Margins on mainstream holidays are under pressure as demand has failed to keep up with increased capacity this summer.
But leading agents and operators dampened expectations of a significant pick-up in sales following England’s World Cup exit.
Deloitte head of travel Graham Pickett told an Abta conference last week that capacity is up by as much as 5% this summer but “demand is slightly down”.
Sunvil chairman Noel Josephides, who chairs Abta, said: “There is gross overcapacity. Everybody has moved in – British Airways, Norwegian, Monarch, Tui – and margins are going to be affected. Everyone has to sell cheaply.
“It’s classic travel industry behaviour. You have one good year, everyone piles in, then you rush around trying to fill the capacity. We’re back to the prices of five-six years ago – £89, £99 for bookings in four to five days.”
Josephides insisted: “Forget the weather, forget the World Cup – they are excuses. It is simply too much capacity.”
Advantage Travel Partnership managing director Julia Lo Bue-Said agreed, saying: “Overcapacity is really affecting the family market. We’ve seen late offers that we would not usually expect.”
Yet she added: “The top-end market continues to flourish.”
Leading agents were more upbeat. Hays Travel managing director John Hays said: “April was flat but May was fantastic.” He reported Hays retail up 8% in passengers and 12% in sales value in June and said: “I definitely don’t share the concern about price.”
Miles Morgan Travel managing director Miles Morgan said: “We traded well through May and June and we’ve seen no impact since [England’s exit] last Thursday.
“Does capacity ever match demand? Someone always sees an opportunity.”
Pickett told Travel Weekly: “Prices are softening. If the weather carries on as it is, with capacity as it is, there could be some issues.”