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Teletext Holidays’ Steve Endacott takes out his crystal ball and says OTAs are gearing up to exploit distressed markets, although terrorism could be a problem for all in travel
Trying to accurately predict a UK lates market usually requires a crystal ball and a lot of luck, given the sheer number of influences that impact the UK travel market.
Unfortunately, the rise of Isis and resulting terrorist attacks are having an increasing impact on the lates market, with the virtual removal of Egypt and Tunisia as winter sun late hot spots and the potential impact on the larger summer lates sector still to come.
January’s early bookings for summer 2016 have remained resilient, despite further terrorist incidents, with travel agents reporting 10% plus growth year-on-year.
However, UK demand is polarising towards the perceived safer Spanish destinations, while other destinations such Turkey and Greece lag well behind.
Turkey (pictured) may hold the key to how the summer 16 late market turns out, as it looks destined to provide the highest volume of cheap late accommodation, combined with poorly loaded UK flight capacity.
Germany is seeing an even more polarised version of the UK trend, with industry commentators forecasting two million less German victors to Turkey, following the recent Istanbul and Ankara attacks.
Some of these holidaymakers will simply not travel, but Spanish hoteliers are already putting up rates in the expectation of selling out due to buoyant German and UK markets.
This polarisation is likely to lead to very expensive late deals in Spain and very cheap deals to destinations such as Turkey and Greece.
Ironically, it is the big tour operators with their fixed capacity models that will suffer the most from this polarised lates market.
It is much harder for their yield departments to manage a program with hundreds of seats flying empty close to departure and therefore the traditionally well-controlled market for charter seats to Turkey and Greece, looks ripe for exploitation by the major OTAs.
OTAs are geared up to exploit distressed markets, as they take no commitment and simply apply relatively fixed mark-ups.
This allows them to exploit the distress of airlines and hoteliers with committed stock, to create the low prices required to persuade customers to travel to less popular destinations.
However, further terrorist activity in these destinations could create a situation where customers will not travel at any price, creating a problem for all players, with little “saleable” stock being left available when we reach the lates market.
The impact on demand of the UK weather has never been more pronounced, due to the effect on children of modern technology.
If we experience sunny weather leading up to the key school holiday period, many parents now opt to simply holiday at home, as the kids are perfectly happy playing on the Xbox, messaging friends over “WhatsApp” and watching 100s of TV channels via Sky.
June’s European Football Championship in France, with easily accessible ferry crossings and low cost camping options, as demonstrated by 2008’s Euros in Germany, could dramatically impact lates demand.
If dad uses up precious holiday days in June it leaves less for the family beach holiday, leaving mum to holiday at home with the kids.
Things could play out in many different ways in Summer 2016 with, not surprisingly, the location of the virtually inevitable terrorist attacks being a key influence.
It could be a great year for OTAs, but I think it’s more likely that we are all in for some sleepless nights ahead.