case study: changing patterns in consumer demand - snow sport holidays
Snow sport holidays are becoming more accessible as disposable income rises and more package deals become available
Introduction
Recent research from Mintel estimates that there were 954,000 overseas ski and snow board trips made by UK residents in the 2001 to 2002 season. This was despite relatively poor snow conditions in European resorts.
Mintel predicts that this number will pass the one million mark for the first time in the 2003 to 2004 season.
Customer perceptions of snow sport holidays
UK consumers increasingly see holidays as a necessity, rather than a luxury. However, snow sport holidays are much more expensive than traditional beach holidays to the Mediterranean. Consumer income is, therefore, a key determinant of demand in this specialist holiday market.
Personal disposable income in the UK increased by 18 per cent between 1997 and 2001 and is expected to rise by another 21 per cent to £823 billion by 2005.
This growing affluence means that snow sport holidays are gradually becoming a more viable option.
Product "packaging"
More than 60 per cent of snow sport packages are sold as "inclusive holidays" - that is, booked through a tour operator. By contrast, about a quarter of snowstorm holidays are booked "independently". Here, the customer organises each element of the holidays (e.g. flights, coach, hotel, apartment, ski passes) separately. The remaining holidays in the market consist of school trips.
Over the past two decades the most dynamic shift has been the decline in the dominance of the school trip - from a 76 per cent market share in the 1980 to 1981 season to just 13 per cent during the 2001 to 2002 season.
Why have the numbers of school skiing trips fallen so dramatically? The main reason was the introduction of much more stringent regulation about the type and supervision of school holidays overseas.
However, the reduction in the number of school skiing trips has been counterbalanced by an increase in both tour operator and independent holiday markets.
Independent segment experiences strongest growth
As consumers demand more flexibility, it is the independent snow sport segment that has experienced the highest growth - increasing at nearly twice the rate of inclusive packages.
The vast amount of information available on the Internet about ski resorts and skiing conditions has made consumers more confident about booking independently.
Although tour operators are expected to continue to prosper - increasing the number of bookings to about 699,000 by the 2005 to 2006 season - they will have to provide more flexible travel and accommodation packages to compete with the growth of independent skiers.
The move towards a cash-rich, time-poor society has also fueled this need for greater flexibility. Subsequently, interest in short breaks or day trips has also increased.
Market concentration - the large tour operators still dominate
Although there are over 200 tour operators selling ski holidays in the UK, it is the six-largest operators - Crystal Holiday, Inghams, Thomson Holiday, First Choice, Neilson and Airtours - that control more than 80 per cent of all packages sold.
This high level of market concentration has led to aggressive pricing strategies, characterised by heavy price competition and a drive by tour operators for strong brand differentiation.
The snow sport market has a high level of customer loyalty to the product. Mintel’s research shows that 15 per cent of all UK consumers have been on a skiing holiday, with half of these saying that they will definitely go again. But there has been no increase in the number of skiers, which suggests that the market is becoming saturated
Of those customer that have been skiing, 43 per cent are from the ABC1 socioeconomic group, with 15 to 24-year-olds most likely to be skiers or potential skiers.
The propensity to ski also declines rapidly as consumers get older, which means that young consumers drive product development and the image of the industry. Operators will have to respond to this movement in order to tap into the potential revenue.
A quarter of consumers still feel that skiing holidays are too expensive. However, four years ago this figure was nearer one in three, so clearly snow sport holidays have become more affordable to a broader spectrum of consumers than before.
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