specific to Thomson. These problems relate particularly to distribution. It was slow to act when Thomas Cook increased its sales of its own holidays, squeezing the sale of Thomson holidays. It is also believed to have displayed an arrogant attitude to some independents.
It is also thought to have been far too optimistic over premium priced millennium sales. It’s like the August eclipse experience all over again.
Thomson is planning changes, particularly in distribution, but it is much too early to tell if these will work. These plans centre on increasing sales through Thomson-owned outlets – Lunn Poly, Portland, other direct sales, teletext – to 75% of all Thomson holidays; the percentage at present is 60% which points to a further squeeze on independent agents.
Most people’s favourite for the chief executive position is First Choice group managing director Peter Long widely praised for his record at Sunworld and more recently at First Choice. However he seems highly unlikely to move unless Airtours succeeds in acquiring First Choice, and maybe not even then.
Thomson has reminded them that, if holiday companies get things wrong, a heavy price is the penalty – for profits and for share prices.
At least it looks as though capacity will be tight for 2000.
THE city’s attitude to Thomson was summed up by the 17% fall in its share price on the day it made a second profits warning, just over a week ago. To give another statistic, the shares are 40% below their 170p issue price in May 1998 – and the London Stock Market has risen in the same period.
Companies newly quoted on the London Stock Market are expected to be very careful not to disappoint in their early days. So the first profit warning in July was bad enough. Another profit warning six weeks later was very badly received.
Ex-Thomson Travel chief executive Paul Brett carried the can for saying he would flood the market in response to Airtours’ bid for First Choice and for the July profit warning.
Roger Burnell, who was appointed acting chief executive, has subsequently moved to assure investors that Thomson will not flood the market with excess capacity. Indeed he seemed to indicate that Thomson will cut capacity for summer 2000.
At the time of the second profits warning, Thomson claimed that the excess capacity was not its fault, that the whole market was suffering from overcapacity and every company has been hurt. However investors noted it was Thomson, not the others, that issued profit warnings.
Consequently, the feeling is that the problems are largely specific to Thomson. These problems relate particularly to distribution. It was slow to act when Thomas Cook increased its sales of its own holidays, squeezing the sale of Thomson holidays. It is also believed to have displayed an arrogant attitude to some independents.
It is also thought to have been far too optimistic over premium priced millennium sales. It’s like the August eclipse experience all over again.
Thomson is planning changes, particularly in distribution, but it is much too early to tell if these will work. These plans centre on increasing sales through Thomson-owned outlets – Lunn Poly, Portland, other direct sales, teletext – to 75% of all Thomson holidays; the percentage at present is 60% which points to a further squeeze on independent agents.
Most people’s favourite for the chief executive position is First Choice group managing director Peter Long widely praised for his record at Sunworld and more recently at First Choice. However he seems highly unlikely to move unless Airtours succeeds in acquiring First Choice, and maybe not even then.
Thomson has reminded them that, if holiday companies get things wrong, a heavy price is the penalty – for profits and for share prices.
At least it looks as though capacity will be tight for 2000.