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Activity Holidays Market Assessment 2012
Key Note Publications Ltd, Jan 2012, Pages: 152
This Key Note Market Assessment is concerned with the UK market for activity holidays both in the UK (domestic holidays) and outside the UK (holidays abroad). An activity holiday can include a myriad of activities but it must involve physical exertion. Activities can range from popular activities such as hiking and skiing to more niche activities such as diving.
Holidays such as safaris or cruises are not included in this report as they do not involve sufficient physical effort. However, a number of companies covered in this report do offer such holidays alongside more strenuous activity holidays. This report also excludes activities that are participated in during a traditional holiday break, such as walking or hiring a bicycle or boat for the day.
Activity holiday providers vary from large multi-national, multi-branded travel companies to smaller independent operators serving niche markets. In the overall holiday market the use of travel agents and tour operators has declined. However, the specialist nature of certain activity holidays means that agents and operators have been able to retain a greater share of the market. As the large tour operators such as TUI and Thomas Cook Group have sought to expand their brand portfolios, smaller operators have been acquired for their expertise in a particular region/activity. The school activity market also accounts for a significant proportion of activity holidays and there are a number of companies specialising in this particular sector.
The economic downturn has had contrasting effects on both the domestic and foreign holiday markets. The weakening of the pound and overall economic uncertainty led to an increase in domestic holidays in 2009 and this is thought to have had a positive impact on domestic activity holidays. On the other hand, the same factors are estimated to have had a serious detrimental impact on activity holidays abroad. Activity holidays in both sectors are estimated to have declined further in 2010.
Distribution within the two sectors differs greatly with the role of operators and agents being more significant for activity holidays abroad. Despite the Internet facilitating easier independent bookings, the protection of an Air Travel Organiser’s Licence (ATOL) through a tour operator is appealing for those booking an activity holiday abroad. The sometimes remote locations and specialist nature of activities means that the experience and expertise of an operator is desirable.
However, for domestic activity holidays the role of agents and operators is much less in demand. Independent bookings can be made through accommodation providers and the dominance of the car as the main mode of transport means that transport does not need to be arranged. Domestic operators will often specialise in a specific region in a specific or multi-activity capacity. The popularity of school activity breaks in the UK means that companies such as Kingswood operate activity centres with accommodation across the country.
Competition within the activity holidays market is tough, especially concerning popular activities such as skiing. Multi-national companies such as TUI will often operate multiple brands for the same activity marketed at differing demographics. As such companies seek to offer more adventurous activities and locations, they have acquired niche operators with expertise in these fields.
There is also room in the market for premium operators such as Abercrombie & Kent (A&K), which offer upmarket luxury experiences such as desert and arctic expeditions. Despite the slowdown in the economy there still appears to be a market for high-cost activities, with A&K recently announcing its intention to introduce new polar tours for the 2012/2013 season.
The fragility of the global economy and recent recession have not been the only factors to have an impact on the activity holidays market and this report will seek to examine such influences. Key developments covered in this report include: the ongoing changes to ATOL regulations; the Government’s proposed double-inflation increase in Air Passenger Duty (APD); the proposed abolition of adventurous activity licensing in the UK; the introduction of aviation into the EU Emissions Trading Scheme; and the role of technology such as social media and cloud computing.
This Key Note Market Assessment also includes bespoke commissioned consumer research by NEMS Market Research to examine 1,000 UK adults’ attitudes towards activity holiday taking. The survey, conducted in October 2011, asked UK adults whether they had been on any activity holidays in the UK or abroad in the last 5 years, and if they would consider taking an activity holiday in the future. The survey indicated that domestic activity holidays were slightly more popular than their foreign counterparts.
Key Note forecasts that continued economic instability will lead to stagnation, hitting activity holidays abroad the hardest. First half-year figures for UK domestic holidays are positive and should result in a return to growth in the activity sector, with the Olympics in 2012 providing a further boost. However, short-term prospects for activity holidays abroad are less positive. Air travel prices inevitably increasing due to APD rises and the introduction of aviation into Emissions Trading may deter holidaymakers. The current economic climate will also provide a bottleneck for growth, but once stability returns growth in overseas activity holidays is forecast to outstrip growth in domestic activity holidays.
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