New research published by the Travel Foundation shows that board basis is just one of several factors that can influence how much holidaymakers spend in resort. Board basis is (obviously) an important factor affecting spend on food and drink: the research found that all-inclusive customers spent significantly less on meals out and drinks, which meant they spent the least overall.
However, board basis is much less important when looking at other types of spend, such as souvenir shopping and excursions. In such cases other variables must also be considered, such as the quality of what’s on offer outside the hotel, to fully understand differences in discretionary spend between resorts, and to take action to optimise tourist spend.
Among the findings from the research (based on over 700 interviews with tourists in 63 hotels across five resorts in Cyprus and Tenerife):
- The average tourist spent £23.07 per day, of which £20.82 was outside the hotel. Only 2% of the sample spent no money outside their hotel.
- Predictably, when compared to other board bases, all-inclusive customers spent significantly less on meals out and drinks, which meant they spent the least overall. However, they were not the lowest spenders when it came to other activities such as shopping (e.g. for souvenirs) and excursions.
- One in seven (14%) all-inclusive customers spent more than the sample average, and nearly half (48%) went out for at least one meal.
However, variations in daily spend between resorts were considerable. For instance within Cyprus, tourists staying in Paphos spent almost a third less per day than those in Protaras. Such differences cannot be accounted for by board basis (the number of all-inclusive tourists was similar across both samples). Rather, cost of the holiday, hotel location and star-rating, and corresponding customer demographics were found to be important influencers.
The research also indicates that customer expectations and perceptions about what is on offer outside the hotel is a very influential factor, either encouraging or dissuading holidaymakers to explore their resort. For some, the low quality of the ‘offer’ from tourism businesses outside the hotel was a disincentive while, for others, the hotel was simply ‘too good to leave’. In fact one fifth (21%) of tourist (26% of all-inclusive customers) spent less than they expected, suggesting significant potential for tourists to spend more in resort if there is enough of an incentive to do so.
Salli Felton, acting Chief Executive of the Travel Foundation, said:
“Hotels can benefit the local economy by doing things like sourcing local produce and providing local employment. However, customer spend outside of the hotel is important as it can help a diverse range of local tourism businesses to thrive, and therefore enhance the destination offer and the overall holiday experience. With demand for all-inclusive holidays set to continue, tour operators, hoteliers, tourist boards and others must look beyond board basis and consider the full range of options available to encourage customer spend outside the hotel. Customer satisfaction is only likely to increase as a result.”
The 6 key recommendations of the research are:
- Get a better understanding of tourist perceptions of the destination.
- Develop and market the destination’s unique selling points.
- Improve how tourists can find out more about a destination.
- Overcome factors that may inhibit customers from exploring outside the hotel.
- Help local tourism businesses to meet consumer demand, for example through training and data sharing.
- Develop incentives and value-added experiences such as walking tours and dine-around schemes.
The Travel Foundation is now looking to implement some of these recommendations with follow-up projects in Cyprus and Jamaica.
You can download a summary or the full report from the Travel Foundation website.