The latest results from the two major travel groups Tui Travel and Thomas Cook provoked a predictable response in the media.
“Holiday prices set to be slashed”, said the Telegraph, reporting a “glut of unsold packages”, while The Guardian was more definite, headlining its main inside news page: “Troubled holiday firms slash prices”.
The newspapers’ excitement stemmed from Tui’s announcement that it has 650,000 flights and holidays left to sell in the UK before the end of the summer. The Guardian concluded with a quote from Bob Atkinson of price comparison site travelsupermarket.com advising: “Keep looking right up to the last minute. If you are prepared to take anything, you will get bargains.”
Well, a price comparison site would say that, wouldn’t it? And when could you not get a bargain if you were prepared to take anything? Bargain hunters should also bear in mind the season runs into October, so 650,000 holidays left to sell need not mean agency bargain buckets full of August departures.
But the point about the lates market is serious. Tui was sanguine about late trading a year ago, despite the summer 2009 season going on sale two months later than usual.
There are two differences this year: Tui added capacity for summer 2010 – though to nowhere near the levels of 2007 and 2008 – and it reported much better trading up to the start of April. The problems set in since the last quarterly statement.
Thomas Cook’s view of the lates market, released a day later, does not support the suggestion that bargains will be more prevalent than last year. The company did not specify how many UK holidays it has left to sell, but declared its UK summer programme 85% sold “in line with last year”.
Both groups, which together account for a lion’s share of the UK market, reported average selling prices for the UK summer season up on last year – Thomas Cook by 3% and Tui by 10%.
That is a marked change from last summer and fits the data from industry analyst GfK Ascent which reported a 2% rise in average price across the sector up to July, leading GfK Ascent managing director Sarah Smalley to conclude: “There is no need to discount.”
Of course, we have to see how the rest of August unfolds. But just last week the country’s third-largest charter carrier Monarch Airlines was sufficiently confident to lay on an additional 22 flights to the western Med over August Bank Holiday. The move came after Monarch carried record passenger numbers in July.
It’s true the UK market has deteriorated since the promise of early spring. A poll across many economies, published today by Ipsos Mori, suggests UK consumers are now among the most pessimistic in the world. This probably represents a realistic expression of the UK outlook and is the reason demand has faltered.
But far from the Tui and Thomas Cook statements justifying headlines such as “Holidays put on hold” and “Thomas Cook adds to travel industry gloom” (both in the Financial Times), the figures suggest a remarkable resilience in the circumstances – and certainly no reason for Tui to lose 10% of its stock market value, as it did yesterday.
So you wait until the last minute if you want to – I’ve just booked my October break.
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