The United States is the largest leisure travel market in the world – by far. The closest point of reference is the entire European Union. We’re three times larger than our closest competitor, the United Kingdom. Yet, despite our size, we just don’t spend as much money on packaged travel. In fact, the folks in the UK spend 50 percent more on it than we do.
Over here, the travel business accounts for $271 billion a year, according to travel industry research firm PhoCusWright, and only 7 percent of that ($18 billion) is spent on travel packages. Meanwhile, the UK has an $84 billion-a-year travel industry – not even a third of ours – and they spend $30 billion a year on packages (35 percent of the local market).
What’s the deal?
There are plenty of reasons bandied about. Europeans tend to take longer vacations, with 10 to 14 days not unusual (especially for the residents of northern European countries), and they tend to take more time off than the workaholics in the United States. They go more and longer, which translates to increased spending.
But, this doesn’t explain the affinity for packages. What makes Americans different?
Well, independence is a major factor. Americans usually prefer to set their own agendas, deciding what they want to see and do, taking on the task of research (and coming to places like Gadling – thanks, by the way, we all appreciate it) and putting together the pieces on their own.
Maybe we’re getting lazier or trying to seem like sophisticated Europeans, but the packaged travel market is growing on this side of the Atlantic, even rapidly. Of course, you need to compare it to starting point to understand how this can happen. In 1999, the packaged travel market was effectively nonexistent. Some large, enterprising online travel agencies, however, created a market from nothing, and turned it into an $8 billion space by the end of last year. This “new” offer has grown at a compound annual growth rate (CAGR) of 50 percent during this time, while tour operators have seen aggregate revenues decline at a compound annual rate of 5 percent.
So, we’re still not heavy package buyers in the United States, but taking the easy way out is becoming more and more attractive.