Domestic holiday trends: a roundtable discussion

Phoenix is an active investor in the UK domestic holiday market and we believe that it will continue to go from strength to strength. Holidaymakers are increasingly choosing to stay closer to home rather than venture abroad (the ‘staycation’ effect), short breaks are becoming more popular and people are seeking out new experiences. The domestic holiday market is forecast to continue to grow strongly over the next few years, outstripping growth in overseas trips. It is an evolving market full of opportunities.

Our current portfolio includes Travel Chapter, Bridge Leisure, and Forest Holidays. We sat down with our three CEOs to discuss their perspectives on the market, the trends and opportunities they see, and what they’d like to change.

Participants:

  • Andrew Howe, CEO, Bridge Leisure
  • Bruce McKendrick, CEO, Forest Holidays
  • Jamie Morris, CEO, Travel Chapter

Why has there been a boom in staycations? Is it the Brexit effect?

Andrew Howe: I think the economy and the Brexit effect have had a relatively minor effect on the ‘staycation’ trend. The boom has arisen because of social change. When I first got involved with holiday parks it was, to a degree, about long summer holidays, two weeks in the summer. Nowadays, families across the socio-economic spectrum enjoy two, three, four holidays, five holidays; inevitably, that means shorter holidays. I think that is the primary driver - it’s easier to holiday in the UK if you have shorter holidays. You couple that with the misery of short-haul flights – it is possible to go to Europe for a long weekend, but it doesn’t make it an enjoyable thing to do.

Bruce McKendrick: Staycations have been around forever; back in the 1950s and 60s, people didn’t go overseas. The change is from one two-week fixed summer holiday to short breaks throughout the year. And I think, ironically, low-cost airlines have helped precipitate the rise in short breaks. People have got into the habit of going on short breaks but recognise that they can be a lot more enjoyable now in the UK.

Jamie Morris: I can only speak to the holiday cottage sector, but so many people had never been to a holiday cottage. I don’t think they knew that sort of thing existed, they thought you had to go to a holiday park or a hotel. In our world, after people have been on their first holiday to a cottage, the repeat side of it has kept going.

What else do you think people are looking for in a holiday these days? Is there a move to ‘greener’ holidays, for example?

BM: I think as people’s lives are ever more pressured, they increasingly value wholesome experiences outside, getting into nature – beaches, forests, whatever, so that’s becoming an increasingly important driver. But essentially, people are looking to go to good locations, eat and drink local produce, all at a price they are willing to pay, and it’s a benefit if the kids also get off their phones and tablets.

AH: I think people are looking for a whole range of things but definitely something experiential - they like to talk about what they have done rather than what they own these days. Getting back to nature and wholesome pursuits is definitely an aspect of this, but it’s not the whole thing. People are looking for something that’s interesting to put on their Facebook or Instagram, for example.

JM: Despite all the downsides with social media, it is reconnecting people, which is what it’s meant for.

BM: I agree; you can see it in our business. Say you have six people who all went to university together and they do some sort of break where they get together every year - they are all in different parts of the country so they select somewhere that’s convenient for everyone to get to.

Have you seen changes in customers’ buying behaviour?

BM: The whole market is moving to later and later bookings. This causes a constant game of poker with the consumer to see who will crack first; It’s hard to know how you stop this trend without a concerted effort – which is hard in such a fragmented sector. But behaviour travels from sector to sector – people see discount vouchers in casual dining, for example, so they expect to see it in accommodation as well.

AH: Another challenge is the bulk sellers – companies such as Booking.com for example, that draw you in and subsequently offer other products to people you would have thought as your customers.

JM: Even though there is a convenience factor with companies like Booking.com, I still think people value dealing directly with the provider.

How about people from overseas holidaying in the UK - does this represent a growth opportunity?

BM: We are also almost exclusively UK to UK focussed. It’s definitely an opportunity, and we won’t stop trying to crack it, but it is hard.

JM: Visitors from overseas are not a big part of our market. It seems easy when you start thinking about getting customers from abroad, but by the time you start dipping into the where and how and the methods of marketing and doing it, we’ve not found it overly straight-forward. Organisations like Visit Britain used to spend several millions marketing the UK overseas, but did that really have any impact in the overall scheme of things?

AH: There are plenty enough people in the UK. What we don’t do on a big picture basis is advertise the UK to the UK anything like enough.

What changes would you like to see, to facilitate further growth in the domestic holiday market?

JM: If there’s one thing that businesses and the government should get together on, it’s transport infrastructure. Traffic can be a real problem. One thing we’ve started doing, which may help with the traffic issue, is making more of our holidays Friday to Friday, or Thursday to Thursday, introducing flexibility. It’s beneficial for a lot of people because cottage owners would rather do changeovers [cleaning, and so on] on a Friday than over the weekend. Customers can generally take an extra day for their holiday, or they can come down in the evening. That’s just one small way to address it.

AH: Government could also help by looking at things like the school holidays. If they could move to the five-term year, or vary the holidays throughout the UK, that would benefit everybody. It would be cheaper for people to consume holidays. Businesses could spread their costs and have more year-round employment rather than seasonality. That would be a low- or no-cost move by the government.

Do you see reasons for optimism for the sector?

JM: Absolutely, yes, because of the improvement in quality across the board; it’s incredible. Just an example, in the small village where I live in North Devon, you’ve gone from two pubs to now four pubs that do great food and another few local restaurants. And it gives employment and is driving a lot of business. Locals are going there but they need tourists to fill them.

BM: Over the last 30 years there’s been quite a revolution in quality in rural areas as well as cities, which was definitely not the case in the past. For most parts of the country, in an hour’s drive, you can get to a nice rural spot with things to do. There are so many beautiful rural areas around the UK with decent accommodation, things going on, nice restaurants and so on.

AH: Holidays are the time you choose to spend with the people that you love so they’re really important. If you look back at old photo albums, it’s all holidays because that was when it merited the time and cost to have the film developed. Holidays are the thing that makes all the rest of it worthwhile and it’s so important to remember that – it’s a completely emotionally consumed product. Fundamentally holidays are still the time you spend with your loved ones but the way you do so evolves over time and will continue to do so.