The biggest hurdles facing tour operators are in the supply chain, delegates at the Aito Overseas Conference 2022 have been told.
Speaking in Braga, Portugal, Aito operators cited problems caused by rocketing airline prices and limited access to bed stock, particularly for the groups market, as a result of hotels turning to other distribution channels or overseas markets during Covid.
Speaking in a panel discussion, Travel Department chief executive Sara Zimmermann said: “The escalation of airline prices is really challenging, particularly in long-haul, but so is access to beds.
“A lot of hotels say they are not going to do half-board any more. A lot of our customers are incredibly loyal but they want what they want and we have to try to deliver and it’s really hard to find it on the supply side at the moment.”
Ramblers Walking Holidays managing director Kevin O’Regan said the industry had become “worse than fragmented” since Covid, with airlines, hotels and operators working in “silos”.
He added: “Trying to predict airline prices right now is a dark art and a lot of hotels don’t want to work with group operators. We have to reconnect with everyone.”
Vacations to America director Nan Wimms said rising prices for UK consumers visiting the US meant the company was having to offer “alternative choices” of more affordable accommodation to clients.
Chris Wright, managing director of Sunvil, said many suppliers which had previously worked closely with UK operators had turned to other markets during Covid or other channels, such as Booking.com, and realised they could earn more money that way.
The tour operator was having to come to new agreements with hotels to claw back accommodation for 2023, he said.
“It’s coming back into our hands but it’s going to take another year before it settles down,” he said, adding: “We are seeing a lot of accommodation providers come back to us because it’s easier than dealing with customers themselves, even though they might make more money.”
In South America, Wright cited the problem of airlift, with airfares in some case rising to treble pre-Covid levels. “The jump has been huge and that’s if you can get availability. It’s making trips very expensive,” he said.
But so far operators said consumers were willing to pay the increased prices.
Chris McIntyre, managing director, Expert Africa, said: “Prices are going up significantly. Customers are going to have to carry on absorbing that.
“In Africa, there is inflation and everyone prices in US dollars. We have seen our average spend marching up. Customers are currently still paying and we are getting relatively little push back.”
Wright said customers were instead dropping down the level of accommodation or flight class they booked. “You are starting to see people will drop down on the accommodation or go economy rather than business class,” he said.
But KE Adventure chief executive Ahsley Toft raised fears consumers may not continue to pay if prices remain high.
“I am not sure prices will come down. People are spending more and more. I am nervous whether that will continue,” he said.