Cashing in on appetite for adventure

Sun, sand and sea are losing their allure for British holidaymakers. A traditional beach holiday is still the favourite, but a rapidly growing number of Britons are choosing activity holidays.

These range from sports holidays such as skiing, sailing or diving to yoga retreats, cookery courses, needlepoint lessons, painting in Provence, trekking in the Himalayas and birdwatching in Belize. This broad market is diversifying all the time. If you have an interest, hobby or merely something you are inquisitive to try, there’s a good chance someone will be a running a holiday that lets you experience it at leisure.

The British take more than 150 million holidays a year, and a 2003 Mintel report showed that active breaks amounted to more than 10 per cent of the market. Operators say there has been a continued increase in passenger numbers over the past two years.

Simon Larkham, of investment bank ABN Amro, says: ‘Consumers want to take more holidays, sample different experiences and above all else want choice, whether it be destination, activity or even how they book it. The growth in activity holidays is just one component of this change.

‘First Choice is the best example of a traditional tour operator that has been alive to this. Specialist and activity holidays now represent more than 50 per cent of group profit. The operators best placed are those who can change as fast as consumer demands are evolving.’

Operating profits for First Choice’s activity holidays division were up by 27 per cent in the last financial year and interim results published last June showed an 8 per cent increase in sales over the same period last year.

Active holiday specialist Neilson, part of Thomas Cook, carries more than 100,000 passengers each year on watersports, mountain biking and winter sports holidays. It has recorded a 14 per cent rise in overall sales for the year ending last April and its Beach Plus active brand is up 43 per cent year on year. Managing director Pete Tyler believes such holidays can eat even further into the traditional beach market: ‘The Benidorm fly-and-flop thing is dying away. People want to improve themselves when they go on holiday now, whether it be cooking or painting, learning to mountain bike or sail.’

Although the major operators are all offering some form of active holiday, the sector is dominated by small specialists – which are also growing. Andreas Elia, director of Regaldive Worldwide, says sales are already up 12 per cent on last year, and the type of client is changing.

‘Many misconceptions about diving being difficult to learn, or that it is a dangerous sport, have been eroded. We used to just see mainly men, committed divers and groups from diving clubs. Now we are getting a far more diverse crowd, many beginners, families, couples and groups of friends. More people are willing to try something new.’

This trend is repeated across a range of holidays. Annabel Lawson, who runs Andante, which specialises in archaeological tours, says: ‘We are seeing everyone from professional archaeologists to people with no previous experience of archaeology at all. They might have seen a documentary on TV about a particular ancient culture or site and want to see it for themselves. There seems to be a widespread desire to learn.’

Yet active holidays tend to be more expensive than beach breaks. Any economies of scale are limited because groups tend to be small, as are overall passenger numbers for most operators, and specialist staff are required in the UK and at the destination. In addition, many activities require significant investment in equipment and can take considerable time to set up and run well.

However, Mark Delow, director of the PricewaterhouseCoopers Travel Group says that people are willing to pay the extra cost: ‘People have more disposable income and a holiday for a lot of people it is not a luxury, it’s a necessity. There is a willingness to spend on quality and experience is deemed as something well worth spending money on.’

There are good profit margins and many small specialists with an enthusiasm for their subject focus on high quality rather than big sales. They typically have high levels of return custom: between 40 and 60 per cent is common.

Wildlife Worldwide, based in Croydon, south London, is expanding with an internal structure that resembles a mini-group rather than a single business. Different operations such as diving, horse riding and wildlife holidays are independently managed yet centrally owned.

Managing director Chris Breen says: ‘These are essentially cost centres within a traditional limited company but with independent management structures. It works for us. It has evolved organically since 1992 to take in products that we want to include and which complement each other.

‘We have economies of scale and are able to obtain more competitive rates. All sorts of negotiations become easier when there are more of you. It makes it more fun as we can share ideas, inspiration and information.’

Active holidays are also helping to dent the popularity of package holidays. A Mori survey last year showed that for British travellers, independent trips have become the most common form of overseas holiday, eclipsing the traditional package.

Yet when people take an active holiday they are overwhelmingly buying a package. The specialist knowledge, equipment and organisation required to make such a holiday successful mean it is far easier, and often cheaper, to buy from an operator than to set it up yourself. With beach package sales on a plateaux, this is something the major travel companies are keenly aware of.

First Choice has been building its presence in the active holiday sector, largely by purchasing strong specialist companies. Peter Long, its chief executive, has overseen the acquisition of two leading adventure travel independents, Exodus and the Adventure Company.

‘We see growth in that whole active sector of the market, so we are building a broader portfolio of leisure travel experiences rather than just saying we have an existing model based around vertical integration with a heavy bias towards the western Mediterranean, Portugal Spain. The world is opening up, there’s far more choice and our customers want that so we need to offer that broader range of choice,’ he says.

First Choice is also following a new direction in active holidays. In recent months they have purchased Groupe Aventuria, a French tour operator to the Americas, Africa and the Pacific Islands and My Planet, a Scandinavian firm providing tailor-made tours to Australia, New Zealand and North America.

For Delow of PriceWaterhousecoopers cracking the European market is a key opportunity for UK active holiday companies, a way to build on their healthy growth by exploiting their specialist expertise in an arena with little local competition.

‘Britain is leading the way. The Germans like the bucket-and-spade holidays, as do the Scandinavians, but their desires are changing too. That may be where the money is to be made. For even greater growth potential and profit, UK-based specialist active travel companies should be looking to exploit markets overseas.’

Six of the best

Swim with humpback whales

From July to October each year, the warm waters off Tonga are home to pods of South Pacific humpback whales, one of the world’s most spectacular marine mammals.

Learn to cook with a Michelin chef

Take lessons from a master at a luxury hotel in the hills above Cannes. As well as cooking techniques, you will be taught to select the best produce on visits to traditional markets, farms and producers.

Heli-ski cruise in British Columbia

Ski or snowboard down remote Canadian mountain slopes by sailing up the British Columbia coast then flying inland aboard the luxury cruise ship’s chopper.

Learn about Japan’s culture

From calligraphy to the tea ceremony and the life of a geisha.

Discover prehistoric civilisations

Travel to south-west Libya through massed dunes to the site of ancient rock paintings.

Drive a classic sports car

Hire an Aston Martin DB4 and join a tour of classic car enthusiasts along the back roads of France.

 

The Observer, Sunday 28 August 2005

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