BCG: The impact of new UK school holiday legislation

Changes to the way UK school holidays are planned will come into effect in September. In a recent study, The Boston Consulting Group (BCG) looks at the way these changes will affect parents and the Travel and Tourism industry. The consultancy finds that a longer more varied holiday period will increase affordability for parents while making planning and delivery of holidays generally more difficult for the industry.

Family holidays bringing with them the joy of endless summer days or cold stary nights, long drives, the sea side, camping grounds, the French or a myriad of other facinating and not school activities. While for the children the fun is abound, parents are faced with the sometimes daunting task of both planning and affording the numerous yearly trips based around the publically defined school holiday periods. The UK Travel and Tourism industry too is keen to meet the needs of the parents, antipating that between 55,000 – 60,000 families making use of their services, with growth flat since 2009 but expected to grow for oversees trips (2.5%) and the family visted holiday parks (1.2%) til 2019.

The holiday freedom
While the number of families going on holidays isn’t changing drastically (even if the average length has dropped from 3.8 days to 3.5), the period in which the holidays are planned are about to become even less predictable for the Travel and Tourism industries. In 2013 a piece of legislation was passed the prevented parents from taking their children out of school for holidays outside of the official holiday period. The effect of this was that for many parents out of peak period holidays became inaccessible and more pressure was put on the peak period. In a survey of travel companies, 85% indicated noticing the effects of the law change, and around 25% indicating that peak holiday period price increases are needed to compensate the decreased sholder-period decline.

In 2015 a new piece of legislation, which will come into effect in September, is set to further disrupt the industry. The new rules will give the head of schools the discretion to decide the holiday period for their individual school rather than working from a National Schedual. Research from BCG shows that up to 70% of schools will immediately enact changes (up to 90% in the coming years). The main reasons cited are to improve the affordability of holidays for parents, and to match school holidays to religious and cultural holidays, and festivals.

The effect of the changes on the industry are, according to the authors, “almost certain” to lead to a softening of the demand curve, with the “sholder period” extending as more schools begin earlier or later, and peak period becoming shorter as distributions becomes more diverse. With these changes, and the decreasing demand for peak period holidays, meaning that families that could not afford the peak periods elastic high prices from limited capacity may now have greater opportunities to travel in sholder periods. For tourist and travel companies the effects will also be varied according to the report, with high demand companies able to keep margins high in the peak period and increase sholder period margins, while others will have to decrease their peak prices as demand wanes while not being ablt to increase sholder period pricing.

Anticipating demand
To meet the changing landscape BCG looks at a number of ways in which the industry might adapt to the developments, suggesting that companies invest in “dynamic pricing software” so as to quickly react to changes. Developing “forecasting tools” to capture the changing school schedules anticipate future demand. Planning for changes in capacity in everything from carriers to student staff, will need to be factored into the effects over the coming period, with the holiday period being elongated through longer shoulder periods. Consumer insight will too be helpful for developing a clear demand understanding, by matching catchment areas with school schedules and other socioeconomic analytics an expectation of demand could be developed according to the authors.

The report concludes that, “The UK travel market will not be transformed overnight. But there is little doubt that domestic-travel patterns will shift over time, and after a period of transition (that could last many years) travel companies will have to adapt to a new paradigm of demand. Those operators that start now to invest in and build the capabilities that will enable them to both anticipate, and react quickly to, shifting demand will have a big competitive advantage over the rest of the UK travel and tourism marketplace.”