Harsh lessons from a dreadful summer

Comment by Jeremy Skidmore (www.jeremyskidmore.com)

The travel industry will be glad to see the back of this summer as it staggers to a close with holidays selling for £20 and a record number of failures.

To say it’s been a tough season is a bit like saying Chelsea have got a few quid.

The World Cup and the hot weather are mere smokescreens; the real problem has been the huge overcapacity of flights and the sheer volume of people prepared to go on no-frills flights rather than traditional packages.

In July, an internal memo from Thomas Cook revealed the company’s view that we were in the worst trading conditions for 15 years. By September, that had been converted to “Thomas Cook UK remains on target to meet its annual budget”, but then again the company has always had a good PR team.

Meanwhile, MyTravel surprised no-one by releasing yet another profits warning. Here’s a teaser for you: have they set a world record for issuing the most number of profits warnings over a five-year period? I’d be interested to know if there’s a company still trading which has issued more.

Meanwhile, many specialist companies have also struggled. The highest profile failure was Tapestry Holidays, a fine operator that ceased trading for a variety of reasons that have been well documented. But you know how tough it is when companies fold in peak season, the one time when you used to be able to guarantee making a fistful of cash. That’s no longer the case.

Then along came the terror alerts. Long queues at airports, hundreds of thousands of misplaced bags and non-stop talk of bombs on transatlantic flights were just what you need when you’re trying to sell those last-minute holidays to Florida.

And high street travel agents, already fighting a losing battle to woo customers, had to contend with ABTA admitting that holidaymakers’ money could no longer be guaranteed if they booked through one of their members. Just the thing to get them flying through the doors.

It hasn’t all been doom and gloom, though. Eurostar and the ferry companies cheerfully told us how much their business was up following the terror alerts and travellers’ subsequent reluctance to fly.

No doubt some niche companies and those offering a service that people are prepared to pay for have also prospered. But they are the exceptions to the rule.

All this has added up to an excellent year for holidaymakers who, as many operators have told me, ‘have never had it so good’ with the number of deals on offer.

So what of the future? Well, it can’t last. The trend towards buying online will, of course, continue, but companies can’t carry on losing so much cash.

More companies and no-frills airlines will either fail or merge. And those remaining will have to reduce capacity to survive.

The major tour operators will continue to cut back on bog standard short-haul holidays and, instead, focus on securing exclusive accommodation and selling it direct via their websites, along with more imaginative packages to short and long haul destinations.

Normality can never be expected in this industry, but surely next summer cannot be as mad as this one. If it is, expect some very big names to bite the dust.

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