The leisure travel market was worth US$2 trillion in 2012 and directly supports 98 million jobs worldwide. The market has grown on average 4% year on year and this is set to continue.
The travel and tourism market is experiencing a clear polarisation of demand. On one hand, some customers demand individualisation through unique holidays with bespoke services. On the other hand, customers are increasingly moving towards commoditisation through flights in combination with hotels with minimal levels of differentiation. Both segments are being driven by high growth in online bookings and, while the uncertain economic environment has had an effect on consumer travel spending habits, demand for leisure travel remains strong.
Our two business models cater to the trends of individualisation and commoditisation to best serve the changing needs of customers. Our Tour Operator businesses address the need for individualisation by offering unique holidays designed for specific customer segments. Our Online Accommodation businesses address the need for commoditisation by taking advantage of our scale and technological developments to offer a wide variety of choice at a very competitive price.
Tour Operator
Market size & coverage
Our ten core markets account for £405bn of global travel spend (Euromonitor):
- UK
- Germany
- France
- Sweden
- Belgium
- The Netherlands
- Austria
- Poland
- Switzerland
- Canada
Our four largest source markets of the UK & Ireland, Germany, France and Sweden make up 70% of this spend. The geographical reach and popularity of Specialist & Activity businesses continue to rise worldwide.
Market growth
Our core markets are projected to grow at a 3% CAGR over the next five years. The mainstream holiday market remains resilient and has actually seen resurgence in a tough economic environment.
Our positioning
We are the number one tour operator in Europe with strong positions in each of our core markets. We have market-leading positions in a number of specialist segments with a portfolio of unique products, unrivalled product knowledge and superb customer experience.
Key trends & future outlook
Customers are increasingly moving towards online channels to fulfil their travel needs and we expect this trend to continue into 2013 and beyond. We remain focused on improving our online presence, increasing our participation in social media and moving towards an online-driven company culture.
Demand for unique holiday experiences continues to see strong growth and with a diverse range of experiences on offer, TUI Travel remains well placed.
Online Accommodation
Market size & coverage
The total online accommodation market accounts for £82bn of global travel spend.
The accommodation wholesaler market accounts for £15bn of this spend with the accommodation online travel agent (OTA) market accounting for the remaining £67bn. Our Group’s addressable market in the accommodation OTA segment (including UK & Asia Pacific focus markets) makes up £7.5bn of the total OTA market.
Market growth
Online accommodation is the fastest growing segment of the travel market and is expected to grow at a CAGR of 7.5% over the next five years.
Our positioning
Our Accommodation Wholesaler business (Hotelbeds and Bedsonline) is the market leader in the B2B space.
With our Accommodation OTA business we are positioned strongly in the UK (LateRooms.com) and Asia-Pacific (AsiaRooms.com) and have recently established ourselves in the Latin American market through the acquisition of MalaPronta.com, Brazil’s fourth largest online accommodation OTA.
Key trends & future outlook
Online accommodation has seen tremendous growth over the last few years, fuelled by the growth in online bookings and supplemented by strong demand from the emerging markets. Online accommodation, therefore, remains a key area of focus for TUI Travel where we look to consolidate our leadership position within the accommodation wholesaler market and build on our strong position in the accommodation OTA segment.