Ernst & Young warns of travel company failures

A leading firm of analysts has warned failures in the travel industry are inevitable following a record number of profit warnings by UK retailers in the past three months.

The deepening downturn has yet to be reflected by a rise in profit warnings by listed travel companies, says City firm Ernst & Young, but the sector “shows signs of distress”.

In a quarterly report, Ernst & Young warns of travel: “The combination of rising input prices and declining consumer spending is exceptionally toxic. If the oil price remains high, failures look inevitable.

“Tour operators say they have learned the harsh lessons of previous downturns and bookings are holding up, but the industry is not immune from rising prices and the consumer trade-down.”

The report adds: “There are many new players [in the sector] without experience of managing in a downturn.”


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