Multiples will shrink, but not fail – Comment by Jeremy Skidmore

It’s not been a great month for the multiples.

Thomas Cook UK chief executive Manny Fontenla-Novoa recently claimed every multiple has between 10 and 15 per cent of its shops under review.

That means the number could be up for literally hundreds of outlets.

Of course, the vertically-integrated companies have always had shops under review. Leases are constantly coming up for renewal and decisions have to be made about whether individual shops are worth persevering with.

However, you can tell from Manny’s comments that, in the current climate, many more are likely to be converted into card shops or electrical stores than ever before.

And you can be sure Manny wasn’t exaggerating. Chief executives are notoriously cautious when relaying bad news.

Some shops may open, perhaps as implants in supermarkets to encourage people to buy a holiday with the weekly groceries. But these will be far outnumbered by the closures. High street travel retailing is not on the way up.

The point was emphasised by Crystal Holidays chief Stewart McLeod at the launch of its ski and snowboard report for 2004.

He said sales of Thomson, Thomas Cook and First Choice ski packages were down because the multiples don’t have the power to push them to the public in the same way as they did before.

It’s all a long cry from the late 1990s when the multiples were able to sell a huge percentage of in-house products to holidaymakers who didn’t really care who they travelled with, as long as it was cheap and reliable.

Should we feel sorry for the multiples?

Only the stone-hearted would lack sympathy for anyone about to lose their jobs, but few tears will be shed for the companies themselves.

Historically, they’ve flooded high streets, often opening a couple of shops in a small town to quash the opposition.

Many a travel agent has told me that they were rewarded for selling a high number of Thomson holidays by having a Lunn Poly open near them the following year.

The majority of the public still don’t care who they travel with, but they’ve found they can sometimes get a better deal going direct – often to a major operator – or booking independently over the Internet.

It’s bad, but not terminal news for the multiples.

A balance of choices has to be offered in the market and the number of multiples will inevitably shrink. You never know, you might go to a small town in the future and see just one or two of them in the high street!

Don’t expect them to disappear altogether, though.

The newspapers recently have been full of how there are still millions of holidays left to sell and a huge number of peak season discounts on offer.

That’s true, but at the end of the summer, close to 12 million packages will still have been sold, the majority through high street retailers.

The influence of the multiples may be reducing, but it is far from over.

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