MARKET OVERVIEW

INDUSTRY INFRASTRUCTURE
Distribution Overview
The travel industry in the UK has continued to see significant changes in distribution. The
vertically integrated tour operator model has focused concentration on a smaller number of
businesses and the continued “globalisation” of business continues to be an important trend in the
retail travel sector.
For destination Australia, this continued consolidation of the traditional trade distribution channels
has provided a challenging environment in which to market itself, with Australia being just one of
many long-haul destinations sold by these larger organisations.
The continued consolidation within the travel industry has remained an area of concern and has
seen a weakening of tour operator brands that traditionally had been key producers for Australia.
With key Australia specialist brands being absorbed into larger travel organisations such as TUI
and Thomas Cook, the larger parent companies’ continual business rationalisation and
restructures have continued to impact the smaller brands. The closure of all Austravel retail shops
is one example, as this brand is now call centre driven with brochures racked in Thomson retail
shops rather than in their own outlets, and Austravel’s core business substantially reduced.
What is interesting is the return to growth in sales from the high street travel agent. Traditional
operators have faced a growing challenge from a number of online firms (OTAs) and online bed
banks which had previously benefited from trends such as the growing propensity for travellers to
book holidays at shorter notice and to build their own holiday packages. However, the recent
collapses of travel providers, for example XL Leisure Group, a number of low cost carriers and
other unlicensed (ATOL bonded) travel providers, have forced consumers to review their
purchasing habits. This has resulted in a greater number of high street travel agencies receiving
enquiries for Australia and whilst a high percentage of research is conducted online the final
transaction is taken through a travel agent or licensed travel provider. The consumer is looking
for financial protection for their holiday dollar investment and this can only be provided through a
bonded agent or tour operator. Consumers were also negatively affected by the flight disruption
and cancellation of air services due to the volcanic ash from Iceland in April/May 2010 costing
many customers, who had booked flights and accommodation independently, thousands of dollars
in repatriation costs and insurance claims.
The Irish market is structured in a similar way to the UK, and there is cross over in terms of
distribution with a number of UK based operators including outlets and various tour operator
brands in Ireland. The two most prominent UK based operators are Trailfinders and now
Travelmood (formerly the Austravel brand presence).
15 UK & Ireland 2010