Sector Insight: Travel agents

First Choice: All-inclusive breaks accounted for 40% of holidays sold by TUI
First Choice: All-inclusive breaks accounted for 40% of holidays sold by TUI

Travel agents face challenging times as more consumers turn to the web to research holiday destinations and book their trips.

Sun, sea and sand, adventure or cultural interest - however people prefer to spend their holidays, taking a break has remained the top spending priority for them over the past few years.

No matter how strapped for cash the public is in austerity Britain, an overseas summer holiday or short break continues to be placed ahead of clothes, DIY, savings and paying off debt as items on which it is important to spend money, according to NOP.

While going on holiday continues to play an important part in people's lives, the means by which these holidays are arranged has changed with the advent of the internet. Flights, accommodation and excursions can all be booked from home, resulting in holidays tailor-made for those with the time and inclination to put them together.

Sites such as TripAdvisor, meanwhile, provide a rich vein of user reviews of tourist attractions and hotels that go above and beyond the details available in any guidebook.

This has brought challenging times for travel agents, once the gatekeepers of such information. Of course, not everyone can, or wants to, create their own holiday and the level of service offered by agents still sets them apart.

Events such as last year's Icelandic ash cloud and a series of holiday-company failures have engendered a desire among consumers for a greater level of protection. More recently, this has driven an increase in the share of bookings made through travel agents. Indeed, four in 10 people who booked through a travel agent said they did so to ensure they were protected, according to Ipsos MORI research.

Mintel estimates that 16.7m overseas holidays were booked via travel agents in 2010. This figure was down 24% on 2007, but still equated to 45% of the total number of overseas breaks booked. Independent breaks accounted for almost 63% of holidays, compared with 57% in 2005.

Holidaymakers are most likely to use travel agents for package holidays. They are also seen as a good place to book specialist or complex holiday arrangements, presenting a time-saving method of booking.

Nonetheless, TGI data shows travel agents are being used less for holiday research (down 7.7% between 2005 and 2009), while the internet is on the rise (up 12.3% in the same period).

When it comes to the choice of destination, mid-haul, non-eurozone countries are on the up. This has brought some benefits to travel agents. For example, since 2005, Turkey and Egypt have been the fastest-growing destinations for British tourists (although recent events in the latter may reverse this trend). The fact that both countries are less familiar to many holidaymakers means the majority book these destinations via travel agents as packages.

All-inclusive holidays, too, have gained in popularity as a way to manage and control holiday spending. In 2009, all-inclusive breaks accounted for 40% of the holidays sold by TUI, Europe's biggest tour operator by revenue, through its two main UK brands, Thomson and First Choice. TUI's wide portfolio of brands also includes Simply Travel and Exodus.

The sector is affected by a range of trends, both to its benefit and detriment. Overall, however, the market has suffered; the number of high-street travel agents fell by about a third over the 10 years to 2009.

Last October, Thomas Cook announced a merger of its retail outlets with those of The Co-operative Travel business, creating the UK's biggest network of more than 1300 stores.

As broadband access widens, though, online booking will become an option for more people, including older demographics. Indeed, only about one in five consumers says they might use a travel agent in the future and, while a third of people who have booked via a travel agent were happy with their holidays, only one in five plans to continue to book in this way.

By 2015, Mintel predicts 14.8m overseas holidays will be booked via travel agents, an 11% decline on 2010. This takes their share of the foreign holiday market down to 35%.

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