Travel Money - UK - May 2008

Abstract

Consumer appetite for travel has never been greater, while accessibility has never been easier. With new channels to reach the Continent - namely, Eurostar and Eurotunnel - and the rise of low-cost airlines, more people are venturing to foreign shores, and with growing frequency. The market for overseas holidays is huge: an estimated 21 million UK adults went on holiday abroad in 2007. More than half of them travelled independently, and many of them took multiple trips during the year.

With the growth in trips abroad, there has been a corresponding increase in spending overseas. However, the methods by which people access and spend their money while abroad are changing. Over the past few years, we have seen people show greater preference for plastic, to the detriment of travellers cheques. New forms of payment have also emerged to cater for a card-carrying public - notably, prepaid cards, which are touted as an alternative to travellers cheques.

This report examines recent travel trends and overseas expenditure patterns. In addition, we analyse consumer usage of, and explore attitudes towards, the various payment solutions available. We also assess the short-term prospects of the travel money market, in light of a weaker domestic economy, less favourable exchange rates, and slower overall spending growth.

Main themes of the report:

• What proportion of UK adults holiday abroad, and where do they travel?
• How many UK households own a second property overseas?
• What is the value of annual spending abroad and how is it forecast to grow?
• Who are the leading UK suppliers of travel money solutions?
• Which sources of travel money do consumers typically use when they go abroad?
• Do people shop around for the best foreign exchange rate? Or do they tend to go for a commission-free service?
• What proportion has ordered currency or cheques online?
• Will sales of travellers cheques continue to fall?
• What do people think of prepaid cards, and what proportion has used them?
• What is the potential for prepaid cards to evolve from a niche into a mainstream product?
• What proportion of people plan to take a trip abroad in the next 12 months, and to which region?