Shifting holiday patterns

By | Category: Travel news

One of the risks that Thomas Cook has listed in its latest six-monthly report which is published today is “Ability to develop and deliver products and services that meet the expectations or demands of new or existing customers.”

Bodrum in Turkey. More of us will holiday in the country this year

You have to wonder whether the management knows what it was doing given the large half-yearly loss announced today. Certainly some customers seem to be shy of booking which is what TUI found when it announced figures earlier this week. A week or so ago, another one of our big travel companies, On the Beach, said that times were challenging and all three companies use that word, a word that is often a euphemism for “we haven’t got it right” .

What does all this tell the British holidaymaker?

It suggests that British holidaymakers are looking at cheaper destinations and destinations outside the Eurozone. Egypt, Tunisia and Turkey are doing well for the companies whilst Spain is a bit lower. TUI says that there is over-capacity in the Spanish market which I take to mean it can’t find enough holidaymakers to fill what it has contracted because holidaymakers are looking at North Africa and the Eastern Mediterranean countries. But then there are bargains to be had in Greece so the “challenge” reported by the companies is not due just to Brexit qualms. It also seems to be across other countries in which the companies sell their products and not just the UK and Ireland. Thomas Cook says long-haul is looking better for them with more bookings by Britons, Just this week, Antigua and Barbuda in the Caribbean reported much better visitor numbers than it had seen for decades. TUI says that cruises are attracting more and more holidaymakers.

The thought by analysts is that we are sitting on our hands and waiting either to see whether there will be good weather at home and thus a staycation is on the cards or whether Brexit will be resolved and we will book in EU countries like Spain, Italy and Portugal

The latter argument is surely wrong since both the British government and the EU have said on many occasions going back months that there will be no disruption this year even if there is no deal.

What it probably means is that the companies have not understood what our holiday habits will be this year. And that’s not surprising given that they haven’t got it right for a few years. They missed the growth in staycations and all three companies that I have mentioned have few if any domestic holidays on offer. TUI and Thomas Cook are heading down the path of owning their own hotels (Thomas Cook has 40,000 hotels rooms) and all-inclusive holidays whereas consistent research findings suggest there is a growing interest in getting closer to local culture and lifestyles such as staying with locals and sampling local cooking.

If the losses announced by the big two are so big should we book elsewhere in case one or the other goes bust? I’m 99% sure that neither will go under at least in the next couple of years. There will always be one of the newer travel companies willing to pick up bits which explains why Thomas Cook has had so many offers for its airline.

That the loss by Thomas Cook is £1.474 billion and £1.1. of that is a goodwill charge for a company it bought eleven years ago means that a truer loss would be just £370 million. But losses were expected so why not lump all the bad news in now?

What we ought to see is a wholesale management change because both companies have been wrong-footed by newer upstarts like Jet 2 and companies that have only a small toehold in the UK such as Otravo and eTravel but which will shake the market up when they expand as they almost certainly will.

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