Package holidays, or package vacations, are making a major comeback. As proof, big players in online travel are noticing and adjusting their product offerings with an eye to serve travel package shoppers. TripAdvisor, while officially vague on the subject, seems to be exploring a growth in the package world. And more notably, at Skift’s recent Global Forum, Google’s Richard Holden talked about the company’s continued foray into travel package metasearch, with a focus on Germany, the UK, and the US. So why packages, and why now?
In Europe, packages - a bundle of various travel options, most often flights, transfers, and accommodations - have been around for a long time. However, with the expansion of OTAs and the availability of cheap flights, many travelers started to ditch them in favor of cheap and easy do-it-yourself options.
Case in point: In the UK in 2008, only 37% of travelers were booking package holidays. But over the last decade, they’ve been making a slow and steady comeback. According to ABTA, 49% of UK travelers booked a package holiday this year citing the following benefits: the ease of having everything taken care of (69%), value (60%), and convenience of booking (39%). The major package companies in the UK include Thomas Cook and TUI, but there are a number of companies specializing in packages including Virgin Holidays and Jet2holidays.
In Germany, where Google has said it will be focusing on its package search first, packages are also going strong thanks in part to deep-set loyalty to the big four tour operators in the country, Thomas Cook, TUI, DER Touristik (REWE), and FTI. RDA reports in its German holiday behavior analysis that package holidays in 2017 (the most recent year available) remain the most popular type of holiday representing 44% of travel. Gross booking for tour operators (of which the big four accounted for 75%) were expected to be €18.8 billion in 2017, according to Phocuswright’s German Online Travel Overview. Four percent annual growth is predicted with bookings of €21.8 billion by 2021.
In the US, on the other hand, there hasn’t been a history of large scale package travel or big players associated with it. Americans don’t have Thomas Cook or TUI to look to, and aren’t necessarily likely to seek out package travel directly, though they may book one if they come across one. Major US airlines including Delta and American Airlines actively market their packages to their customers, and online travel shoppers can find plenty of packages on Expedia. But, as Google has noticed, there’s a hole to be filled in the package shopping experience.
As Holden, Google’s Vice President of product for travel, explained to Skift, “There is no great place to go to understand all the packages that are offered out there and from a transparency standpoint, we’re also trying to show people what that package travel would look like and what the component pricing looks like so they can compare right there.” Currently, Kayak.com is the only site that offers package comparisons from various travel websites, such as Expedia, Priceline and Orbitz. In order to compare package deals with the cost of booking travel separately, though, a consumer would have to do the searching and comparison on their own – a time-consuming process.
Google’s new tool, once it’s been refined and rolled out more prominently, has the potential to make package travel easier to find in one place, and easier to assess the value of the package. Whether it will have an impact on traveler’s actual choices remains to be seen. The renewed interest in packages could be seen as part of a bigger trend – the trend toward convenience. Many travelers, particularly Millennials, prefer to keep it simple, from using travel agents for booking, to the convenience of all-inclusive vacations and cruises. Even if the added transparency in pricing doesn’t show a huge cost savings to consumers, packages may have enough benefits to continue their renewed popularity.