Peter Long, CEO of Tui, owners of Thomson and First Choice, two of the best known providers of all inclusive holidays in the UK, spoke out at the Family Holidays Association about the importance of families being able to take a family holiday together. Speaking about Britain back in October he said there are “2 million children for whom even a day trip is unaffordable. Given that we are the world’s 7th largest economy; this is an appalling indictment on our society.”
Research by the Joseph Rowntree Foundation shows that since 2008 there has been an “unprecedented erosion of household living standards” thanks to rapid inflation and flat-lining wages. They argue that the freeze in child benefit, the decision to uprate tax credits by only 1% and the increase in the cost of essentials faster than inflation mean that a working couple with two children will be £230 worse off a year, and a working lone parent has £223 less disposable income. Many families are therefore unable to afford a holiday and many more are having to be very careful about how much they spend.
In an interview on BBC Breakfast Peter Long said that Tui was very mindful of the growing cost of living. This is affecting demand for holidays, as Peter Long said “What is particularly a strong demand is the all-inclusive holidays, where you have complete peace of mind because everything is included, and that enables our customers to budget more easily and effectively.”
Package holidays, however, are growing in popularity. Tui’s package holiday sales rose 5% in the UK, helped by the popularity of all-inclusive breaks. TTG Digital reported that sales of all inclusive holidays across all of Tui’s UK and Ireland brands had grown by 14% as economic uncertainty continues to drive the market. Kathryn Ward, Tui UK and Ireland director of retail, told TTG at their Retail Conference that some consumers considered all-inclusive packages to be the best way to control their holiday budget and reported that 55% of all bookings via the vertically integrated operator were for all-inclusive packages.
The growth in all inclusive holidays, particularly popular with families, looks set to continue in the UK as consumer seek to protect themselves against uncertainties in the cost of their annual family holiday and the risks associated with ash clouds and political instability. As some analysts are arguing all-inclusives offer better margins.
Given the continuing squeeze on the living standards of many in the UK, and particularly families, it would be surprising if the numbers of all inclusive holidays do not continue to grow. This is not necessarily a bad thing for destinations – we should be judging the value of tourism by the extent of spending on local salaries and wages and goods and services. The key question is what does tourism yield for the local economy? The value of an all-inclusive bed night to the local economy may be greater than a traditional hotel, depending on where the alcohol and food is produced, and who is employed to provide activities and entertainment. We need to evaluate different tourism enterprises by their impacts rather than their form.