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Travel and Tourism in the United Kingdom

United Kingdom tourism market: Online bookings continue to see growth

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2014-01-23 01:28:01 - Travel and Tourism in the United Kingdom - a new market research report on

As travel and tourism is considered one of the key industries for the UK´s growth strategy, the Government presented what is considered to be one of the most prominent marketing campaigns – the GREAT campaign - with the aim of promoting inbound and domestic tourism. Advertising campaigns were launched worldwide, particularly in China. As the UK is not part of the Schengen agreement, the UK visa system has been criticised for hampering inbound tourism.

As such, procedures for Chinese tourists have been reviewed and made simpler and faster. However, the problems remain for other up-and-coming countries, such as Russia and Indonesia. On the other hand, the Government has been criticised for raising Air Passenger Duty (APD), which is expected to produce



a negative effect on tourism. The increase in VAT from 17.5% to 20% in 2011 was also heavily criticised as it could deter foreign tourists from travelling to the UK, a country which is already perceived as expensive to visit.

Despite the Government´s efforts to attract more tourists, as well as the Queen´s Diamond Jubilee and London´s hosting of the Olympic Games, domestic inbound and outbound tourism was stable in 2012 compared to the previous year. Overall, tourism remained below the peak level seen in 2007. However, the trend in 2012 cannot be considered as bad news as it came after recovery in 2011. In addition, the economic outlook remains highly uncertain in the UK but mainly in the Eurozone, as well as in the rest of the world as the crisis in the Eurozone is starting to affect international trade. In fact, tourism remains quite resilient to the economic downturn which is now entering its fifth year, even though it drastically reduced consumer confidence as well as wages and purchasing power.

The number of last-minute bookings as well as the use of the internet to search for offers and promotions increased in 2012. Consumers are demanding value for money, which has often translated into choosing the cheapest deal. The revival of package holidays was also notable in 2012, as these holidays offer travellers peace of mind as they know in advance how much their holiday is going to cost. Moreover, package holidays also benefit from ATOL protection. Moreover, the category also grew due to the popularity of dynamic package holidays, which provide the traveller with a bit more flexibility. The extension of ATOL protection to dynamic package holidays in August 2012 also contributed to category growth.

Personalisation could become a major trend in the future as the digital era enables the collection of a massive amounts of data about customers that can then be analysed to provide tailor-made solutions. This strategy appears to have paid off for TUI, which launched package holidays to target specific consumer groups by increasing differentiation, a strategy which achieved strong growth in 2012. Clearly, the challenge for companies remains the establishment of a level of personalisation which can still be profitable. In addition, excessive differentiation could lead to confusion for consumers.

Consumers are using the internet to search for travel information but also a larger number of people are booking holidays online. Although industry sources are reporting that people are returning to the more traditional high street travel agency, which can add a personal touch to the booking experience, online bookings will continue to grow and are expected to account for the largest proportion of sales by 2017. Nevertheless, the trend is expected to slow down compared to the review period as high IT investments will be necessary to improve consumers´ booking and online experience, which will be difficult to put in place given the overall economic outlook.

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Mike King
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