The return of package holidays: how travel chaos revived a dying industry
Travellers turn to travel agent-booked trips for protection as wars and wildfires threaten to ruin summer vacations
Demand for package holidays has staged an unexpected comeback as the spectre of wars, wildfires and worker strikes prompts holidaymakers to seek out greater protection.
Barclays spending data shows that spending at UK travel agents, which has been growing consistently since 2021, outpaced overall travel spend in 13 of the past 17 months.
In May, booking volumes through travel agents were up by 11 per cent year on year compared with 3.5 per cent growth in flight bookings, according to Barclays.
Travel agents including Tui, Jet2 and On the Beach are enjoying a renaissance as holidaymakers look to protect themselves against the risk their trip falls victim to flight delays and cancellations, which are increasing in regularity due to strikes, wildfires and wars.
Britons’ spending on package holidays is growing faster than overall travel spending in a buoyant post-pandemic market. In total, the UK, Irish and German package holiday market is expected to grow 8 per cent annually from £49bn in 2024 to £67bn in 2028, according to consultancy OC&C.
“Demand for package holidays is greater than it’s ever been,” said Shaun Morton, chief executive of UK-listed On the Beach, adding that consumers are “more aware now that if you’ve got [your holiday] as a package, you have more rights”.
Package holidays, which first gained popularity in the 1960s, were Brits’ default way of booking vacations until the internet enabled holidaymakers to research and book their own trips. The changes led to the collapse of Thomas Cook, the UK’s oldest travel agent, in 2019.
“Ten to fifteen years ago it seemed that [package holiday providers] were going to disappear,” said one adviser to leisure companies. “But that hasn’t happened. It has been really, really surprising”.
Demand for package holidays is growing as conflicts in the Middle East disrupt flights and air traffic control strikes in France caused widespread delays in July.
Meanwhile, the rising prevalence of wildfires is increasing risks for holidaymakers in southern Europe especially. Heatwaves have resulted in areas of Greece and Turkey being evacuated this summer.
“There’s always something happening, like events in the Middle East or there’s an earthquake in Turkey or there is a fire in Rhodes,” said Donat Rétif, chief executive of loveholidays. “[But] at the flick of a switch, we can send you somewhere else if you want to.”
Package holidays are covered under the EU Package Travel Directive (PTD) regulations, which protect consumers should their travel provider become insolvent and allow them to cancel their trip in certain circumstances.
The legislation, which has been transposed into UK law, does not cover holidays where consumers book flights and hotels separately. In addition, countries have their own regulations that ensure customers are repatriated if a tour operator collapses, such as ATOL in the UK and DRSF in Germany.
Jet2 chief executive Steve Heapy said when extreme events ruined a trip overseas those who booked a package holiday with a single provider were better placed to cope.
“Just imagine trying to get three different refunds from three credit cards at three different call centres,” he said.
Young adults were once at the forefront of the shift towards “DIY holiday booking” but they are now booking package holidays in greater numbers.
To attract more of them providers are offering interest-free repayment plans and a more diverse range of destinations — including the Azores and the Spanish seaside town of Tarifa.
Meanwhile, Jet2 has won fresh brand awareness among younger travellers thanks to viral internet content, showing holiday chaos accompanied with a narration of the company’s slogan, “Nothing beats a Jet2 holiday”. The song that has long accompanied Jet2’s adverts, Hold my Hand by Jess Glynne, has become so popular this year it has even been featured as a warm-up act at music festivals.
“Our branding has become something of a viral phenomenon this summer and we are pleased to see how many people have used it in good humour,” said a Jet2 spokesperson.
More mature package holiday providers — such as Tui — still own and operate hotels and aeroplanes, affording them less flexibility to cater for emerging or more unorthodox holiday destinations.
But newer market entrants have asset-light models, allowing consumers to create customised holidays via any available flights and properties, while enjoying the same protections as a traditional package holiday. On the Beach chief executive Morton said the most popular destination searched on its platform was “anywhere”.
Another online-only player, loveholidays, handled 5mn passenger bookings in its latest financial year, four times as many as in 2019.
Andrew Lobbenberg, an analyst at Barclays, said he believed the newer breed of package holiday providers — what he calls “tour operating 2.0” — would continue to thrive. “The whole concept has been modernised very successfully.”
Traditional providers are following their rivals. In March, Tui outlined plans to sell more seats on other airlines’ aircraft to expand its “dynamic packaging deals”. A person familiar with the company said it was selling “more packaged holidays than ever”.
Rich Robinson, head of hospitality and leisure at Barclays, said ultimately it was the fear of a ruined holiday, rather than greater choice, that was the real driver of the packaged holiday resurgence.
“People have had a lot of cancelled holidays. If you have had that experience then that’s in your mind and you want protection.”