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Will package holidays rise again?

Emma T - 8 th April 2021

Since the introduction of the package holiday by Thomas Cook in 1851, package holidays have remained a stalwart of the UK holiday market. When conducting research in 2019, it was obvious that the love for package holidays hadn’t waned, with their popularity driven by the desire for relaxing, all-inclusive beach holidays chosen by travellers that just wanted a value for money, no hassle break.

Booking a holiday with a package holiday company was easy. With several large well known brands that had a good reputation – they provided trust, reliability, booking security, honesty and transparency.

“ I need to feel reassured. When you book it separately you don’t get any reassurance. You’re walking through the
hotel doors with your fingers crossed that it’s actually booked”
Families, Manchester

“if we are going on a big thing, it has to be in one package. I am not interested in booking separate, I haven’t got the time.
I want to know that if something goes wrong I have just one button to press”
Families, Watford

Focus group must havesPriorities for a family holiday, focus group, 2019

And then along came a global pandemic.

Millions of UK holiday makers found themselves unable to go on holiday, through cancellations, lockdowns and travel bans it’s estimated that £7 billion of traveller’s money was impacted due to the pandemic (Which, 2021). And where did package holiday operators sit within this? Unfortunately, the market failed their customers in the very thing that they chose them for. Frustrated customers reported issues contacting companies, being issued credits despite saying time and time again they wanted refunds, losing deposits or even being charged cancellation fees. Many of the key market players did not play fairly, with Tui, Virgin Holidays and Ryan Air all being investigated by the CMA (Competition and Markets Authority) for illegal conduct and disregarding the 14-day refund rule for cancellation regulation.

As a consequence it’s not surprising that the package holiday sector lost the trust of many of its consumers. A Which survey in May 2020 showed that trust in the travel industry had dropped from a net score of 9 in February 2020 to -12 in May 2020 – a drop of 21 points, only one in five customers trusted the industry.

Fast forward nearly 12 months and the travel industry is still in dire straits. They desperately need us to book with them but with regulations for overseas travel still unclear and the memory of last year’s fiasco still fresh in our minds we are, understandably, reluctant.

So how does the package holiday industry recover, if indeed it can? It has failed us in the one key advantage it had over booking independent travel – the confidence and trust that we will be looked after if all goes wrong.

In late February this year we conducted a UK-wide survey of 2000 people to understand how attitudes towards travel and tourism have been affected by Covid-19.

One key finding is the considerable reluctance of many (51%) to go abroad at all in the next two years. Therefore, not only are UK package holiday operators having to recover from a crisis in trust they are also having to compete in a much smaller market.

Companies need to go back to basics. They need to understand what customers want in this new era of travel and reassure them that it will be delivered.

When looking into what people are looking for from a holiday, there is good news for package holidays with the key desires being relaxation (63%), escape (28%) and a bit of sun (27%) all aligning well with what a package holiday is ideally designed to do!

Chatting to the Marketing Director of one of the UK’s largest on-line travel agencies, he told me they were completely focused on two things: offering value for money holidays, as many of their customers have suffered financial hardship over the last year and rebuilding trust.

In pursuit of this they have conducted research into the areas in which the industry let customers down last year and found there were seven key elements. They have then built their ‘holiday promise’ based on these seven. These include a guarantee of money back within 14 says in the event of a cancellation, the ability to speak to a human quickly, price matching and Covid cover plus.

This seems a great first step and is in line with our research which showed that 72% of us feel that cancellation polies are more important than they were in the past and it does seem to be working to bring business back however, as even he admits, it is not a long-term solution. He doesn’t want to be competing in 5 years-time on what should really be hygiene factors for the industry – value for money and trust.

More is therefore needed and there are three keyways to build back up in the future:

Tune into the (changing) mood of your customer – Having customer insight at the heart of your strategy has and always will be fundamental to success but I have never known a 12- months in which attitudes and behaviour has changed so rapidly, so often. Staying tuned into this is key to survival in the months and years ahead. Like businesses, the consumer has gone through a great deal of change and upheaval over the last year and consumer behaviour has had to adapt to respond to these changes. From a surge in online shopping, a shift in work-life balance and a prioritisation of hygiene and cleanliness – consumer desires, perceptions and behaviour has shifted dramatically, and this is likely to impact the holiday sector. How long-lasting these changes will be we are yet to see but they are unlikely to go away overnight.

Use your brand as compass and anchor – your brand is your most valuable business tool.

If you have it right your brand should be credible, motivating to your customers and your colleagues and allow you to be distinctive in your market. Making sure you stay true to it, allowing it to guide strategic and tactical decisions across the whole business, not just marketing, will allow you to thrive and grow especially in an increasingly competitive arena.

This is no more true than in the package holiday sector. Every time we conduct research in the holiday sector, we hear how a strong brand is intrinsically linked to consumer trust.

“Brand recognition is important, someone you’ve heard of because if not you’d be a bit like hmm can I trust them?”
Families, Stoke

“you trust big brand like Virgin for a holiday because they are such a big brand”
Couples, Watford

Aligned to this is the third vital lesson to follow

Keep your experiences distinct – Many cite the demise of Thomas Cook even before this pandemic as being due to a lack of differentiation. They were not offering anything different from the competition and so were going head-to-head with the internet and the internet won!

Brands are built not by what brands say or even do but how they make customers feel – the experience they offer to customers and also colleagues. If you have a motivating, credible and distinct brand and you religiously align your external and internal experience to that brand you will make customers feel how you want them to feel, they will remain loyal to you and tell their families, friends and followers to book their next relaxing holiday in the sun with you.

The stage is set for the package industry to thrive once we all start traveling again. They can offer what we all want but it will only be those that truly understand and keep pace with what that is, base their brand around it and deliver it faultlessly through their experience that will survive.
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Emma has had a very successful marketing career spanning a range of industries. This enables her to truly understand, and help overcome, the challenges her clients face in developing and operationalising winning brands.
Find out more about Emma T