First Choice optimistic for 2006

FIRST Choice is confident of exceeding this year’s record profits in 2006 by further developing specialist sectors and controlling distribution.

The operator’s buoyant prediction came after it announced a record £144 million profit in the year to October, on a turnover of £2.6 billion, and as customer research revealed a quarter of people plan to spend more on their summer holidays next year.

The results to October 31 represent the third successive year of double-digit growth for First Choice, which is on track to hit the holy grail of an average 5% margin on sales by 2007.

Rival Thomas Cook is expected to announce it has hit average margins of 5% this year when it reports in March. But First Choice chief executive Peter Long described the 2005 results, in which margins grew slightly to 4.6%, as a “very strong performance”.

Long said the operator’s business model, which favours increased differentiation and does not rely on a single source market, has helped mitigate the effects of natural and man-made disasters in 2005.

He expects a better year in 2006, with long-haul winter sales up 30% and “a higher increase in long-haul revenue”.

“Winter is very strong, the mainstream sector’s revenues are 4% overall, with the specialist holidays sector up 1% and the activity holidays sector up 9%,” he said.

The company has reduced its generic, short-haul three-star holiday and flight-only capacity by 9% for this winter