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| BD6300Q |
| MBD TOUR OPERATORS : 2003 |
| Overview |
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This report covers: travel agencies, tour operators, holidays abroad by UK residents, expenditure on holidays abroad by UK residents, inclusive tours, abroad, charter airlines etc.
Companies covered include: Accoladia, Cosmos Coach Tours, First Choice Holidays & Flights, Gold Medal Travel Group, LIBRA Holidays,MyTravel Group, TUI UK, Thomas Cook Tour Operators, Virgin Travel Group,
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Table of Contents Executive Summary
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Engine| No. | Title | Page |
| 1 | EXECUTIVE SUMMARY | 1 |
| 2 | INTRODUCTION | 5 |
| 2.1 | Definitions | 6 |
| 2.2 | Abbreviations | 6 |
| 2.3 | Economic Overview | 6 |
| 2.4 | Market Positioning | 9 |
| 2.4.1 | Customers | 9 |
| 2.4.2 | Suppliers | 9 |
| 2.5 | Market Factors | 10 |
| 2.5.1 | Social | 10 |
| 2.5.2 | Technological | 11 |
| 2.5.3 | Economic | 11 |
| 2.5.4 | Environmental | 11 |
| 2.5.5 | Political | 11 |
| 3 | MARKET SIZE AND TRENDS | 12 |
| 3.1 | Chapter Summary | 13 |
| 3.2 | Market Size | 14 |
| 3.3 | Market Segmentation | 17 |
| 3.4 | Market Trends | 19 |
| 4 | INDUSTRY STRUCTURE | 21 |
| 4.1 | Chapter Summary | 22 |
| 4.2 | Industry Overview | 22 |
| 4.2.1 | Industry Rivalry | 23 |
| 4.2.2 | Threat of Entry | 25 |
| 4.2.3 | Threat of Substitutes | 26 |
| 4.2.4 | Recent Events | 27 |
| 4.2.4.1 | MyTravel | 27 |
| 4.2.4.2 | Low-Cost Airlines | 27 |
| 4.2.4.3 | Promotions | 28 |
| 4.3 | Structure by Turnover | 29 |
| 4.4 | Employment | 29 |
| 4.5 | Company Profiles | 30 |
| 4.5.1 | Accoladia | 30 |
| 4.5.2 | Cosmos Coach Tours | 31 |
| 4.5.3 | First Choice Holidays & Flights | 32 |
| 4.5.4 | Gold Medal Travel Group | 33 |
| 4.5.5 | LIBRA Holidays | 34 |
| 4.5.6 | MyTravel Group | 36 |
| 4.5.7 | TUI UK | 37 |
| 4.5.8 | Thomas Cook Tour Operators | 38 |
| 4.5.9 | Virgin Travel Group | 39 |
| 5 | FORECAST | 41 |
| 5.1 | Chapter Summary | 42 |
| 5.2 | Market Size | 43 |
| 5.3 | Industry Structure | 45 |
| 6 | FURTHER SOURCES & CONTACTS | 47 |
| 6.1 | Trade Associations | 48 |
| 6.2 | Trade Magazines | 49 |
| 6.3 | Trade Exhibitions | 50 |
| List of Tables | |
| No. | Title |
| 1 | Changes in the UK Population, by Age Group, 1991-2006 |
| 2 | Expenditure on Holidays Abroad by UK Residents, 1999-2002 |
| 3 | Holidays Abroad by UK Residents, by Mode of Transport,,1998-2002 |
| 4 | Expenditure on Inclusive Tours Abroad by UK Residents, by Destination, 1999-2002 |
| 5 | Number of Inclusive Tours Abroad by UK Residents, by Mode,of Transport, 1998-2002 |
| 6 | UK Charter Airlines, Market Share by Airline, 2001 |
| 7 | Analysis of the Financial Structure of the Travel Agencies and,Tour Operators, 2001 and 2002 |
| 8 | Tour Operator and Travel Agency Personnel Employed in,Great Britain, by Type, 1998-2002 |
| 9 | Financial Analysis of Accoladia, 2001 |
| 10 | Key Financial Ratios for Accoladia, 2001 |
| 11 | Financial Analysis of Cosmos Coach Tours, 1997-2001 |
| 12 | Key Financial Ratios for Cosmos Coach Tours, 2000-2001 |
| 13 | Financial Analysis of First Choice Holidays & Flights, 1997-2001 |
| 14 | Key Financial Ratios for First Choice Holidays & Flights,,2000-2001 |
| 15 | Financial Analysis of Gold Medal Travel Group, 1997-2001 |
| 16 | Key Financial Ratios for Gold Medal Travel Group, 2000-2001 |
| 17 | Financial Analysis of LIBRA Holidays, 1997-2001 |
| 18 | Key Financial Ratios for LIBRA Holidays, 2000-2001 |
| 19 | Financial Analysis of Mytravel Group, 1997-2001 |
| 20 | Key Financial Ratios for Mytravel Group, 2000-2001 |
| 21 | Financial Analysis of Tui UK, 1996-2000 |
| 22 | Key Financial Ratios for Tui UK, 1999-2000 |
| 23 | Financial Analysis of Thomas Cook Tour Operations,,1997-2001 |
| 24 | Key Financial Ratios for Thomas Cook Tour Operations,,2000-2001 |
| 25 | Financial Analysis of Virgin Travel Group, 1997-2001 |
| 26 | Key Financial Ratios for Virgin Travel Group, 2000-2001 |
| 27 | Forecast Expenditure on Holidays Abroad by UK Residents,,2003-2007 |
| List of Diagrams | ||
| 1: | Forecast Development of the UK Market for Inclusive,Tours, 1999-2007 | 45 |
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| 1 | Some 62 percent of UK individuals are estimated to take at least one overseas holiday per year, with the proportion of the population holidaying twice or more per annum estimated at around a quarter, with the average spend at some £500 per person. Trends in the travel market, such as the prevalence of low cost airlines, has benefited the overall travel market and led to incremental growth in trips. |
| 2 | During the review period, spending on all holidays taken abroad by UK residents is projected to have increased by some 37 percent, while expenditure on inclusive tours is anticipated to have seen a somewhat lower growth of some 32 percent, with much of this sector under-performance occurring in the early part of the current decade. Consequently, the share of inclusive tours of expenditure on all holidays is anticipated to be reduced further during 2002 to 53 percent, after declining to 54 percent during the previous year. |
| 3 | UK residents are estimated to have made in excess of 59.4 million visits abroad during 2002. This is believed to represent an increase of just under 2 percent compared with the previous year, when the total number of international visits was increased by 2.5 percent. The growth in all visits abroad by UK residents is believed to have been affected by the terrorist attacks in the USA on September 11th 2001, although the slowing down of growth levels has been smaller than was initially anticipated. |
| 4 | When the number of visits is taken to exclude business travel, VFR and miscellaneous visits, the total number of holidays taken abroad by UK residents is estimated to have been increased by a substantial 10 percent during 2002, compared with a rise of 5 percent during the previous two years. In the latter part of the period, possibly in reaction to terrorist fears particularly those relating to air travel, but also a tendency to take holidays closer to home, the biggest growth has occurred in the number of holidays taken by sea or Channel tunnel, where the number of visits is expected to rise by some 14 percent during 2002, compared with an anticipated increase of some 8 percent in holidays taken by air. Moreover, much of the growth in air travel is attributable to the impact of low cost airlines with much of the growth in the market believed to represent short break, independently booked visits rather than growth in tour operator booked holidays. |
| 5 | EU countries have become increasingly popular destinations for holiday makers choosing an inclusive tour during recent years, with the expenditure estimated to have risen significantly during 2002 to 69 percent of the total, after declining to 60 percent in 2000. At the same time, the share of spending on inclusive tours to North America is believed to have declined to 8 percent during 2002 from its highest share of 12 percent in 2000. Spending on inclusive tours to non-EU countries is projected to remain unchanged at some 11 percent of the total in 2002, while the share of inclusive tours to other countries is expected to decline to 12 percent from its peak of 18 percent in 2000. During the review period, the total number of inclusive tours taken abroad by UK residents is projected to have increased by some 27 percent. Travel by sea and the Channel Tunnel accounts for around a fifth of the total, with the number of visits projected to reach over 4.7 million during 2002. The share of inclusive tours taken by air is anticipated to be reduced during that year, as the number of inclusive tours by sea and Channel Tunnel is expected to show much stronger growth than tours by air. |
| 6 | Since the early part of the review period, the annual rate of growth in the number of all inclusive packages, or AITs, has risen quite substantially, averaging just under 10 percent annual growth. Due to the recent acts of terrorism, the growth has slowed considerably, with an increase of only 3 percent recorded in 2001. A further 3 percent rise is expected to occur in the number of inclusive tours by air during 2002. The number of air inclusive tours to North America fell by 10 percent during 2001, with a substantial 15 percent reduction occurring during the first quarter of 2002 compared with that of the previous year. This region accounted for some 6 percent of the total number of AITs in 2001, 1 percent less than during the previous two years. EU countries’ share fell from 70 percent in 1999 to 69 percent in the following year and remained unchanged during 2001. Non-EU countries increased their share of the total number from 12 percent in 1999 to 14 percent in 2001, while other countries retained their share unchanged at 11 percent of the total number of AITs. |
| 7 | The number of inclusive tours abroad taken by sea or Channel Tunnel has fluctuated substantially during recent years. Although the growth is believed to have reached reach a significant 28 percent during 2002, only a marginal 1 percent increase was recorded in 2001, after a substantial 11 percent decline during the previous year. Inclusive tours to EU countries accounted for the vast majority of 89 percent of the total number of inclusive tours by sea or tunnel in 2001. A further 1 percent of the total was accounted for by non-EU countries, which have lost market share from nearly 3 percent in 1999. |
| 8 | Recent consolidation activity in the sector has been particularly pronounced in international terms. Thomson Travel was acquired by the German TUI AG in 2000, with the “World of TUI” branding now a feature of all its operations. In 2001, Thomas Cook was bought by the German tour operator Condor & Neckermann, subsequently re-branding the entire group under the Thomas Cook name. |
| 9 | The threat of international terrorism and attacks on tourist resorts remains a threat, although to date, these have been rare in continental Europe which remains the centre of business for most tour operators. Further, the threats posed are most likely to have a direct impact on independent tourism which tends to be more prevalent in long haul destinations, with the perceived security of tour companies having operatives on location acting as a reducer of fear. However, inevitably any international, geo-political disturbance, such as the threat of war with Iraq, tends to dampen the desire to travel internationally in the short term. |
| 10 | The development of the low cost airlines market in the UK poses both a threat and an opportunity for tour operators. MBD believe that the greatest impact of low cost airlines has been to develop incremental sales rather than specifically eroding the traditional market. |
| 11 | The effect of the development and use of IT systems, such as the Internet booking both threatens the concept of tour operations, and potentially alters the routes to market for suppliers. Despite the savings that can be achieved by booking direct, the tour operators still have the advantage of bulk purchasing which they should be able to continue to leverage in their favour. |
| 12 | Demographic factors such as the aging of the population encourages the creation of tours that are more suited to the older traveller. Similarly, the continued development of niche tours presents an opportunity for providers to continue to add value to their offering. |
| 13 | Economic development indicates continued slow growth although this is somewhat complicated in the UK by the increasing emergence of a two stream economy with manufacturing remaining in a difficult position. Many people working in manufacturing tend to be amongst the core target market for tour operators potentially threatening this market although the continued development of the service economy augers well for higher cost, niche tours. |
| 14 | MBD forecast sustained year-on-year real term growth in the tour operators’ market, with the rate of development forecast to be somewhat ahead of the economic growth, although slower than that recorded during the peak period of market development in the late 1990s. |
| 15 | Expenditure on all holidays abroad is forecast to be some 24 percent higher by 2007 compared with 2002, compared with a forecast 20 percent increase in spending on inclusive tours during that period. Therefore, the share of inclusive tours of the total expenditure on foreign holidays is expected to be slightly reduced to some 51 percent. |
| 16 | Consolidation among the major UK tour operators is speculated by industry observers to occur in the near future, with the big four players expected to be halved to just two. The two leading German-owned groups, TUI and Thomas Cook, are believed to be in the strongest positions, with a possible bid by TUI for MyTravel and Thomas Cook’s attempt for First Choice. This has been made possible by the landmark legal ruling by the European Court of Justice, which overturned the blocking of an £850 million hostile bid by MyTravel for First Choice in 1999. However, the current state of the industry has put a dampener on any immediate moves, as any takeover or merger plans would first have to be justified to shareholders, with in turn has been made more difficult by recorded losses and concern about accounting practices, money would need to be raised and any deal would face a lengthy regulatory investigation. |
| 17 | The emergence of the low-cost airlines in the UK has resulted in a number of tour operators launching their own no-frills operations and seen a move by operators to become more flexible on their seat only operations. Tour operators are believed to be interested in the low-cost sector not only in terms of competition to their traditional package holiday sector but also in terms of expanding their operations into the buoyant low-cost market. The competition from low-cost operators is anticipated to have an impact on the tour operators market in the short-haul and short-break sector, where the tour operators tend to charge significantly higher prices for holidays booked on a seat-only basis, compared with the low-cost operators. Although margins are somewhat lower, the seat-only business accounts for some 15 percent of customers carried annually by tour operator |
Text © 2003 MBD - Market & Business Development
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