Holiday: Trends, Insights and Opportunities

1. Holiday: Trends, Insights and Opportunities Gabe Ingalls June 2011

2. Contents

3. Summary – Holidays • The recession had opposite effects on the number of domestic and overseas holidays. The volume of the latter fell 15% year on year in 2009, to 38.5 million trips. In the UK the number of holidays rose (the ‘staycation’ trend). • In expenditure, increased polarisation took place, with overseas holidays ever-more the preserve of better-off consumers. • In 2010, overseas holiday volume fell further and the appetite for staycations waned somewhat. Fewer than 94 million holidays were taken overall. • Mintel’s exclusive consumer research reveals that over seven in ten people took some holiday in the 12 months ended November 2010. They were significantly more likely to choose an independent holiday over packages. • In 2010, just under one in two holidaymakers researched their holidays online. • Europe is still UK holidaymakers’ favourite overseas region. Spain and France top the popularity rankings, with the latter having held up better during the recession (although the volume of holidays did fall). ‘Far-near’ destinations – particularly Egypt and Turkey – have bucked the recessionary trend. • Overall, two in five people now consider holidays a luxury; one in four say they are a “necessary spend” or a “right”. Two in five people state that they would go on holiday less if their financial situation worsened; twice the proportion that would instead cut back on other things. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

4. Market Environment

5. Issues in the Market: Holidays Research • The recession had opposite effects on the number of domestic and overseas holidays. The volume of the latter fell 15% year on year in 2009, to 38.5 million trips. In the UK the number of holidays rose (the ‘staycation’ trend). • In 2010, overseas holiday volume fell further and the appetite for staycations waned somewhat. Fewer than 94 million holidays were taken overall. • Mintel’s exclusive consumer research reveals that over seven in ten people took some holiday in the 12 months ended November 2010. They were significantly more likely to choose an independent holiday over packages. • In 2010, just under one in two holidaymakers researched their holidays online. • Europe is still UK holidaymakers’ favourite overseas region. Spain and France top the popularity rankings, with the latter having held up better during the recession (although the volume of holidays did fall). ‘Far-near’ destinations – particularly Egypt and Turkey – have bucked the recessionary trend. • Overall, two in five people now consider holidays a luxury; one in four say they are a “necessary spend” or a “right”. Two in five people state that they would go on holiday less if their financial situation worsened; twice the proportion that would instead cut back on other things. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

6. Consumer Trends

7. The South-East, London and some of the North-West have the highest % of Searchers There is an even gender split in the consumers in the is category The 55+population make up a large percentage of the searchers in the category Travel Hitwise Demographics Search Source: Hitwise Source: Hitwise Source: Hitwise

8. Travel Hitwise Demographic Mosaic and Social Grades Search • Travel has the highest number of visitors in the A/B/C1 categories however indexes the best in the A/B category • Suburban Mindsets, Liberal Opinions and Professional Rewards make up the top 3 mosaic groups while the Alpha Territory’s and Active Retirements over index Source: Hitwise Source: Hitwise

9. Advertising Climate

10. Media Spend Source: NNR adDynanix : January – May 2011 Travel advertisers tend to spend the most on Press advertising and Television followed by the Direct Mail On average the industry spent around 9% on Internet advertising (not including search)

11. Source: ComScore AdMetrix: April 2011 Impressions and Audience by Publisher - AdMetrix While the top number of impressions goes to eBay and Yahoo!, MS Sites have a larger number of Advertising Exposed Unique Visitors than any other publisher AOL has the highest average frequency, however many of these may be wasted MS offers a unique opportunity to Travel Advertisers to make the most of their campaign by offering the largest reach of all publishers

12. Top Advertisers by Impression - AdMetrix The top 5 Advertisers make up 50% of the travel destinations impressions Source: ComScore AdMetrix: April 2011

13. Bing Search Traffic KPIs Search • Overall, holiday KWs have grown 42% year on year for 2011 • While this took a dip in April, mostly in the 2nd half of the month as a result of Easter, the Royal Wedding and Bank Holidays, the market has grown 31% for April year on year • Good growth has been seen in both the generics and UK specific holiday markets (including holiday rentals). There has also been a steady increase in search for train terms which might explain the steeper and continued growth of the UK market. Microsoft Advertising Intelligence Tool

14. Product and Location KW Traffic - Bing Search • Camping holidays have shown stronger growth in 2011 than caravanning holidays (201% vs 73%) • However both package holidays and Self-Catering have both seen similar increases this year (6% vs 6% growth for 2011) • Different destinations have seen different amounts of growth Microsoft Advertising Intelligence Tool ( Year on year and month on month for April)

15. KW Traffic vs Exchange Rates Search Expenditure once you reach a destination can also be a deciding factor when choosing a destination. Consequently, keyword traffic to destinations can be influenced by the exchange rates to those destinations as shown below. • Australia – 1.5 • Current Exchange Rates • United States – 1.6 • Europe – 1.1

16. Travel - Hitwise Category Search • KWs are typically a combination 1 to 3 search terms • While organic clicks provide most of the traffic, paid search has will continue to grow in the coming months to represent a larger percentage of overall clicks during the holiday peak times • Paid clicks represent about almost a quarter of all clicks Source: Hitwise Source: Hitwise

17. Holiday KW Demographics and Daily Trends: Bing Search • 31% more during the week than weekend • There is a bias towards female searchers; traffic peaks in the 35-49 age brackets Microsoft Advertising Intelligence Tool

18. The South-East, London and some of the North-West have the highest % of Searchers There is an even gender split in the consumers in the is category The 55+population make up a large percentage of the searchers in the category Travel Hitwise Demographics Search Source: Hitwise Source: Hitwise Source: Hitwise

19. Travel Hitwise Demographic Mosaic and Social Grades Search • Travel has the highest number of visitors in the A/B/C1 categories however indexes the best in the A/B category • Suburban Mindsets, Liberal Opinions and Professional Rewards make up the top 3 mosaic groups while the Alpha Territory’s and Active Retirements over index Source: Hitwise Source: Hitwise

20. Microsoft Media Network Trends

21. Network Demographics Microsoft Media Network 53% of the impressions occur between 18 and 34, while a larger proportion of clicks occur in the higher age brackets, 25-54, than in impressions Impressions and conversions peak in the 18-24 for females while the higher age groups are more evenly split 55% of conversion occur between the 18-34 age bracket Conversions for Travel usually entail a booking • Conversions are predominantly females, particularly in the lower age groups even though clicks are more evenly distributed throughout the demographic range Source: Microsoft Media Network : July 2010 – April 2011

22. Network: Day of the Week Microsoft Media Network For impressions and clicks there is an increase until Wed when it begins to decline to a low point on Saturday. However as, conversions have a distinct peak on Friday and Saturday, this suggests that the onset of the week is a influential period in the decision making process Source: Microsoft Media Network : July 2010 – April 2011

23. Network: Time of Day Microsoft Media Network There is a build of Impressions and Actions all day peaking late in the evening There is an acceleration of the IMPs and Actions after 16.00 until 22.00 • Prime targeting times should be the post work until end of evening time (22.00) • Activity ramps up quickly ate the end of the work day continued until late evening • IMPs and actions fall quickly after this period Source: Microsoft Media Network : July 2010 – April2011

24. Holiday Opportunities Emerging Destinations Because of many variables in the market place, there are many factors which influence destination choice. Exchange rates, fuel prices and cost of living are all factors. On Bing, Eastern European countries have seen strong growth so far in 2011. Weekly Targeting As seen from the data on the Microsoft Media Network, most of the action in ad views occurs during the middle of the week while the conversions happen on Fridays and Saturdays Search and Display – Better Together Use both offerings to help boost your ROI moreover, use our display offering to help boost your brand campaign. Particularly when we have seen good increases in traffic in the start of 2011 • Weekly Targeting • Budget Holidays to Traditional European and Eastern European Destinations • Search and Display Better Together