Online travel makes further inroads into package arena

Online travel is seeing high double digit growth, fuelled by dynamic packaging at the expense of the traditional package holiday.

Lastminute.com says a largest percentage of the online sector’s forecast growth of 32% this year will come from dynamic packaging – much of it booked close to the departure date.  

But the traditional package holiday sector has had its toughest year in a “very long time”, with the market down by 12%, according to the online retailer.

Holiday director John Bevan, revealing dynamic packaging growth of 35% for lastminute.com in the May-mid-September period, said mainstream destinations such as Spain and Greece were coming under most pressure while long haul and specialist packages continued to attract consumer demand.

Reviewing a summer overshadowed by bird flu scares, terrorist attacks, a UK heatwave and the World Cup, Bevan said dynamic packaging had been the “driving force” of the company’s growth.

He said: “There is still a place for package holidays but we believe that their stronghold is going to diminish over the next few years.

“The trend towards late booking is not reversing as the years go by, if anything it’s increasing. Consumers expect choice and they expect good value, the key for them is to shop wisely.

“If there is a specific villa that you want at a specific time then naturally it makes sense to book it early, However, if like most people, you have a limited time frame but no real preferences about where you go, then you will almost certainly find a great deal and a lot of options open to you if you leave it a week or two before departure.” 

Bevan added: “While the shift towards dynamic packaging for well-established destinations such as mainland Spain and the Balearics continues, the fact that both Majorca and Ibiza are on the search list of packages mean that the public is still interested in taking this type of holiday.

“The package is by no means dead despite opinions from other parts of the industry.”

Outlining lastminute.com’s second annual review of the travel market, Bevan aid people were moving away from standard seven and 14-night packages to more flexible trips even to long-haul destinations such as Beijing and Hong Kong which have soared in popularity.

Meanwhile, increased low cost carrier capacity was the primary reason for growth in independent trips to destinations such as Pisa, Cannes, Bilbao and Palma – all in the company’s top ten fastest growing dynamic packaging destinations.

“No-frills airlines introducing or increasing capacity into these regions is the primary reason for their growth. But it’s also a case of familiarity for the public which is a driving force too,” said Bevan.

“Not so long ago all of these would have been virtually solely served by the charter operators in the package holiday market, now that people have been going to them for a few years, they feel confident in booking their own flight and accommodation for delivering greater flexibility than offered by the mainstream operators.”

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Report by Phil Davies