Opinion: Big two makes sense for the industry – 19 Mar 2007

In my January column in Travel Weekly I passed comment on consolidation within the four major travel groups. 

I quote: “The UK market in recent years should have sustained only three and I believe is now only capable of sustaining two.”

While I firmly believed what I wrote even I could not have predicted that within less than two months four would have become two.

Where does this leave the industry now? Firstly there is little doubt that The Monopolies and Mergers Commission now have had their hand forced by the TUI/First Choice announcement so swiftly on the back of the MyTravel/Thomas Cook merger.

True, in the long term it likely will mean that the consumer will pay more for their holidays in the UK. However I do not consider this to be a bad thing as this will bring the UK market more into line with the rest of Europe and will stabilise the industry as it has survived on too small margins for too long.

There will be less flexibility for the small operator who sources components from the larger operators and there could be aviation capacity issues as a result. Neither of these issues though are insurmountable for this flexible, innovative industry.

I also continue to predict activity for a number of smaller travel businesses and their owners who will avail themselves of investment cash that is available in the City buoyed by the incredible fact this latest merger will now likely mean that the industry will have, before the end of 2007, two representatives in the FTSE 100!

Incredible! Indeed the TUI/First Choice merger makes it the largest tour operating group in Europe. I understand it will be fully listed as TUI Travel.

2007 has started on a very exciting and positive note and my feedback from the market place is that bookings are up and that the current trading year is looking much improved. Lets hope the rest of the year unfolds without the alarms that beset the industry last year.

Chris Photi, partner, White Hart Associates 

• Travel Weekly Blog: Reactions to the First Choice and TUI merger
• Travel Weekly Blog: First Choice and TUI: more questions than answers
• Travel Weekly Blog: Now it's First Choice and TUI's turn…
• Travolution Blog: So what about the Big, erm, Two then