Mintel warns of ‘continued decline’ in overseas travel

Mintel is forecasting a slowdown in growth of travel overseas in the next three years.

It says the ongoing Brexit negotiations and its impact on the Pound has already dampened travel abroad, with overseas volume growth slowing from 6.8% in 2016 to only 3% in 2017.

"With the Pound susceptible to changes in the Brexit narrative, and only subdued real wage growth projected by the end of 2018, it is possible that people will choose to holiday in the UK, marking a continued decline in foreign travel," it said in its British Lifestyles Report out this week.

"In line with this change, Mintel expects a slowdown in total growth over the next three years due to the impact of ongoing Brexit negotiations and a fluctuating Pound."

It said if rising oil prices continue this would also push up air fares.

But the report said there is ‘some good news’ as the number of overseas trips has finally surpassed the 45.5 million trip milestone, the record high reached before the 2008 recession.

The report says spending on packages increased slightly, but independent bookings saw stronger growth because ‘consumers feel like they can get a cheaper deal by researching and booking online themselves’.

"The number of package bookings is expected to have remained fairly flat in 2017, while spending increased by an estimated 1.2%," said Mintel.

"In contrast, independent bookings are expected to have increased by 6.2% in 2017, while independent spending is estimated to have risen by 6.9%."

Mintel said while Brits are still keen to go on overseas holidays, many will need to cut back on spending to afford their trips abroad.

"Consumers want to take the same amount of holidays than they did the previous year. However, they will think about spending differently – many will be looking to cut back and economise on holiday services," it said.

"This means that travel companies may take on a hit on ancillary revenues."

It suggested that travel companies can get around this by encouraging ‘spontaneous feel-good spending’, by making purchasing ancillaries and upgrades as frictionless as possible.

Fergal McGivney, senior travel analyst, added: "Many (British holidaymakers) will choose to drop their supplementary short breaks in the low season; however, they will be reluctant to give up their longer summer holiday. As a result, there is an opportunity for big brands to attract customers by diversifying their summer product offerings to fill the void of these missed short breaks."