Wednesday, May 14, 2008

All inclusive holidays popular in a weak economy

Guest blog post from Robin Goad, research director at Hitwise UK:

The combination of a weakening economy, falling house prices and a rising cost of living thanks to inflation mean that many British consumers are looking for ways to cut their expenditure.

Add in the impact of a strong Euro (although not Dollar), and it seems likely that one area facing a cutback in consumer spending will be travel. One interesting trend we have noticed which indicates that this may be the case is an increase in searches for ‘all inclusive holidays’.

As you can see from that chart below, the amount of traffic that travel websites are receiving from this price-sensitive / budget-conscious search term has increased by 24% compared with last year.

UK Internet searches for all inclusive holidays in travel  sector may 2006 2007 2008 chart.png

The table below illustrates the top 10 search terms containing the phrase ‘all inclusive holidays’, and it is noticeable that people searching for such packages are more concerned with the 'all inclusive' element than with where they want to actually go.

Six of the top 10 search terms don’t mention a location at all, whereas - by way of comparison - nine of the top 10 searches containing the term ‘cheap flights’ over the same period include a destination.

Another thing that jumps out is the low success rate for the term ‘all inclusive family holidays’. Almost two fifths of people searching for this term don’t find a relevant result in a search engine that they a happy to click through to, highlighting a potentially lucrative area for SEO or paid search activity.

top 10 search term suggestions for all inclusive holidays may 2008  spain egypt turkey family table.png

As you can see, the people currently looking for location specific all inclusive deals are choosing warmer sunshine destinations around the Mediterranean and Red Sea: Spain, Egypt, and Turkey.

This leads me on to another hypothesis: as money is tight and the strong Euro means that European destinations are becoming more expensive, will we see a decline in travel to Europe and bumper year for domestic tourism?

Throw in 10 days of lovely sunny weather, and it seems likely that UK holiday bookings will be up this year.

Not so fast. I heard a representative from TUI (which owns Thomson Holidays) on the Today programme the other morning claiming that overseas bookings from the UK were up - and the company’s financial release bears this out.

Back to the Hitwise data and the news also isn’t great. As you can see from the chart below, the amount of traffic that searches for both ‘uk holidays’ and ‘british holidays’ send to travel websites is on the decline.

Maybe a few more weeks of good weather and some first hand experience of the strong Euro will help reverse this trend?

We’ll keep and eye on this and report back with any changes.

Robin Goad, research director, Hitwise UK

Read more of Goad's posts

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