100.0
Other Countries 38.5 15.9 34.6 11.0 100.0
All regions 38.2 22.0 29.4 10.4 100.0

% of Total by Region
EU Europe 68.4 71.9 65.7 64.9 68.0
North America 11.7 10.7 12.8 12.6 11.9
Non-EU Europe 5.6 7.1 4.8 7.4 5.9
Other Countries 14.3 10.2 16.7 15.0 14.2
Total 100.0 †100.0 100.0 †100.0 100.0

VFR — visiting friends and relatives


† — does not sum due to rounding at source
Note: figures are provisional and relate to trips of less than 1 year, including day trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)/Key Note

Inbound day visits to the UK are popular among those who live in countries
that are relatively close to the UK, such as France. Their importance to the
overall inbound travel and tourism sector continued to fall, however, with the
total in 2009 at a 5-year low of 1.7 million visits (5.7% of the total). Increases
in travel costs, such as higher ferry, plane and train prices, were likely to have
contributed to the falling popularity of these visits in 2009.

© Key Note Ltd 2010 143


Travel & Tourism Market The Inbound Market

Table 7.4: The UK Inbound Travel and Tourism Market by Type


of Trip by Volume (000 trips and %), 2005-2009

2005 2006 2007 2008 2009


Trips (000)
Tourist visits 28,039 30,654 30,869 30,142 28,199
Day visits 1,931 2,059 1,907 1,746 1,690
Total 29,970 32,713 †32,778 31,888 29,889

% of Total
Tourist visits 93.6 93.7 94.2 94.5 94.3
Day visits 6.4 6.3 5.8 5.5 5.7
Total 100.0 100.0 100.0 100.0 100.0

† — does not sum due to rounding at source


Note: figures relate to trips of less than 1 year, including day trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)/Key Note

By Country of Origin
France continued to be the leading source market for inbound tourist visits to
the UK. In 2009, there were 3.8 million visits from France, a 4.1% increase on
2008 and the highest total over the 5-year review period. In many of the other
leading source markets falls were recorded in visitor numbers between 2008
and 2009. The number of visits from Poland, for example, decreased by 30.2%
to 1 million, while trip numbers from Italy were 25.5% lower at 1.2 million.
Among the 14 leading countries listed in Table 7.5, only Spain and France
recorded a higher number of trips in 2009 compared to 2008 figures.

© Key Note Ltd 2010 144


Travel & Tourism Market The Inbound Market

Table 7.5: The UK Inbound Travel and Tourism Market by


Country of Origin by Volume (000 trips and %), 2005-2009

% change
2005 2006 2007 2008 2009 2008-2009

France 3,324 3,693 3,404 3,636 3,784 4.1


Republic of
Ireland 2,806 2,909 2,970 3,070 2,948 -4.0
US 3,438 3,696 3,551 2,950 2,877 -2.5
Germany 3,294 3,411 3,376 2,900 2,780 -4.1
Spain 1,786 1,981 2,227 1,974 2,164 9.6
Netherlands 1,720 1,791 1,823 1,818 1,715 -5.7
Italy 1,186 1,477 1,615 1,639 1,221 -25.5
Poland 1,041 1,326 1,294 1,492 1,041 -30.2
Australia 919 956 941 955 912 -4.5
Belgium 1,111 997 995 970 903 -6.9
Switzerland 699 714 748 702 701 -0.1
Canada 796 868 852 857 687 -19.8
Sweden 728 745 738 743 604 -18.7
Norway 627 638 609 688 573 -16.7
Other countries 6,495 7,511 7,635 7,494 6,979 -6.9

Total 29,970 32,713 32,778 31,888 29,889 -6.3

Note: figures relate to trips of less than 1 year, including day trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)/Key Note

© Key Note Ltd 2010 145


Travel & Tourism Market The Inbound Market

By Mode of Transport
Although air transportation remained by far the most popular mode of
transport for inbound visitors to the UK, the economic downturn in 2009 had
more of an impact on this form of travel than on sea or tunnel inbound
transportation. In 2009, the number of inbound trips made by air fell by 8.1%
to 22.1 million compared to a 0.7% drop in inbound visits by sea to 4.5 million
visits. Visits made via the Channel Tunnel also fell by 0.7% to stand at 3.3 million
in 2009. The sharper fall in arrivals via air could be due to lower numbers of
travellers arriving from countries where sea or tunnel travel may be less of an
option, Poland for example. By contrast, higher numbers of arrivals from
France may have bolstered demand for the more accessible sea and tunnel
transport options.

Table 7.6: The UK Inbound Travel and Tourism Market by Mode


of Transport by Volume (000 trips), 2005-2009

2005 2006 2007 2008 2009

Air 22,043 24,588 25,089 24,024 22,080


% change - 11.5 2.0 -4.2 -8.1
year-on-year

Sea 4,675 4,858 4,459 4,495 4,462


% change - 3.9 -8.2 0.8 -0.7
year-on-year

Tunnel 3,252 3,267 3,230 3,369 3,347


% change - 0.5 -1.1 4.3 -0.7
year-on-year

Total 29,970 32,713 32,778 31,888 29,889


% change - 9.2 0.2 -2.7 -6.3
year-on-year

Note: figures relate to trips of less than 1 year, including day trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)/Key Note

© Key Note Ltd 2010 146


Travel & Tourism Market The Inbound Market

By Type of Arrangement
The upward trend for overseas visitors to the UK who travel independently,
rather than on inclusive or package holidays, continued. In 2009, 83.5% of all
inbound visits were independently arranged, up from 82.7%% in 2008 and
79.3% in 2007. The popularity of this form of arrangement was especially
prevalent among air travellers, with over 90% of all inbound air trips booked
in this way. For sea and tunnel travel, two-thirds (67.2%) of inbound trips in
2009 were independently organised.

Table 7.7: The UK Inbound Holiday Market by Type of


Arrangement and Mode of Transport by Volume
(000 trips and %), 2005-2009

2005 2006 2007 2008 2009


By Air
Trips (000)
Independent 5,761 6,478 6,623 6,672 7,026
Inclusive 735 781 990 708 659
Total 6,496 7,259 7,613 7,380 7,685

% of Total
Independent 88.7 89.2 87.0 90.4 91.4
Inclusive 11.3 10.8 13.0 9.6 8.6
Total 100.0 100.0 100.0 100.0 100.0

By Sea and Tunnel


Trips (000)
Independent 2,078 2,199 1,910 2,365 2,514
Inclusive 1,139 1,109 1,235 1,178 1,225
Total 3,217 3,308 3,145 3,543 3,739

% of Total
Independent 64.6 66.5 60.7 66.8 67.2
Inclusive 35.4 33.5 39.3 33.2 32.8
Total 100.0 100.0 100.0 100.0 100.0

All Modes

Table continues...

© Key Note Ltd 2010 147


Travel & Tourism Market The Inbound Market

Table 7.7: The UK Inbound Holiday Market by Type of


Arrangement and Mode of Transport by Volume
(000 trips and %), 2005-2009

...table continued

2005 2006 2007 2008 2009


Trips (000)
Independent 7,839 8,677 8,533 9,037 9,540
Inclusive 1,874 1,890 2,225 1,886 1,884
Total 9,713 †10,566 10,758 10,923 11,424

% of Total
Independent 80.7 82.1 79.3 82.7 83.5
Inclusive 19.3 17.9 20.7 17.3 16.5
Total 100.0 100.0 100.0 100.0 100.0

† — does not sum due to rounding


Note: figures relate to trips of less than 1 year, including day trips

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)/Key Note

The popularity of independently arranged holiday travel is a global trend and


in 2009, between 81.8% and 89.7% of all inbound visits made to the UK were
arranged in this way. It is also a pattern that continues to gather pace. In 2009,
83.5% of inbound holidays were independently arranged, up from 82.7% in
2008 and 79.3% in 2007.

© Key Note Ltd 2010 148


Travel & Tourism Market The Inbound Market

Table 7.8: The UK Inbound Holiday Market by Type of


Arrangement and Region of Origin by Volume
(000 trips and %), 2009

Ind Inc Total Ind as a %


of Total

EU Europe 6,390 1,421 7,811 81.8


North America 1,152 189 1,341 85.9
Non- EU Europe 572 66 638 89.7
Other Countries 1,427 208 1,635 87.3

Total †9,540 1,884 †11,424 83.5

Ind — independent
Inc — inclusive
† — does not sum due to rounding
Note: figures are provisional and relate to trips of less than 1 year, including day trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)/Key Note

SUPPLY STRUCTURE
The UK inbound travel and tourism market is supplied and serviced by a wide
range of organisations including transport providers (road, rail and air),
accommodation providers, companies which offer tourist attractions,
restaurants and catering services. Organisations involved in this sector include
VisitBritain, which works in partnership with the Government, the industry and
its partners in London, England, Scotland and Wales to promote Britain in 35
key overseas markets. VisitBritain has a network of international offices which
are supported by its London-based marketing, commercial, research and policy
teams. Also involved in the inbound travel and tourism market is the trade
organisation, UKinbound, which represents over 250 major member
companies and organisations in all sectors of the industry.

MARKETING ACTIVITY
Main media advertising expenditure by UK tourist offices fell by 2.3% to £17m
in the year ending March 2010. Despite this reduction, the 2010 total was still
the second-highest over the 5-year review period and 13.6% ahead of the
£15m spent in the year ending March 2006.

© Key Note Ltd 2010 149


Travel & Tourism Market The Inbound Market

The tourist board with the highest levels of main media advertising in the year
ending March 2010 was VisitScotland, which spent £4.6m, and Enjoy England
(VisitEngland’s consumer-facing brand) which spent £2.3m. Both of these
tourist boards increased their level of main media advertising in 2010 as did
the Yorkshire Tourist Board, which upped its main media advertising
expenditure almost fivefold to £1.8m. In 2010, the Yorkshire Tourism Agency
reported a sharp increase in traffic to its website from the US following a
high-profile marketing campaign in New York.

Table 7.9: Main Media Advertising Expenditure by UK Tourist


Offices (£000), Years Ending March 2006-2010

2006 2007 2008 2009 2010

VisitScotland 4,095 3,986 3,092 2,781 4,613


Enjoy England 91 321 2,079 887 2,327
Wales Tourist Board/ 2,532 2,192 1,775 3,132 1,327
Wales Cymru
Yorkshire Tourist Board 133 330 226 360 1,752
Jersey Tourist Board 1,148 774 1,100 1,536 1,458
North East England 1,423 1,160 1,432 419 849
Tourism
West Midlands Tourist n.a n.a 87 124 406
Board
UK Tourist Office – Visit 238 346 220 261 344
London
London Tourist Board 210 300 288 313 274
Northern Ireland Tourist 826 336 n.a 272 243
Board
North West England n.a n.a 234 246 n.a
South West England 396 411 428 147 n.a
Tourist Board
Others 3,878 5,448 3,347 6,922 3,409

Total UK Tourist Offices †14,971 †15,600 14,308 †17,401 †17,003

% change year-on-year - 4.2 -8.3 21.6 -2.3

n.a — not available


† — does not sum due to rounding at source

Source: Nielsen Media Research

© Key Note Ltd 2010 150


Travel & Tourism Market The Inbound Market

BUYING BEHAVIOUR
Average expenditure per trip by incoming visitors to the UK reached a 5-year
high of £555.12 in 2009. The average length of stay for incoming visitors
remained at 7.7 bed nights in 2009, while average expenditure per bed night
increased by 8.8% to £72.33, the highest figure in this category over the review
period. A favourable exchange rate for the euro against the pound contributed
to an increase in average expenditure per day and visit.

Table 7.10: Average Expenditure per Trip, Average Length of


Stay and Average Expenditure per Bed Night by Overseas
Visitors to the UK (£ and number of bed nights), 2005-2009

2005 2006 2007 2008 2009

Average expenditure 475.41 489.16 486.91 511.89 555.12


per trip (£)

Average length of stay 8.3 8.4 7.7 7.7 7.7


(bed nights)

Average expenditure 57.17 58.53 63.24 66.48 72.33


per bed night (£)

Note: expenditure excludes fares; figures relate to trips of less than 1 year, including day
trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)/Key Note

In terms of regional trends, incoming visitors from Asia/Pacific, Latin America,


North Africa, the Middle East and the Caribbean, tend, on average, to remain
in the UK longer than visitors from Europe and North America. In 2009, the
average stay of these visitors was 15.8 bed nights compared with 8.6 bed nights
for North American visitors and 6 bed nights for visitors from Europe. The
average expenditure per trip of visitors from the ‘Rest of the World’ region,
amounted to £1,126.83 in 2009, a 17.7% increase on 2008.

© Key Note Ltd 2010 151


Travel & Tourism Market The Inbound Market

Table 7.11: Average Expenditure per Trip, Average Length of


Stay and Average Expenditure per Bed Night by Overseas
Visitors to the UK by Region of Origin (£ and
number of bed nights), 2007-2009

2007 2008 2009

Average Expenditure Per Trip (£)


North America 698.39 721.22 724.19
Europe 369.29 395.04 418.01
Rest of the World 905.75 957.65 1,126.83

All visitors 486.91 511.89 555.12

Average Length of Stay (bed nights)


North America 8.4 8.6 8.6
Europe 6.1 6.1 6.0
Rest of World 15.4 15.4 15.8

All visitors 7.7 7.7 7.7

Average Expenditure per Bed Night (£)


North America 83.19 83.86 84.35
Europe 60.72 64.76 69.98
Rest of World 58.68 62.19 71.45

All visitors 63.24 66.48 72.33

Note: expenditure excludes fares; figures relate to trips of less than 1 year, including day
trips.

Source: International Passenger Survey, National Statistics © Crown copyright


material is reproduced with the permission of the Controller of HMSO (and the
Queen’s Printer for Scotland)/Key Note

FORECASTS 2010 TO 2014


2010 is expected to be another challenging year for the inbound travel and
tourism market. In the 12-month period ending April 2010, the number of visits
by overseas residents to the UK decreased by 5% from 30.8 million to 29.4
million — a drop of 1.4 million — compared with the 12 months to April 2009.
Visits for business reasons fell by 9% over the period while visits to friends or
relatives fell by 8%. Holiday visits remained broadly the same.

© Key Note Ltd 2010 152


Travel & Tourism Market The Inbound Market

It should be noted that inbound tourist numbers in April 2010 were severely
affected by the ash cloud from the volcanic eruption in Iceland and as a
consequence, visits to the UK by overseas residents were down 10% compared
to April 2009. Between January and March 2010, inbound visitor numbers were
just 1% lower than in the first quarter of 2009.

Based on data for the first 3 months of 2010 from the IPS, VisitBritain is
forecasting that full-year 2010 visitor numbers will decline by 1.3% to
29.5 million in comparison to 2009 figures, while inbound visitor expenditure
will increase by 0.7% to £16.7bn. VisitBritain expects receipts to outperform
volume as a weak sterling encourages growth in average spend per visit.
However, early indications are that this differential may be smaller than at first
anticipated.

In line with the projections of VisitBritain, Key Note forecasts that the number
of inbound trips made to the UK in 2010 and the number of bed nights stayed
will both fall. Total expenditure by visitors is expected to rise, although only
by a marginal amount due to the relatively strong rise in the value of sterling
against the euro. In the longer term, Key Note expects the inbound market to
demonstrate some recovery in visitor numbers in 2011 before being
significantly boosted in 2012 by the London Olympics, which should benefit
the inbound market across all three measures.

Table 7.12: The Forecast UK Inbound Travel and Tourism Market


by Value and Volume (£m, 000 and million), 2010-2014

2010 2011 2012 2013 2014

Expenditure (£m)† 16,700 17,000 18,900 18,100 18,700


% change year-on-year 0.7 1.8 11.2 -4.2 3.3

Trips (000) 29,500 30,000 32,200 30,800 31,550


% change year-on-year -1.3 1.7 7.3 -4.3 2.4

Bed nights (million) 223 218 235 225 230


% change year-on-year -2.8 -2.2 7.8 -4.3 2.2

† — excluding fares
Note: figures relate to trips of less than 1 year, including day trips.

Source: Key Note

© Key Note Ltd 2010 153


Travel & Tourism Market The Inbound Market

Figure 7.2: The Forecast UK Inbound Travel and Tourism Market


by Value† (£m), 2010-2014
19,500

19,250

19,000

18,750

18,500

18,250

18,000

17,750

17,500

17,250

17,000

16,750

16,500

16,250

16,000
2010 2011 2012 2013 2014

† — excluding fares
Note: figures relate to trips of less than 1 year, including day trips.

Source: Key Note

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Travel & Tourism Market A Global Perspective

8. A Global Perspective

MARKET VOLUME
2009 was a difficult year for the world tourism industry. International tourist
arrivals are estimated to have fallen by 4.2% to 880 million and international
tourism receipts are projected to have declined by 9.6% to $852bn.
International tourist arrival numbers were particularly affected in the first
three quarters of 2009 with falls of 10%, 7% and 2% being recorded,
respectively, compared to the first, second and third quarters of 2008. Tourist
arrivals in the fourth quarter of 2009 increased by 2% compared to the
corresponding quarter in 2008, as the global economy recovered, thus
contributing to a better than initially expected full-year total.

Despite the contractions in 2009, international tourist arrivals within the year
were still 9.9% higher than in 2005 and international tourist receipts were
more than a quarter (25.5%) up on 2005.

Table 8.1: International Tourist Arrivals and Receipts


(million and $bn), 2005-2009

2005 2006 2007 2008 2009

Arrivals (millions) 801 846 900 919 880


% change year-on-year - 5.6 6.4 2.1 -4.2

Receipts ($bn) 679 744 859 942 852


% change year-on-year - 9.6 15.5 9.7 -9.6

Note: International tourist receipts refer to the earnings in destination countries from
expenditure by international visitors on accommodation, food and drink, entertainment,
local transports and shopping, etc. Earnings from international passenger transport are
not included.

Source: UNWTO World Tourism Barometer, April 2010, World Tourism


Organization

© Key Note Ltd 2010 155


Travel & Tourism Market A Global Perspective

Figure 8.1: International Tourist Arrivals (millions), 2005-2009

950

925

900

875

850

825

800

775

750
2005 2006 2007 2008 2009

Source: UNWTO World Tourism Barometer, April 2010, World Tourism


Organization

By Region
In 2009, falls in international tourist arrivals were recorded within four of the
five regional markets with the largest decline being registered in Europe where
visitor numbers fell by 5.6% to 460 million. Africa was the only region which
saw visitor arrivals increase in 2009 compared to 2008. Europe and the Americas
experienced the largest declines in international tourist receipts in 2009, with
falls of 12.8% to $412.4bn and 11.8% to $165.6bn, respectively. It was only in
the Middle East that international tourist receipts were higher in 2009 than
2008.

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Table 8.2: International Tourist Arrivals and Receipts by Region


(million, $bn and %), 2008 and 2009

Arrivals Receipts
% change % change
2008 2009 2008-2009 2008 2009 2008-2009

Europe 487.3 460.0 -5.6 472.8 412.4 -12.8


Asia/Pacific 184.0 180.9 -1.7 209.0 202.8 -3.0
Americas 146.9 140.0 -4.7 187.7 165.6 -11.8
Middle East 56.0 52.9 -5.5 42.8 43.3 1.2
Africa 44.5 45.9 3.1 29.9 28.1 -6.0

Total †919 †880 -4.2 †942 †852 -9.6

† — totals do not sum due to rounding at source


Note: International tourist receipts refer to the earnings in destination countries from
expenditure by international visitors on accommodation, food and drink, entertainment,
local transports and shopping, etc. Earnings from international passenger transport are
not included.

Source: UNWTO World Tourism Barometer, April 2010, World Tourism


Organization

By Country

Arrivals
France was the leading country in terms of international tourist arrivals in 2009
with a total of 74.2 million visitors, a 6.3% decline on 2008, but a figure that
still equated to 8.4% of the global total. The US, Spain and the People’s
Republic of China (PRC) all recorded lower numbers of visitors in 2009 than in
2008.

The ten leading countries by international tourist arrivals accounted for 45.2%
of the global visitor total in 2009. Visitor numbers fell in seven of these
countries in 2009, with the UK registering a decline of 7%, the second-largest
drop behind visits to Spain, which fell by 8.7%. The highest increase in
international visitor arrivals among the ten countries included in Table 8.3 was
reported for Malaysia, which saw a 6.8% advance to 23.6 million.

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Table 8.3: International Tourist Arrivals by Country


(million and %), 2008 and 2009

2008 2009 % change % of 2009


2008-2009 Total

France 79.2 74.2 -6.3 8.4


US 57.9 54.9 -5.2 6.2
Spain 57.2 52.2 -8.7 5.9
PRC 53.0 50.9 -4.0 5.8
Italy 42.7 43.2 1.2 4.9
UK† 30.1 28.0 -7.0 3.2
Turkey 25.0 25.5 2.0 2.9
Germany 24.9 24.2 -2.8 2.8
Malaysia 22.1 23.6 6.8 2.7
Mexico 22.6 21.5 -4.9 2.4
Others 504.3 481.8 -4.5 54.8

Total 919.0 880.0 -4.2 100.0

PRC — People’s Republic of China


† — The UNWTO’s international arrival numbers for the UK differ from those given by
the International Passenger Survey (see Table 7.1)

Source: UNWTO World Tourism Barometer, April 2010, World Tourism


Organization

Receipts
The US is the primary beneficiary of international tourist receipts. In 2009, US
receipts from international tourism amounted to $94.2bn or 11.1% of the
global total. However, this figure fell by 14.4% in 2009, a contraction which
was only surpassed by a 16.4% decline to $30.1m in international tourist
receipts in the UK. The nine leading countries by international tourist receipts
accounted for 45.5% of the global total in 2009. Only in Australia did the value
of receipts increase in 2009 compared to 2008.

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Table 8.4: International Tourist Receipts by Country ($bn and


%), 2008 and 2009

2008 2009 % change % of 2009


2008-2009 Total

US 110.1 94.2 -14.4 11.1


Spain 61.1 53.2 -12.9 6.2
France 55.6 48.7 -12.4 5.7
Italy 45.7 40.2 -12.0 4.7
PRC 40.8 39.7 -2.7 4.7
Germany 40.0 34.7 -13.3 4.1
UK 36.0 30.1 -16.4 3.5
Australia 24.8 25.6 3.2 3.0
Turkey 22.0 21.3 -3.2 2.5
Austria 21.8 n.a. n.a. n.a.
Others 484.1 464.3 -4.1 54.5

Total 942.0 852.0 -9.6 100.0

PRC — People’s Republic of China


n.a — not available

Source: UNWTO World Tourism Barometer, April 2010, World Tourism


Organization

AIR PASSENGERS
According to the International Air Transport Association (IATA), 2009 was the
worst year that the international scheduled air traffic market had yet
experienced, with passenger demand for the year down by 3.5%.

Carriers in Asia/Pacific, Europe and North America recorded year-on-year


declines in passenger demand in the years up to 2009, while Middle Eastern
carriers generated the fastest growth in passenger traffic in 2009 with an
increase of 11.2%. Full-year traffic growth in Latin America was constrained to
0.3% due to the impact of Influenza A (H1N1) fears during the second and third
quarters of 2009. Africa’s carriers experienced a sharp decline of 6.8% in 2009
primarily due to an exceptionally weak performance in the first half of the year.

Assessed in terms of available seat kilometres, the largest falls were recorded
in Asia/Pacific (-6.3%), North America (-5.4%) and Europe (-4.4%). The
passenger load factor was highest in North America at 79.6% and lowest in
Africa at 69.9%.

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Table 8.5: Revenue Passenger Kilometres, Available Seat


Kilometres Growth and Passenger Load Factor (%), 2008-2009

RPK Growth (%) ASK Growth (%) PLF

Africa -6.8 -3.3 69.9


North America -5.6 -5.4 79.6
Asia/Pacific -5.6 -6.3 73.9
Europe -5.0 -4.4 76.4
Latin America 0.3 1.7 73.0
Middle East 11.2 13.6 73.3

Total -3.5 -3.0 75.6

RPK — revenue passenger kilometres (measures actual passenger traffic)


ASK — available seat kilometres (measures available passenger capacity)
PLF — passenger load factor

Source: International Air Transport Association (IATA)

The largest regional international passenger traffic by revenue passenger


kilometres (RPK) market share was Europe, which accounted for 34.7% of the
total in 2009. Africa was the smallest market with a market share of 1.8% of
the total.

Table 8.6: Revenue Passenger Kilometres Market Shares by


Region (%), 2009

Market Share (%)

Europe 34.7
Asia/Pacific 29.8
North America 17.8
Middle East 11.5
Latin America 4.5
Africa 1.8

Table continues...

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Table 8.6: Revenue Passenger Kilometres Market Shares by


Region (%), 2009

...table continued

Market Share (%)

Total †100.0

† — does not sum due to rounding

Source: International Air Transport Association (IATA)

EUROPEAN AIRLINE MARKET


The Association of European Airlines (AEA) compiles air passenger statistics
based on the returns of 36 leading airlines across Europe including British
Airways, BMI and Virgin Atlantic. In 2009, these airlines carried 326 million
passengers on scheduled flights, an 8.4% reduction on 2008 levels. The number
of passenger kilometres travelled also fell in 2009, dropping by 5.5% to 747.9
billion. At 76% the load factor in 2009 was unchanged on 2008 figures.

Passenger numbers in 2009 declined on a monthly basis compared to the


corresponding periods in 2008, with the exception of December 2009 when
numbers increased by 1.4%. These monthly falls ranged from 10.6% in March
2009 to 1.1% in November 2009.

Table 8.7: Number of Air Transport Passengers and Passenger


Kilometres Travelled by Association of European Airlines’
Members on Scheduled Services (million and billion
kilometres), 2005-2009

2005 2006 2007 2008 2009 % change


2008-2009

Passengers on scheduled 329.9 345.6 361.4 355.8 326.0 -8.4


services (million)

Passenger kilometres 699.5 741.6 781.2 791.8 747.9 -5.5


travelled (billion
kilometres)

Source: Association of European Airlines (AEA)

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In 2009, the leading AEA member airline in terms of passengers carried was
Lufthansa with 53.2 million passengers. British Airways was the third-largest
AEA member airline by passengers in 2009 with 32.3 million and Iberia, the
Spanish airline, was the eighth-largest with 20.5 million passengers. Combined,
British Airways and Iberia would have carried 52.8 million passengers in 2009,
indicating that the merger of these two airlines would put them almost equal
to Lufthansa.

Table 8.8: Number of Air Transport Passengers of Association


of European Airlines’ Members by Airline (million and %), 2009

Million % of Total

Lufthansa 53.2 16.3


Air France 47.9 14.7
British Airways 32.3 9.9
Turkish Airlines 24.5 7.5
KLM 22.3 6.8
SAS 21.4 6.6
Alitalia 21.2 6.5
Iberia 20.5 6.3
Swiss International Airline 13.6 4.2
BMI 7.4 2.3
Others 61.7 18.9

Total 326.0 100.0

Source: Association of European Airlines (AEA)

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AIRPORT PASSENGER NUMBERS

By Region
North America, Europe and Asia/Pacific are the world’s three leading regional
markets for air travel. The recessionary influences of 2009 affected airport
passenger numbers in North America and Europe, which fell by 5.2% to 1.47
billion and 5.4% to 1.4 billion, respectively, while in Asia/Pacific, a strong
performance during the second half of 2009, driven primarily by domestic
traffic in the PRC and India, helped to push passenger numbers up by 4.9% to
1.22 billion. In Latin America/Caribbean, passenger numbers showed a small
increase of 1.5% in 2009 boosted by an improving Brazilian market, while a
more stable Middle Eastern market produced a 7.7% rise. Passenger numbers
in Africa slipped back by 0.6% to 150.6 million.

Table 8.9: Worldwide Airport Passengers by Region


(000 and %), 2009

Passengers (000) % change 2008-2009

North America 1,466,589 -5.2


Europe† 1,408,493 -5.4
Asia/Pacific 1,218,573 4.9
Latin America/
Caribbean 368,732 1.5
Middle East 183,487 7.7
Africa 150,593 -0.6

Total 4,796,467 -2.7

† — includes Intra-European (Schengen) traffic


Note: these preliminary statistics are compiled from data reported by those airports that
participate regularly in Airports Council International monthly traffic statistics collection.

Source: Airports Council International

By Airport
The world’s largest airport by passenger numbers is Atlanta which handled
88 million passengers in 2009, a 2.2% decrease on 2008. Heathrow replaced
Chicago as the world’s second-busiest airport in 2009 with 66 million terminal
and transit passengers and Beijing became the world’s third-busiest airport
with nearly 65.4 million passengers, a 16.9% increase on 2008 figures.

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Among the world’s 20 busiest airports, Beijing, Dubai, Bangkok and San
Francisco were the only ones to record increases in passenger numbers in 2009,
while in the top 100 listing, only 26 airports showed positive growth. At the
other end of the scale, Vancouver, London Stansted, Detroit, Stockholm
Arlanda, St. Louis, Manchester, Dublin and Osaka airports all reported
double-digit declines in passenger numbers in 2009.

Table 8.10: Worldwide Airport Passengers by Airport (000),


2009

†Passengers (000) % change 2008-2009

Atlanta (ATL) 88,032 -2.2


London (LHR)‡ 66,037 -1.5
Beijing (PEK) 65,372 16.9
Chicago (ORD) 64,158 -6.1
Tokyo (HND) 61,904 -7.2
Paris (CDG) 57,907 -4.9
Los Angeles (LAX) 56,521 -5.5
Dallas/Ft Worth (DFW) 56,030 -1.9
Frankfurt (FRA) 50,933 -4.7
Denver (DEN) 50,167 -2.1
Madrid (MAD) 48,251 -5.1
New York (JFK) 45,915 -3.9
Amsterdam (AMS) 45,570 -8.1
Hong Kong (HKG) 45,559 -4.8
Dubai (DXB) 40,902 9.2
Bangkok (BKK) 40,500 4.9
Las Vegas (LAS) 40,469 -6.3
Houston (IAH) 40,007 -4.1
Phoenix (PHX) 37,825 -5.2
San Francisco (SFO) 37,339 0.3
Others 3,341,048 n.a

Table continues...

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Table 8.10: Worldwide Airport Passengers by Airport (000),


2009

...table continued

†Passengers (000) % change 2008-2009

Total 4,380,446 -2.7

† — arriving and departing passengers and direct transit counted once


‡ — Heathrow’s total includes both terminal and transit passenger numbers
n.a — not available
Note: these preliminary figures were compiled from data reported by those airports that
participate in Airports Council International’s monthly traffic statistics collection.

Source: Airports Council International

THE CRUISE MARKET


In contrast to the weaker market conditions in many other sectors of the travel
and tourism industry in 2009, the European cruise market continued to exhibit
steady growth, with record numbers of Europeans taking cruise holidays in
2009. The European cruise industry has positioned cruising as a mainstream
holiday choice and this is believed to have contributed to the growth reported
during the major downturn in the world economy.

According to the European Cruise Council (ECC), 4.9 million passengers took a
cruise holiday in 2009, an 11.8% increase on the previous year. The UK
continues to be the leading European cruise market in terms of passenger
numbers, followed by Germany, which exceeded the 1 million passenger
threshold for the first time in 2009.

The UK market has doubled in the past 9 years, with 1.5 million British
passengers taking a cruise in 2009, representing 31% of the market. Germany
continues to show strong growth in second place with just over
1 million passengers and 20.8% of the market. Italy, the third-largest cruise
market in Europe, saw a 17.2% increase to 799,000 passengers, while Spain
reported an 18.1% increase to 587,000 passengers in 2009.

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Table 8.11: Number of European Cruise Passengers by Country


(000), 2005-2009

2005 2006 2007 2008 2009 % change


2008-2009

UK 1,071 1,204 1,335 1,477 1,533 3.8


Germany 639 705 763 907 1,027 13.2
Italy 514 517 640 682 799 17.2
Spain 379 391 518 497 587 18.1
France 233 242 280 310 347 11.9
Scandinavia 42 62 94 123 173
(incl. Finland) 40.7
Benelux 42 64 82 92 110 19.6
Austria 39 44 52 59 80 35.6
Switzerland 51 56 64 65 76 16.9
Portugal 15 18 20 28 n.a n.a
Other 102 105 155 183 213 16.4

Total† 3,126 3,409 4,004 4,422 4,944 11.8


% change
year-on-year - 9.1 17.5 10.4 11.8

n.a — not available


† — totals do not sum due to rounding at source

Source: European Cruise Council/IRN Research

The Mediterranean and Atlantic Islands continue to be the most popular


destinations with 2.8 million cruise passengers visiting the region in 2009,
resulting in a market share of 57%. Northern Europe showed impressive
growth with a 20% increase in the number of cruise visitors to 884,000, while
the Caribbean and the rest of the world accounted for 1.2 million passengers,
an increase of 19% over the previous year.

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GLOBAL TOURIST FORECASTS


The World Tourism Organization (UNWTO) is forecasting that international
tourist arrivals will increase between 3% and 4% in 2010, and this may be even
higher if the summer high season in Europe is strong. In the first 4 months of
2010, international tourist arrivals totalled over 258 million, a 6.6% increase
on the number of international tourist arrivals recorded for the corresponding
period in 2009 which was the worst period of the crisis. Visitor volume in the
first 4 months of 2010 was, however, still 2.3% short of the record figures
reported in 2008, when there were 264 million arrivals in the same 4-month
period.

According to the June 2010 issue of the UNWTO World Tourism Barometer,
growth in international tourist arrivals is still uneven and trading conditions
remain challenging. Globally, the pace of recovery is faster than initially
expected and is largely being driven by emerging markets. In the first 4 months
of 2010, international tourist arrivals in the Middle East increased by 33%
compared to the same period in 2009, while visitor numbers in Asia and the
Pacific were 12% higher. Lower growth rates were recorded in Africa (6%) and
the Americas (6%), while in Europe growth was limited to just 0.3% due to the
closure of European airspace in April 2010.

International tourist arrivals in 2010 should benefit from the gradually


improving economic situation, as well as from a number of high-profile events
including the Winter Olympics in Vancouver, the FIFA Football World Cup in
South Africa, the World Exposition in Shanghai and the Commonwealth Games
in India. On the downside, tourism has suffered the effects of a series of natural
disasters, including earthquakes in Haiti, Chile, Southern California, Guatemala
and New Zealand, as well as severe flooding in a number of destinations
including Pakistan, Peru and parts of Europe.

These and other challenges mean that the world tourism industry still has some
way to go to make up lost ground. Increasing unemployment continues to be
a major cause of concern, particularly for advanced economies and this could
affect leading outbound markets. The travel and tourism industry may also be
confronted with increased taxes such as the expected rise in UK departure tax,
which is due to come into force in November 2010, and Germany’s intention
to introduce a new air tax as part of its budget-cutting plans.

On the consumer side, trends such as late booking, increasing use of the
Internet to look and book, travelling closer to home and for shorter periods of
time and demanding value for money seem to have been accentuated during
the post-crisis period and are likely to continue in the future.

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Travel & Tourism Market The Future

9. The Future

INTRODUCTION

The Economy

Gross Domestic Product


Gross domestic product (GDP) in the UK is forecast to rise by 1.1% in 2010 and
then steadily strengthen up to 2014. The economic downturn in late 2008 and
2009 affected all parts of UK business including the travel and tourism industry.
The forecast improvement in the economic outlook in 2010 should help to
bolster demand for travel and tourism services, although the speed and rate
of the recovery is likely to remain fairly modest and it may be 2011 before the
overall market starts to improve.

Table 9.1: Forecast UK Growth in Gross Domestic Product in Real


Terms (%), 2010-2014

2010 2011 2012 2013 2014

Gross domestic product


growth (%) 1.1 2.1 2.4 2.7 2.5
Percentage point change
year-on-year - 1.0 0.3 0.3 -0.2

Source: Forecasts for the UK Economy, May 2010, Treasury Independent Average
© Crown copyright

Inflation
Inflation in the UK, as measured by the retail price index (RPI), is currently
forecast to rise by 3.6% in 2010 and remain above 3% between 2012 and 2014.
Inflation at these levels will increase the operating costs of companies involved
in travel and tourism and may lead to price rises above the overall RPI. For
example, in June 2010, the RPI for UK holidays was 4.1% higher than in June
2009 and the RPI for foreign holidays was 6.1% higher.

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Table 9.2: Forecast UK Rate of Inflation (%), 2010-2014

2010 2011 2012 2013 2014

Inflation (%) 3.6 2.9 3.0 3.3 3.4


Percentage point change
year-on-year 4.1 -0.7 0.1 0.3 0.1

Note: inflation is at retail price index (RPI).

Source: Forecasts for the UK Economy, May 2010, Treasury Independent Average
© Crown copyright

Unemployment
Unemployment in the UK is forecast to rise by 9.2% to nearly 1.7 million
claimants in 2010, before remaining above 1.6 million until 2013. These
relatively high rates of unemployment could affect both consumer confidence
and consumer expenditure and, in turn, the demand for travel and tourism
services.

Table 9.3: Forecast Actual Number of Unemployed Persons in


the UK (millions), 2010-2014

2010 2011 2012 2013 2014

Actual number of
claimants (million) 1.67 1.67 1.62 1.48 1.37
% change year-on-year 9.2 0.0 -3.0 -8.6 -7.4

Source: Forecasts for the UK Economy, May 2010, Treasury Independent Average
© Crown copyright

Population
The UK population is forecast to increase by 0.7% to 62.2 million in 2010 and
reach 63.9 million by 2014, a rise of 1.7 million people over the forecast period.
In the long term, a growing population should boost demand for travel and
tourism. However, in the short term, the economic constraints affecting the UK
might mitigate such benefits.

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Table 9.4: Forecast UK Resident Population by Sex (000),


Mid-Years 2010-2014

2010 2011 2012 2013 2014

Female 31,614 31,807 32,001 32,196 32,391


Male 30,609 30,842 31,073 31,302 31,530

Total †62,222 62,649 63,074 63,498 63,921


% change
year-on-year 0.7 0.7 0.7 0.7 0.7

† — does not sum due to rounding by source

Source: Population Projections Database (2008-based projections), National


Statistics website © Crown copyright material is reproduced with the permission
of the Controller of HMSO (and the Queen’s Printer for Scotland)

FORECASTS 2010 TO 2014


Key Note forecasts that the UK travel and tourism market will once again
contract in 2010 with expenditure, trips and bed nights all lower than in 2009.
The value of the market is projected to fall by 3.4% to £67.8bn, the number of
trips made is expected to decline by 1.8% to 210.7 million and the number of
bed nights is forecast to fall by 5% to 1.18 billion. The market is expected to
show some improvement in 2011 before experiencing further growth in 2012
when the inbound and domestic sectors should receive a boost from the
London Olympics.

Thereafter and up to 2014, travel and tourism expenditure is currently


projected to rise and reach £75.4bn at the end of the forecast period, an 11.2%
advance on 2010. The number of trips made is projected to approach 216.5
million by 2014, a 2.7% improvement on 2010 and bed night numbers are
forecast to increase to 1.25 billion by 2014, a rise of 5.9% on 2010.

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Table 9.5: The Forecast UK Travel and Tourism Market by Value


and Volume (£m, 000 and million), 2010-2014

2010 2011 2012 2013 2014


Expenditure (£m)
Domestic 22,100 22,100 23,000 22,300 22,200
Outbound† 29,000 30,000 31,350 32,900 34,500

Inbound† 16,700 17,000 18,900 18,100 18,700


Total 67,800 69,100 73,250 73,300 75,400
% change -3.4 1.9 6.0 0.1 2.9
year-on-year

Trips (000)
Domestic 128,530 127,500 132,600 128,000 126,500
Outbound 52,700 53,800 55,100 56,700 58,400
Inbound 29,500 30,000 32,200 30,800 31,550
Total 210,730 211,300 219,900 215,500 216,450
% change -1.8 0.3 4.1 -2.0 0.4
year-on-year

Bed nights (million)


Domestic 402 398 410 399 395
Outbound 555 570 585 605 625
Inbound 223 218 235 225 230
Total 1,180 1,186 1,230 1,229 1,250
% change
year-on-year -5.0 0.5 3.7 -0.1 1.7

† — excluding fares
Note: domestic trips relate to trips of less than 60 days but at least 1 night; outbound and
inbound trips relate to trips of fewer than 1 year.

Source: Key Note

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Figure 9.1: The Forecast UK Travel and Tourism Market by


Value† (£m), 2010-2014
76,000

75,000

74,000

73,000

72,000

71,000

70,000

69,000

68,000

67,000
2010 2011 2012 2013 2014

† — excluding fares

Source: Key Note

FUTURE TRENDS

Value of Tourism to the UK Economy Set to Rise


According to a study commissioned by VisitBritain, the value of tourism to the
UK economy is set to rise significantly by 2020. The report, by professional
services company Deloitte and forecasting organisation Oxford Economics,
suggested that favourable exchange rates, the lure of the London 2012
Olympics and the appeal of British attractions should ensure continued growth.
The report does warn, however, that government intervention would be the
key to success, as a range of market failures need to be tackled. These included
co-ordinating marketing to help small and medium-sized tourist businesses
who cannot afford to do it themselves; enabling rural firms, who face higher
costs of operating, to adopt technology; and supporting the many districts
across the UK that rely on tourism as an important source of jobs for low-skilled
and part-time workers. The report also suggests that the tourism industry
needed help to improve its ability to predict what facilities would be needed
for the tourists that are likely to turn up and to ensure the modernisation of
hotels and venues is done in a way that retains their original appeal and
authenticity. It also needs to be able to adapt more swiftly to new trends such
as the growth in older, ‘grey pound’, tourists.

© Key Note Ltd 2010 172


Travel & Tourism Market The Future

Package Travel Directive


The European Union review of the Package Travel Directive (PTD) forms part
of Europe’s biggest regulatory overhaul in travel for 20 years. Structural
changes in the industry linked to the rise of the no-frills carriers and the growth
of the Internet have meant that current legislation is becoming increasingly
outdated and irrelevant to the majority of international travellers in the EU.
The Travel Association (ABTA) is advocating a radical overhaul of consumer
protection in the travel industry and members of the association believe that
consumer protection should be extended and clarified. The growth in travel
arrangements that fall outside the legal definition of a package holiday has
resulted in many customers travelling without the benefit of financial
protection. The desire of ABTA members to increase the scope of protection
will be a major step forward for consumers, and should remove market
distortions.

Business Travel
Travel and tourism trips for business purposes have been badly affected by the
recession. In 2009, for example, the number of such trips made in the domestic
market fell to 18 million after recording a figure of 18.2 million in 2008; the
number of outbound trips for business purposes slipped from 8.9 million to 6.9
million and the number of inbound trips for business purposes dropped from
8.1 million to 6.6 million. Although the market for business travel and tourism
may remain difficult in 2011, there may be some potential for recovery within
this sector of the market in the future.

© Key Note Ltd 2010 173


Travel & Tourism Market Further Sources

10. Further Sources

Associations
Airlines Reporting Corporation Air Travel Insolvency Protection
4100 North Fairfax Drive, Suite 600 Advisory Committee
Arlington, VA 22203-1629 E-mail: atipac@caa.co.uk
US http://www.atipac.org.uk
Telephone: 0017-038 168 000 Association of British Travel Agents
Fax: 0017-038 168 104 30 Park Street
http://www.arccorp.com London, SE1 9EQ
http://www.abta.com
Airports Council International
CP 16 Association of European Airlines
Aéroport 15 Avenue Louise 350
1215, Geneva 15 B-1050 Brussels
Switzerland Belgium
Telephone: 0041-227 178 585 Telephone: 00322-639 8989
Fax: 0041-227 178 888 Fax: 00322-639 8999
E-mail: aci@aci.aero http://www.aea.be
http://www.airports.org
Association of Independent Tour
Airport Operators Association Operators
3 Birdcage Walk 133A St Margaret’s Road
London, SW1H 9JJ Twickenham
Telephone: 020-7799 3171 Middlesex, TW1 1RG
Fax: 020-7340 0999 Telephone 020-8744 9280
E-mail: info@aoa.org.uk Fax: 020-8744 3187
http://www.aoa.org.uk E-mail info@aito.com
http://www.aito.co.uk
Air Transport Users Council
CAA House Association of Train Operating
Companies
45-59 Kingsway
3rd Floor
London, WC2B 6TE
40 Bernard Street
Telephone: 020-7240 6061
London, WC1N 1BY
Fax: 020-7240 7071
Telephone: 020-7841 8020
E-mail: admin@auc.org.uk
Fax: 020-7841 8263
http://www.auc.org.uk
http://www.atoc.org

© Key Note Ltd 2010 174


Travel & Tourism Market Further Sources

The British Air Transport Association European Commission


Artillery House 8 Storey’s Gate
11-19 Artillery Row London, SW1P 3AT
London, SW1P 1RT Telephone: 020-7973 1992
Telephone: 020-7222 9494 Fax: 020-7973 1900
Fax: 020-7222 9595 http://ec.europa.eu
Telephone: info@bata.uk.com
http://www.bata.uk.com European Cruise Council
C/o European Community
The British Tourist Authority Shipowners’ Associations
1 Palace Street Rue Ducale 67, bte 2
London, SW1E 5HE 1000 Brussels
Telephone: 020-7578 1400 Belgium
Fax: 020-7578 1401 Telephone: 00322-510 6127
http://www.visitbritain.com http://
www.europeancruisecouncil.com
Civil Aviation Authority
CAA House European Low Fares Airline
Association
45-59 Kingsway
14A, Rue du Luxembourg
London, WC2B 6TE
B-1000 Brussels
http://www.caa.co.uk
Belgium
Telephone: 00322-504 9005
Competition Appeal Tribunal
http://www.elfaa.com
Victoria House
Bloomsbury Place
Federation of Tour Operators
London, WC1A 2EB
30 Park Street
Telephone: 020-7979 7979
London, SE1 9EQ
Fax: 020-7979 7978
Telephone: 020-3117 0590
http://www.catribunal.org.uk
Fax: 020-3117 0581
E-mail: info@fto.co.uk
Competition Commission
http://www.fto.co.uk
Victoria House
Southampton Row
Guild of European Business Travel
London, WC1B 4AD
Agents
Telephone: 020-7271 0100
Rue Dautzenberg 36
E-mail: info@cc.gsi.gov.uk
B-1050 Brussels
http://
Belgium
www.competition-commission.org.uk
Telephone: 00322-644 2187
Fax: 00322-644 2421
E-mail: gebta@gebta.org
http://www.gebta.org

© Key Note Ltd 2010 175


Travel & Tourism Market Further Sources

Guild of Travel Management The Travel Foundation


Companies The CREATE Centre
Euston Fitzrovia Smeaton Road
85 Tottenham Court Road Bristol, BS1 6XN
London, W1T 4TQ Telephone: 01179-273 049
Telephone: 020-7268 3540 Fax: 01179-300 076
Fax: 020-7268 3105 E-mail:
E-mail: info@gtmc.org admin@thetravelfoundation.org.uk
http://www.gtmc.org http://
www.thetravelfoundation.org.uk
Institution of Civil Engineers
One Great George Street UKinbound
Westminster 3rd Floor
London, SW1P 3AA 388 The Strand
Telephone: 020-7222 7722 London WC2R 0LT
http://www.ice.org.uk Telephone: 020-7395 7500
Fax: 020-7240 6618
International Air Transport E-mail: info@ukinbound.org
Association http://www.ukinbound.org
Spencer House
23 Sheen Road World Tourism Organization
Richmond upon Thames, TW9 1BN Capitán Haya 42
Telephone: 020-7660 0068 28020 Madrid
Fax: 00349-114 12624 Spain
http://www.iata.org Telephone: 00349-1567 8100
Fax: 00349-1571 3733
International Civil Aviation E-mail: omt@unwto.org
Organization http://www.unwto.org
999 University Street
Montréal World Travel & Tourism Council
Quebec, H3C 5H7 1-2 Queen Victoria Terrace
Canada Sovereign Court
Telephone: 00151-4954 8219 London, E1W 3HA
Fax: 00151-4954 6077 Telephone: 0870-727 9882
E-mail: icaohq@icao.int Fax: 0870-728 9882
http://www.icao.int E-mail: enquiries@wttc.org
http://www.wttc.org

© Key Note Ltd 2010 176


Travel & Tourism Market Further Sources

Publications
Daily Telegraph • UK Cruise Census 2009
111 Buckingham Palace Road IRN Research
London, SW1W 0DT Concorde House
http://www.telegraph.co.uk Trinity Park
Solihull
London Evening Standard Birmingham, B37 7UQ
2 Derry Street Telephone: 0121-635 5210
London, W8 5TT Fax: 0121-635 5211
Telephone: 020-3367 7000 E-mail: info@irn-research.com
http://www.thisislondon.co.uk http://www.irn-research.com

• Tourism Satellite Accounting Passenger Shipping Association


Forecasts 1st Floor
World Travel & Tourism Council 41-42 Eastcastle Street
1-2 Queen Victoria Terrace London, W1W 8DU
Sovereign Court Telephone: 020-7436 2449
London, E1W 3HA http://www.the-psa.co.uk
Telephone: 0870-727 9882
Fax: 0870-728 9882 • UNWTO World Tourism Barometer,
E-mail: enquiries@wttc.org April 2010
http://www.wttc.org World Tourism Organization
Capitán Haya 42
• United Kingdom Tourism Survey 28020 Madrid
• United Kingdom Occupancy Survey Spain
VisitBritain Telephone: 00349-1567 8100
1 Palace Street Fax: 00349-1571 3733
London, SW1E 5HE E-mail: omt@unwto.org
Telephone: 020-7578 1400 http://www.unwto.org
Fax: 020-7578 1401
http://www.visitbritain.com

• UK Airline Statistics
Civil Aviation Authority
CAA House
45-59 Kingsway
London, WC2B 6TE
http://www.caa.co.uk

© Key Note Ltd 2010 177


Travel & Tourism Market Further Sources

General Sources
Dun & Bradstreet Nielsen Media Research
Marlow International Atrium Court
Parkway The Ring
Marlow Bracknell
Buckinghamshire, SL7 1AJ Berkshire, RG12 1BZ
http://www.dnb.co.uk Telephone: 01344-469 100
Fax: 01344-469 102
Dun & Bradstreet E-mail: mediacommunicationuk@
Marlow International nielsen.com
Parkway http://www.nielsenmedia.co.uk
Marlow
Buckinghamshire, SL7 1AJ
http://www.dnb.co.uk

Kantar Media
Ealing Gateway
26-30 Uxbridge Road
Ealing
London, W5 2BP
Telephone: 020-8433 4000
Fax: 020-8433 4001
http://www.kantarmedia.com

Government Sources
Department of Business, Innovation HM Treasury
and Skills 1 Horse Guards Road
1 Victoria Street London, SW1A 2HQ
London, SW1H 0ET Telephone: 020-7270 4558
Telephone: 020-7215 5000 Fax: 020-7270 4861
http://www.bis.gov.uk http://www.hm-treasury.gov.uk
•Forecasts for the UK
Department for Transport Economy-Treasury Independent
Great Minster House Average, May 2010
76 Marsham Street
London, SW1P 4DR
Telephone: 0300-330 3000
Fax: 020-7944 9643
http://www.dft.gov.uk

© Key Note Ltd 2010 178


Travel & Tourism Market Further Sources

National Statistics
1 Myddelton Street
London, EC1R 1UW
Telephone: 0845-601 3034
Fax: 01633-652 747
E-mail: info@statistics.gov.uk
http://www.statistics.gov.uk
•Annual Abstract of Statistics, 2009
•Economic & Labour Market Review,
May 2010
•International Passenger Survey
•Monthly Digest of Statistics, May
2010
•Population Projections Database
(2008-based projections)
•UK Business: Activity, Size and
Location

Other Sources
Air Travel Organisers’ Licensing easyJet
Civil Aviation Authority Hangar 89
ATOL Section London Luton Airport
K3 Bedfordshire, LU2 9PF
45-59 Kingsway Telephone: 0871-244 2366
London, WC2B 6TE http://www.easyjet.com
Telephone: 020-7453 6700
http://www.caa.co.uk Greener Journeys
3rd Floor
Arriva Drury House
Admiral Way 34-43 Russell Street
Doxford International Business Park London, WC2B 5HA
Sunderland, SR3 3XP Telephone: 020-7257 2520
Telephone: 0191-520 4000 Fax: 020-7240 6565
Fax: 0191-520 4001 E-mail:
E-mail: enquiries@arriva.co.uk contact@greener-journeys.com
http://www.arriva.co.uk http://www.greener-journeys.com

Deloitte London Development Agency


2 New Street Square Palestra
London, EC4A 3BZ 197 Blackfriars Road
Telephone: 020-7936 3000 London, SE1 8AA
Fax: 020-7583 1198 Telephone: 020-7593 8000
http://www.deloitte.com http://www.lda.gov.uk

© Key Note Ltd 2010 179


Travel & Tourism Market Further Sources

Northern Ireland Tourist Board Transport for London


59 North Street Windsor House
Belfast, BT1 1NB 50 Victoria Street
Telephone: 02890-231 221 London, SW1H 0TL
Fax: 02890-240 960 Telephone: 020-7222 5600
E-mail: info@nitb.com http://www.tfl.gov.uk
http://
www.discovernorthernireland.com TTG Live
Third Floor
Norwegian Institute for Air Research Ludgate House
Instituttveien 18 245 Blackfriars Road
NO-2007 Kjeller London, SE1 9UY
Norway http://www.ttglive.com/home
Telephone: 0047-6389 8000
Fax: 0047-6389 8050 VisitBritain
E-mail: nilu@nilu.no 1 Palace Street
http://www.nilu.no London, SW1E 5HE
Telephone: 020-7578 1400
Oneworld Alliance Fax: 020-7578 1401
Burrard Street http://www.visitbritain.com
Vancouver, BC V6C 2G8
Canada VisitEngland
http://www.oneworld.com 1 Palace Street
London, SW1E 5HE
Oxford Economics Telephone: 020-7578 1400
Abbey House Fax: 020-7578 1401
121 St Aldates http://www.visitengland.com
Oxford, OX1 1HB
Telephone: 01865-268 900 Visit London
Fax: 01865-268 906 2 More London Riverside
E-mail: London, SE1 2RR
mailbox@oxfordeconomics.com Telephone: 020-7234 5800
http://www.oef.com Fax: 020-7378 6525
http://www.visitlondon.com
P&O Ferries
Channel House VisitScotland
Channel View Road Ocean Point One
Dover, CT17 9TJ 94 Ocean Drive
http://www.poferries.com Edinburgh, EH6 6JH
Telephone: 0131-472 2222
Fax: 0131-472 2250
http://www.visitscotland.org

© Key Note Ltd 2010 180


Travel & Tourism Market Further Sources

Visit Wales Yorkshire Tourist Board


Welsh Assembly Government Dry Sand Foundry
Brunel House Foundry Square
2 Fitzalan Road Holbeck
Cardiff, CF24 0UY Leeds, LS11 5WH
Telephone: 0870-8300 306 Telephone: 01133-223 500
Fax: 0870-1211 259 E-mail: info@yorkshire.com
E-mail: info@visitwales.co.uk http://www.yorkshire.com
http://www.visitwales.co.uk

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© Key Note Ltd 2010 181


Travel & Tourism Market Further Sources

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© Key Note Ltd 2010 182


Travel & Tourism Market Further Sources

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Leads Reports A service that offers a discount
£420 on multiple report purchases.

For each region of Great Britain, Contact us for further details:


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provided.

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© Key Note Ltd 2010 183


Travel & Tourism Market Understanding TGI Data

Understanding TGI Data


TGI tables, produced by Kantar Media, are generally based on one of the following groups:

• Households — a private household consists of either one person living alone or a group of
people, usually, but not always, members of one family, who live together and whose food
and other household expenses are managed as one unit.

• Adults — any person aged 15 or over.

• Housewives — a member of a private household who is solely or mainly responsible for the
household duties.

Number, Profile, Penetration


Tables used in Key Note reports may give figures for the Number, Profile, and/or Penetration.
These terms are explained in the following table.

© Key Note Ltd 2010 184


Travel & Tourism Market Understanding TGI Data

TGI data used in Key Note reports are broken down by age, social grade and standard region.

Social Grade
This is normally based on the occupation of the Head of the Household, or if the Head of the
Household is retired, their former occupation. If this information is not available, social grade
is based on environmental factors such as type of dwelling, amenities in the home, presence of
domestic help, etc.

Social grade is assessed by the interviewer when collecting the information and is, therefore,
based on information given personally and verbally by the respondent. Social grade is checked
by Kantar Media’s coding and editing office.

The following table broadly defines the six social grades used. The relationship between social
grade and net income of the Head of the Household is a complex one and readers should note
that income is not determinant of social grade.
Head of Household’s
Social Grade Social Status Occupation
A Upper middle class Higher managerial,
administrative or professional
B Middle class Intermediate managerial,
administrative or professional
C1 Lower middle class Supervisory or clerical and
junior managerial,
administrative or professional
C2 Skilled working class Skilled manual workers
D Working class Semi and unskilled workers
E Those at lowest levels of State pensioners or widows
subsistence (no other earner)

Standard Region
This is as defined by the Registrar-General.

© Key Note Ltd 2010 185


Travel & Tourism Market Key Note Research

Key Note Research


Key Note is a leading supplier of market information, publishing an extensive range of
consumer, industrial, business-to-business and services titles. With over 25 years’ experience,
Key Note represents clear, concise, quality market information.

For all reports, Key Note undertakes various types of research:

Online searching is carried out by product code or free search method, and covers the period
from the last edition of the report to the current day.

Trade sources, such as trade associations, trade journals and specific company contacts, are
invaluable to the Key Note research process.

Secondary data are provided by Kantar Media (TGI) and Nielsen Media Research for consumer/
demographic information and advertising expenditure, respectively. In addition, various official
publications published by National Statistics, etc. are used for essential background data and
market trends.

Interviews are undertaken by Key Note for various reports, either face-to-face or by telephone.
This provides qualitative data (‘industry comment’) to enhance the statistics in reports;
questionnaires may also be used.

Field research is commissioned for various consumer reports and market reviews, and is carried
out by NEMS Market Research.

Key Note estimates are derived from statistical analysis and trade research carried out by
experienced research analysts. Up-to-date figures are inserted where possible, although there
will be some instances where a realistic estimate cannot be made or external sources request
that we do not update their figures.

Key Note Editorial, 2010

© Key Note Ltd 2010 186


Travel & Tourism Market The Key Note Range of Reports

The Key Note Range of Reports


Key Note publishes over 180 titles each year, across both the Key Note and Market Assessment
product ranges. The total range covers consumer, lifestyle, financial services and industrial
sectors.

Title Edition Published Title Edition Published

Market Reports and Reports Plus Cigarettes & Tobacco 24 2010


Cinemas & Theatres 9 2001
A
Closed-Circuit Television 12 2010
Access Control 11 2010
Clothing Manufacturing 15 2008
Accountancy 14 2010
Clothing Retailing 7 2009
Aerospace 12 2003
Commercial Radio 8 2004
Agrochemicals & Fertilisers 3 2002
Commercial Vehicles 15 2009
Air Freight 2 2005
Computer Hardware 8 2010
Airlines 21 2010
Computer Services 9 2010
Airports 14 2010
Computer Software 7 2008
Animal Feedstuffs 11 2001
Confectionery 28 2010
Arts & Media Sponsorship 3 2008
Consumer Internet Usage 4 2000
Automatic Vending 24 2010
Consumer Magazines 17 2010
Automotive Services 7 2010
Contraception 4 2009
Autoparts 19 2009
Contract Catering & Foodservice
B Management 21 2010
Baths & Sanitaryware 14 2009 Contract Cleaning 21 2010
Bearings 2 2007 Cooking Sauces & Food
Betting & Gaming 23 2010 Seasonings 3 2008
Biscuits & Cakes 16 2009 Corporate & Promotional
Book Publishing 19 2007 Giftware 3 2008
Bookselling 17 2010 Corporate Hospitality 6 2007
Bread & Bakery Products 24 2009 Cosmetics & Fragrances 22 2009
Breakfast Cereals 14 2009 Cosmetic Surgery 8 2010
Breweries & the Beer Market 27 2008 Courier & Express Services 16 2010
Bricks & Tiles 16 2010 D
Bridalwear 5 2010 Dark Spirits & Liqueurs 3 2004
Builders’ Merchants 17 2010 Debt Management (Commercial
Building Contracting 10 2009 & Consumer) 5 2008
Building Materials 13 2008 Defence Equipment 11 2010
Bus & Coach Operators 9 2008 Design Consultancies 3 2000
Business Press 14 2009 Digital Broadcasting 4 2009
Digital Communications 1 2009
C
Digital TV 2 2003
Cable & Satellite TV 10 2004
Direct Marketing 19 2009
Camping & Caravanning 13 2002
Discount Retailing 7 2009
Canned Foods 17 2009
Disposable Paper Products 13 2009
Carpets & Floorcoverings 16 2009
Document Imaging Systems 1 2007
Catering Equipment 13 2010
Domestic Heating 14 2009
Chemical Industry 13 2010
Dry Cleaning & Laundry Services 5 2005
Childrenswear 8 2009
Chilled Foods 15 2009
China & Earthenware 27 2010

© Key Note Ltd 2010 187


Travel & Tourism Market The Key Note Range of Reports

Title Edition Published Title Edition Published

E Household Appliances (Brown


Goods) 11 2008
Electrical Contracting 9 2009
Household Appliances (White
Electrical Wholesale 5 2009
Goods) 16 2008
Electricity Industry 6 2009
Household Detergents &
Electronic Component Cleaners 16 2009
Distribution 12 2002
Household Furniture 18 2008
Electronic Component
Manufacturing 11 2002 I

Electronic Games 4 2003 Ice Creams & Frozen Desserts 14 2010


Equipment for the Disabled 5 2009 Industrial Fasteners 8 2001
Equipment Leasing 12 2003 Industrial Pumps 5 2000
Estate Agents 17 2008 Industrial Valves 8 2001
Ethnic Foods 15 2009 Insurance Companies 12 2009
Exhibitions & Conferences 11 2009 Internet Usage in Business 8 2005
IT Security 9 2009
F
IT Training 13 2010
Factoring & Invoice Discounting 2 2003
Fast Food & Home Delivery J
Outlets 24 2010 Jewellery & Watches 25 2009
The Film Industry 4 2002 K
Finance Houses 11 2000 Kitchenware 7 2009
Fire Protection Equipment 8 2006 L
Fish & Fish Products 14 2010 Laboratory Equipment 9 2008
Fitted Kitchens 7 2007 Lighting Equipment 14 2002
Football Clubs & Finance 4 2009 Lingerie 9 2010
Footwear 16 2009
M
Franchising 12 2010
Management Consultants 10 2003
Free-To-Air TV 8 2004
Market Forecasts 1 2005
Freight Forwarding 17 2009
Meat & Meat Products 21 2010
Frozen Foods 24 2009
Medical Equipment 17 2009
Fruit Juices & Health Drinks 13 2010
Metal Recycling 5 2009
Fruit & Vegetables 21 2009
Milk & Dairy Products 24 2010
Further & Higher Education 6 2009
Mobile Phones 7 2010
G Mobile Telecommunications 2 2007
Garden Equipment 13 2009
N
Gas Industry 5 2009
Natural Products 2 2007
Giftware 19 2010
New Media Marketing 3 2002
Glassware 15 2009
Newspapers 18 2010
Greetings Cards Plus 26 2010
Non-Metal Recycling 3 2010
H
O
Hand Luggage & Leather Goods 15 2010
Office Furniture 21 2008
Health Clubs & Leisure Centres 10 2010
Offshore Oil & Gas Industry 5 2009
Health Foods 22 2003
Ophthalmic Goods & Services 17 2010
Heating, Ventilating & Air
OTC Pharmaceuticals 14 2010
Conditioning 9 2002
Own Brands 12 2007
Home Furnishings 19 2009
Home Shopping 13 2009
Horticultural Retailing 17 2008
Hotels 24 2009
Housebuilding 19 2009

© Key Note Ltd 2010 188


Travel & Tourism Market The Key Note Range of Reports

Title Edition Published Title Edition Published

P T
Packaging (Food & Drink) 6 2010 Take Home Trade 17 2008
Packaging (Glass) 13 2008 Telecommunications 21 2007
Packaging (Metals & Aerosols) 12 2003 Timber & Joinery 19 2008
Packaging (Paper & Board) 14 2008 Toiletries 23 2010
Packaging (Plastics) 15 2010 Tourist Attractions 5 2001
Paper & Board Manufacturing 14 2002 Toys & Games 24 2010
Personal Banking 11 2000 Training 18 2009
Photocopiers & Fax Machines 14 2005 Travel Agents & Overseas Tour
Plant Hire 13 2007 Operators 22 2009
Plastics Processing 10 2003 Tyre Industry 4 2008
Poultry 4 2010 V
Power Tools 5 2007 Vehicle Security 9 2010
Premium Lagers, Beers & Ciders 8 2009 Videoconferencing 4 2007
Printing 15 2010 Video & DVD Retail & Hire 8 2005
Private Healthcare 20 2009 W
Protective Clothing & Equipment 7 2009 Wallcoverings & Ceramic Tiles 18 2010
Public Houses 26 2010 Waste Management 10 2010
R Water Industry 5 2010
Rail Travel 7 2008 Windows & Doors 20 2010
Ready Meals 11 2009 Wine 20 2009
Recruitment Agencies White Spirits 1 2005
(Permanent) 10 2010
Market Reviews
Recruitment Agencies
Catering Market 21 2009
(Temporary & Contract) 10 2010
Clothing & Footwear Industry 13 2010
Renewable Energy 3 2009
UK Computer Market 11 2004
Restaurants 24 2009
Construction Industry 11 2009
Retail Chemists & Drugstores 16 2010
Contracted-Out Services 3 2007
Road Haulage 22 2009
Defence Industry 7 2003
S
Distribution Industry 10 2009
Sauces & Spreads 11 2008
DIY & Home Improvements
Shopfitting 14 2009 Industry 11 2009
Short Break Holidays 4 2001 Drinks Market 18 2008
Slimming Market 8 2000 Energy Industry 8 2010
Small Domestic Electrical Film Market 2 2009
Appliances 12 2010
Food Industry 19 2009
Snack Foods 20 2010
Healthcare Market 10 2005
Soft Drinks (Carbonated &
Insurance Industry 10 2009
Concentrated) 17 2008
The Legal Services Market 1 2005
Soup Market 3 2009
Leisure & Recreation Market 15 2005
Sports Clothing & Footwear 12 2009
Leisure in the Home 2 2008
Sports Equipment 15 2009
Leisure Outside the Home 2 2008
Sports Sponsorship 7 2009
Local Government Services 3 2010
Stationery (Personal & Office) 25 2010
Mechanical Handling 1 2001
Motor Industry 12 2008
Music Industry 2 2010
Office Equipment Industry 9 2010
Packaging (Food & Drink)
Industry 1 2003

© Key Note Ltd 2010 189


Travel & Tourism Market The Key Note Range of Reports

Title Edition Published Title Edition Published

Passenger Travel in the UK 5 2007 Customer Loyalty in Financial


Pharmaceuticals Industry 6 2008 Services 2000
Process Plant Industry 1 2000 Customer Magazines & Contract
Publishing 2009
Publishing Industry 13 2010
Customer Relationship
Railway Industry 2 2006
Management 2008
Security Industry 13 2010
Customer Services in Financial
Sports Market 13 2010 Organisations 2010
Travel & Tourism Market 17 2010 C2DE Consumer 2010
UK Internet Market 1 2009
D
Market Assessment Reports Diet Foods 2009
A DINKY Market 2007
ABC1 Consumer 2010 Direct Insurance 2010
Activity Holidays 2009 Direct Mortgages 2008
Advertising Agencies 2007 Domestic Lighting and Electrical
All-Inclusive Holidays 2000 Products 2000
Alternative Healthcare 2010 Domestic Telecommunications 2006
Audio-Visual Retailing 2000 E

B
E-Commerce: The Internet
Grocery Market 2009
Baby Foods 2006
E-Commerce: The Internet
Baby Products 2010 Leisure & Entertainment Market 2008
Baths and Showers 2000 Electronic Banking 2008
Beds, Bedrooms and Upholstered EMU — The Impact on the UK
Furniture 2000 Financial Services Industry 2003
Betting and Gaming 2002 E-Recruitment 2006
Book Retailing on the Internet 2007 E-Shopping 2002
Bottled Water 2003 Estate Agents and Services 2010
Bridalwear 2002 Ethnic Foods 2002
Business Postal Services 2008 European Electricity Industry 2007
B2B Marketing 2008 European Gas Industry 2007
Business Travel Market 2008 European Long-Term Insurance 2008
C European Oil & Gas Industry 2007
Cable and Satellite Services 2002 European Renewable 2008
Charity Funding 2005 Energy Industry 2008
Childcare 2008 European Short Breaks 2008
Children’s Publishing 2010 European Telecommunications 2010
Clothing Retailers 2000 European Tourist Attractions 2009
Coffee & Sandwich Shops 2009 European Trends in Food
Commercial Dynamics in Shopping 2009
Financial Services 2005 European Water Industry 2007
Commercial Insurance for Small Extended Financial Families 2005
Businesses 2009
Condiments and Sauces 2008
Consumer Credit & Debt 2010
Contact Centres 2010
Contraception 2002
Cooking & Eating 2009
Cross-Border Shopping 2000
Cruise Market 2008

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Travel & Tourism Market The Key Note Range of Reports

Title Edition Published Title Edition Published

F L
Financial Services Marketing to Lifestyle Magazines 2008
ABs 2006 Low-Fat & Reduced-Sugar Foods 2008
Financial Services Marketing to The Luggage Market 2000
ABC1s 2000
M
Financial Services Marketing to
BCs 2009 Marketing to Children 4-11 2003
Financial Services Marketing to Marketing in the Digital Age 2009
C1C2DEs 2006 Media Marketing 2010
Financial Services Marketing to Medical & Health Insurance 2007
DEs 2009 Men and Women’s Buying Habits 2008
Financial Services Marketing to Men’s Toiletries & Fragrances 2008
Over 60s 2004
Millennium Youth 2002
Financial Services Marketing to
Mobile Marketing 2009
the Affluent 2009
Motor Finance 2008
Financial Services Marketing to
the Retired and Elderly 2007 N
Financial Services Marketing to The Newspaper Industry 2005
Start-Up Businesses and the Self- Non-Food Sales in Supermarkets 2008
Employed 2010
Nutraceuticals 2008
Financial Services Organisations
on the Internet 2009 O

The Fish Industry 2001 Off-Trade Spirits 2004


Forecourt Retailing 2010 Opticians & Optical Goods 2010
Functional Foods 2010 Organic Baby & Toddler Care 2007
Funding in Higher Education 2002 Organic Food & Drink 2010
OTC Pharmaceuticals 2000
G
Over-40s Consumer 2005
General Insurance 2010
Over-50s Consumer 2009
Generation Y 2007
Global Waste Management 2007 P

Green and Ethical Consumer 2008 Pay TV 2004


Grey Consumer 2009 Pension Extenders 2002
Pensions 2009
H
Personal Banking 2003
Healthy Eating 2008
Personal Lines Insurance 2010
Holiday Purchasing Patterns 2009
Personal Loans 2008
Home Entertainment 2008
Pet Market 2009
Hot Beverages 2009
Planning for Retirement 2008
I
Plastic Cards in Europe 2005
In-Car Entertainment 2000
Plus-Size Fashion 2009
Independent Financial Advisers 2008
Private Sector Opportunities in
Individual Savings Accounts 2005 Education 2001
Insurance Prospects 2008 Public Relations Industry 2007
Internet Advertising 2009 Public Transport 2001
Internet Service Providers 2005
R
Issues and Challenges in the UK
The Railway Industry 2004
Life Assurance Market 2002
Ready Meals 2001
Issues in Higher Education
Funding 2006 Recycling and the Environment 2000
IT Recruitment 2010 Retail Credit 2000
Retail Development 2001
Rural Economy 2009

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Travel & Tourism Market The Key Note Range of Reports

Title Edition Published Title Edition Published

S U
Savings & Investments 2010 Utilities 2007
Saving Trends in the Eurozone 2002 V
Singles Market 2009 Vegetarian Foods 2009
Shopping Centres 2008 Vehicle Breakdown Services 2010
Short Breaks 2004 Vitamins, Minerals &
Slimming Market 2009 Supplements 2009
Small Businesses & Banks 2010 W
Small Office Home Office White Goods 2000
Consumer 2001 Women Over 45 2007
Small Office Home Office Working Women 2009
Products 2001
The Soup Market 2001
Sponsorship 2000
Supermarket Own Label 2009
Supermarket Services 2007
Sweet & Salty Snacks 2010
T
Teenage Fashionwear 2008
Teenage & Pre-Teen Magazines 2009
Teleworking 2003
Trends in Food Shopping 2008
Trends in Leisure Activities 2007
Tweenagers 2005

© Key Note Ltd 2010

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