Travel Money - UK - May 2008

Table of Contents

• Issues in the Market
• Mintel asks...
• Market definitions
• Abbreviations
• Market in Brief
• Overseas spending in 2007 up by a quarter on 2003
• Factors behind the growth
• Will this trend continue?
• Leading brands active in the foreign currency market
• Product innovation: prepaid cards
• Plastic card usage
• What sources of travel money do people tend to use?
  • Figure 1: Source(s) of travel money typically used when abroad, February 2008
• Buying behaviour
• Attitudes towards plastic versus cash and cheques
• People' s travel plans for 2008
• Broader Market Environment
• Key points
• Technology opens up new sales channels
• Demand for travel underpinned by a wealthier older market
• Economic slowdown could lead to a downturn in holiday sales
• Spending growth set to slow rapidly
  • Figure 2: UK population aged 16+, total PDI and consumer expenditure, at constant 2003 prices, 2003-12
• Internal Market Environment
• Key points
• Brits take growing number of overseas trips
  • Figure 3: Number of overseas visits by UK residents, by purpose of visit, 2000-07
• Most foreign trips are to other European countries
  • Figure 4: Number of overseas visits by UK residents, by region of visit, 2003-07
• Other travel trends
• Growth in holiday homes abroad
  • Figure 5: Number of English households with a second home abroad (three-year moving averages), 1997/98- 2007/08
• Spain and France are the top destinations for a holiday home abroad
  • Figure 6: Country of second home, 2003/04-2005/06 (average)
• The adoption of the euro
• Pound weakens as the economy wilts
  • Figure 7: Sterling to euro and US dollar exchange rates, December 2003-March 2008
• Competitive Context
• Key points
• Most people like to take foreign currency with them when they go abroad
  • Figure 8: Source(s) of travel money typically used when abroad by UK visitors overseas in the past year, February 2008
• Declining demand for travellers cheques
• Raising the profile of prepaid cards via targeted marketing
• Size of the travel money target market
  • Figure 9: Estimated size of the travel money customer base, February 2008
• Price comparison: debit cards versus prepaid cards
  • Figure 10: Cost of using debit cards and prepaid travel cards abroad, by selected card issuers, April 2008
• Credit card charges
• Key facts about debit and credit card ownership and usage
• Using a debit card abroad is becoming more popular
  • Figure 11: Volume of debit, credit and charge card transactions outside the UK, 2000-06
• Overseas credit card protection strengthened
• Overseas debit card transactions grow strongly in value
  • Figure 12: Value of debit, credit and charge card transactions outside the UK, 2000-06
• Strengths and Weaknesses in the Market
• A more difficult trading environment ahead
  • Figure 13: UK travel money market: Strengths, weaknesses, opportunities and threats, April 2008
• Market Size and Forecast
• Key points
• Overseas spending outpaces inflation
  • Figure 15: Annual spending abroad by UK residents, at current and constant prices, 2003-13
• Factors incorporated
• Segment Performance
• Key points
• Holiday spending accounts for around two thirds of all spending abroad
  • Figure 16: Annual spending abroad by UK residents, by purpose of visit, 2003-07
• The Eurozone accounts for half of all spending...
  • Figure 17: Annual spending abroad by UK residents, by region of visit, 2003-07
• ... but has seen its share fall over the past five years
  • Figure 18: Distribution of annual spending abroad by UK residents, by region of visit, 2003, 2006 and 2007
• Spending patterns vary depending on the region and purpose of visit
  • Figure 19: Average length of stay, average spend per visit and per day, by region and purpose of visit, 2006
• Market Share
• Key points
• The Post Office is the largest provider of foreign currency in the UK...
• ... while American Express dominates the travellers cheques market
• Barclays holds the number one spot in the credit card market...
  • Figure 20: The largest credit card issuers, by share of customers, 2004-07
• ... while Lloyds TSB is the largest issuer of debit cards
  • Figure 21: The largest debit card issuers, by share of (main) current account customers, 2003 and 2007
• Companies and Products
• American Express
• Barclays
• CAXTONfx
• M&S Money
• Post Office Travel Services
• Thomas Cook
• Travelex
• Brand Communication and Promotion
• Key points
• Foreign currency providers spend £3-5 million annually on advertising
  • Figure 22: Top 15 advertisers of foreign currency services, 2005/06-2007/08
• The press typically accounts for the largest proportion of adspend
  • Figure 23: Distribution of adspend on foreign currency services, by media type, 2005/06-2007/08
• Travelex sponsors events to raise its brand profile
• Channels to Market
• Key points
• A branch network is key to selling currency
  • Figure 24: Source used to buy foreign currency pre-departure, February 2008
• Ordering online
  • Figure 25: Agreement with statements about buying travel money, February 2008
• Less than a third shop around for the best deal
• Travellers cheques mainly sold via retail distributors
  • Figure 26: Source used to buy travellers cheques, 2006-2007
• The Consumer -- Holidays Abroad
• Key points
• About Mintel' s consumer survey
• A huge target market
  • Figure 27: Holidays taken abroad in the past 12 months, by gender, February 2008
• The 55-64 age group represents a lucrative market
  • Figure 28: Holidays taken abroad in the past 12 months, by age group, February 2008
• Those without dependents are more likely to venture overseas
  • Figure 29: Holidays taken abroad in the past 12 months, by lifestage, February 2008
• ABs are a major target group for the independent sector
  • Figure 30: Holidays taken abroad in the past 12 months, by socio-economic group, February 2008
• Holiday trends show regional variation
  • Figure 31: Holidays taken abroad in the past 12 months, by region, February 2008
• The Consumer -- Travel Money Usage and Preference
• Key points
• People are showing greater preference for plastic
  • Figure 32: Source(s) of travel money typically used when abroad, ranked in order of significance, February 2008
• Credit cards are most used by those aged 45-64 when abroad
  • Figure 33: Source(s) of travel money typically used when abroad, by age group, February 2008
• ABs are a key target group for foreign currency and travel card providers
  • Figure 34: Target groups identified for the travel money market, February 2008
• Most use just one or two sources of money when abroad
  • Figure 35: Number of travel-money types used when abroad (repertoire analysis), February 2008
• Independent travellers make greater use of plastic...
  • Figure 36: Source(s) of travel money typically used when abroad, by type and destination of holiday taken in past 12 months, February 2008
• ...as do those travelling to destinations further afield
  • Figure 37: Usage of plastic cards when abroad, February 2008
• The Consumer -- Attitudes and Behaviours
• Key points
• Most fail to shop around for the best deal
  • Figure 38: Agreement with statements about arranging and using travel money, February 2008
• ' Commission free' wins over a competitive exchange rate
  • Figure 39: Agreement with statements about arranging and using travel money, by source(s) typically used when abroad, February 2008
• One in four of those aged 45-54 prefers the security of credit cards
  • Figure 40: Agreement with statements about arranging and using travel money, by age group, February 2008
• Travel-related credit cards appeal most to third agers...
  • Figure 41: Agreement with statements about arranging and using travel money, by gender and lifestage, February 2008
• ... and to ABC1s
  • Figure 42: Agreement with statements about arranging and using travel money, by socio-economic group, February 2008
• The Consumer -- Future Travel Plans
• Key points
• More than half of all UK adults expect to travel abroad in the coming year
  • Figure 43: Overseas trips overseas planned in the next 12 months, February 2008
• Plastic fantastic
  • Figure 44: Overseas trips planned in the next 12 months, by source(s) of travel money typically used, February 2008
• A quarter of those aged 45-54 plan to venture outside Europe
  • Figure 45: Overseas trips planned in the next 12 months, by age group, February 2008
• One in eight will visit family or friends overseas this year
  • Figure 46: Overseas trips planned in the next 12 months, by gender and lifestage, February 2008
• ABC1s are most likely to travel abroad
  • Figure 47: Overseas trips planned in the next 12 months, by socio-economic group, February 2008
• Scots and Southerners are keenest on escaping to foreign shores
  • Figure 48: Overseas trips planned in the next 12 months, by region, February 2008
• Appendix -- Travel Money Usage by Demographic
  • Figure 57: Sources of money used when abroad, by gender, age, socio-economic group, marital status, lifestage, region and tenure, February 2008
  • Figure 58: Sources of money used when abroad, by working status, household income, ACORN category, new technology usage, newspaper readership, commercial TV viewing and supermarket usage, February 2008