Holiday market will take 5 years to recover, says Mintel
VAT increases and higher fuel costs will make holidays more expensive from next year, which could cause a further dip in the market, says a new report by Mintel.
Although its report said there was a ‘small chance’ of a major boom in revenue as Britain emerges from the recession, it admitted this was unlikely.
"Recovery is not a word that can be applied to the holiday market in the coming five years," it warned.
"Higher holiday prices due to high VAT will hurt the market as the costs of low-cost flights are increased."
According to Mintel, overall spend on overseas holidays is forecast to rise by 17 percent over the next five years, which is significantly more than from 2005 to 2010, but the rise will be driven by higher holiday costs.
"In constant price terms, expenditure on holidays will decline by 1.6 percent between 2010 and 2015," it said. "Changing exchange rates and higher fuel costs will play a major role in holiday prices in the coming years and higher prices will limit volume growth."
Mintel’s consumer research for Holidays – Attitudes and the Impact of the Recession – UK, January 2010 report suggests that if low-cost flights disappeared, those most likely to travel less would be the ABC1 pre-/no family group.
The two markets that would be most affected would be overseas city breaks and holiday homes.
Good news for travel agents, however, is that the recession has led to more people booking short break through high street outlets rather than online. Its report found that in 2009 travel agents and tour operators became ‘noticeably more popular’.
The report concluded: "In the coming years, while beach and family holidays will continue to dominate the market, more diversification will be seen in holiday types," claimed Mintel. "Niche products/destinations will see the fastest growth."
It also predicted that the use of collaborative online social media, such as Twitter, Facebook and TripAdvisor, will increase, which ‘will challenge traditional notions of brand authority and marketing’.
By Linsey McNeill
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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