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Package holidays are back as fliers choose hassle-free trips


Flights, hotel, transfers and food in a few clicks: the package vacation is this summer’s hottest trend across Europe.

Package holidays are back as fliers choose hassle-free trips(Unsplash)

Once seen as an outdated niche appealing mainly to baby boomers, the humble holiday bundle has mounted an unlikely comeback after almost being wiped out during the pandemic. Demand for all-inclusive packages is surging as younger travelers warm to an increasingly sophisticated offering of affordable and hassle-free holidays.

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Growth is forecast to surpass 11% globally this year, with Western Europe approaching pre-pandemic levels, according to Euromonitor International, a market research firm. The key UK market is already where it was in 2019, with Germany not far behind.

“We all thought it was dead, because of the Internet allowing people to put their own packages together,” Deutsche Lufthansa AG Chief Executive Officer Carsten Spohr said this month. “But with all these interruptions in Covid, people now love to have everything secured in one package.”

Airlines now see a bonanza in a corner of their businesses they long considered a backwater. UK budget carrier EasyJet Plc sees 35% passenger growth for its holiday business this year, while Jet2 Plc and TUI AG report rising interest in package tours. The segment has become increasingly important for Lufthansa’s growth, Spohr said.

TUI and others have evolved their offerings to cater to a younger, more Internet-savvy crowd. The choices are more varied, with experiences that go beyond the traditional sun-and-beach trip, said Caroline Bremner, senior head of travel research at Euromonitor.

EasyJet Holidays, for example, offers guests a £162 ($206) add-on — a guided tour of Iceland’s Thingvellir National Park, where the American and Eurasian tectonic plates meet, followed by a visit to a volcanic crater and a dip in the steaming Blue Lagoon. TUI recently added an 11-night tour of Kenya, where elephants and hippos are on display.

Travel companies are also tailoring packages to extended families with a range of interests, while customer-friendly options like installment payments, amenities for children and all-inclusive food plans represent a “safe bet” for consumers squeezed by rising prices, said Bremner. “They offer a value for money option where costs are fixed up-front.”

Globally, package-tour revenue is forecast to reach $280 billion this year, or 86% of 2019 levels, according to Euromonitor. While the broader aviation market reached pre-Covid parity last year, according to the International Air Transport Association, package tours are coming back from a steeper drop: more than two thirds of revenue disappeared at the 2020 low.

The segment first gained popularity in the 1960s, when vacationers sought an affordable way to sightsee or visit the beach. Jetting abroad became more accessible with modern single-aisle aircraft such as Boeing Co.’s 737, and tour operators offering leisure trips to Spain.

The market slowed in the 1990s, when holidaymakers started surfing the web to book their own flights and accommodation separately. Heavy competition led to the collapse of package-tour stalwarts Thomas Cook just before the pandemic.

Return Trip

Now airlines are finding themselves at a disadvantage if they haven’t joined in. Ryanair Holdings Plc lowered its profit outlook after online travel agents stopped selling its flights amid a long-running dispute. The Irish discounter has since formed partnerships with TUI and others to list its flights.

In Europe, Brits and Germans have traditionally led the annual exodus from colder climates to the sunny sands of Spain, Greece and Portugal. Each side held a certain notoriety in the eye of the other: their competition for sun beds is legendary.

The UK is the biggest European source of outbound tourists and second globally to the US. It reached 99% of 2019 levels last year, and is poised to grow 11% this year, Euromonitor projects. Germany is forecast to be at about 91% of its pre-pandemic size.

Other countries are picking up the baton, with Italy forecast to grow 26% this year and Croatia set to rise almost 16% a year through 2028, according to Euromonitor.

TUI said it’s recently seen more demand from France, while Lufthansa’s low-cost Eurowings unit said the Czech Republic was becoming an increasingly important market.

While more younger people are being introduced to the concept, package tours are still mainly the domain of older consumers, who are attracted to the simplicity of dealing with a single provider, said Jennie Bryans, senior travel analyst at researcher Mintel.

Yet the outlook for future growth is strong, said Paul Charles, CEO of travel consultancy The PC Agency. Operators have put together better-quality packages than in the past and their marketing has improved, he said.

After Thomas Cook’s breakdown, EasyJet saw an opportunity to develop a package-tour business offering greater value and flexibility, CEO Johan Lundgren said in an interview. Now, he said, “I don’t see any limits to it.”



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