market outlook consumer confidence pressures


THOMAS COOK FALLOUT Thomas Cook’s failure marked the end of a 170-year history, although the group only emerged in its final form in 2007. The collapse was described by Abta


chief executive Mark Tanzer as “a failure of corporate finance”. Pritchard, however, attributed the failure to “a range of factors”. An overriding issue was the group’s debt, accumulated under previous management and expensively restructured in 2011-13. Another was the loss of confidence in a group left fighting for survival after announcing a LQ ەOOLZGRRJ e bELOOLRQ “LPSDLUPHQW RI its UK business in May. Intense competition and the wider


forces reshaping the outbound market and retail sector were also factors. The pressure on margins was intense.


The UK’s top-10 Atol-holders increased their capacity for summer 2019 by almost 15%, compared with a capacity rise of just 2% the year before. The increase was due not only to additional capacity but also to previously unprotected sales falling within the new Package Travel Regulations. But industry adviser Alan Bowen expressed surprise at the increase in April, saying: “The short-haul market is enormously difficult. There is huge competition. Airlines are holding constant sales.”


failure ‘a concern’ %


10 15 20 25 30 35


0 5


32% 28% 24% 21% % for whom %


10 15 20 25 30 35


0 5


16-24 25-34 35-44 45-54 55+ 35% 35% 33% 29% 24% 19% 15% 20% 20% 20% 27% 34% 26% 33% 24%


A SIGNIFICANT minority of holidaymakers (28%) appear


concerned about the risk of a travel company failure, a proportion up seven points year on year


(Figure 10), albeit the survey was conducted within three weeks of Thomas Cook’s failure. The well- documented shift to the western Med of 2015-17 appears over (Figures 11 and 12). The market to


Turkey has come back. All-inclusive demand appears at a new high


(Figure 13), having risen steadily since 2015. Holidaymakers with


children show a clear preference for all-inclusive resorts


If businesses pile back in [to fill the gap left by Thomas Cook], we will probably get back to where there is not a lot of margin


Tui chief executive Fritz Joussen made the same point in May, noting: “All markets are suffering. People have better prices and we have lower margins. Everyone is prepared to put on capacity, to fight for market share. We assume there will be consolidation. There are weak players.” In July, Philip Meeson, executive chairman of Dart Group, parent of Jet2, similarly noted: “Pricing has to be continually enticing.” Cook’s was not the only failure. Super


Break and its parent Malvern Group ceased trading in August. But Cook’s collapse was a defining moment. Joussen attributed the failure to “too little differentiation”, noting: “When you have no differentiation, you are head to head with the internet. People are fine with packages because it’s comfort. People are not fine being treated like anybody else.” Tui joined other leading players –


Jet2, easyJet Holidays, On the Beach – in making clear its intention to fill the gap left by Cook, and easyJet Holidays relaunched in late 2019 with an initial UK capacity of one million. Pritchard noted: “The failures took short-term capacity out, but a number of businesses said they are going to add capacity. If they pile back in, we will probably get back to where there is not a lot of margin.” The Financial Times suggested


FIGURE 10: CONCERN AT RISK OF TRAVEL COMPANY FAILURE Failure a concern: By age


By child status %


10 15 20 25 30 35


0 5


Child Child No 34% 29% 25% 26% 22% 19% %


10 15 20 25 30 35


0 5


33% 30% 25% 21% 20% 21% 35% 29%


Oct 2019 Oct 2018 Oct 2017 Oct 2016


By social class


ABC1


C2DE Source: Kantar/Service Science


12 Travel Weekly Insight Report 2019-20


Oct 2019 Oct 2018 Oct 2017 Oct 2016


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