First Choice plans cuts to short-haul portfolio

FIRST Choice aims to reduce short-haul product to 25% of its mainstream portfolio by 2008 as it continues to leverage profits from medium, long-haul and specialist holiday sales. A diverse product range, tight capacity controls and a flexible model resulted in record pre-tax profit of £98.3 million, up 13% on last year, for the year to October 31 2004.

Chief executive Peter Long denied First Choice would pull out of the short-haul market completely but said it would not operate “where we do not add value”.

Short-haul product made up 40% of sales this summer.

Meanwhile, Long said long-haul sales are booming, with the weak dollar making far-away destinations more attractive. He claimed it is around £200 cheaper to book a long-haul four-star all-inclusive package than a comparative holiday in the Balearics.

“A two-week holiday in the Caribbean is now cheaper than in Majorca,” he added.

Medium and long-haul sales for summer 2005 are up 33% and 54% respectively for summer 2005, with short-haul “flat” at -1%. Specialist holiday sales are up 45%, with activity breaks up 27%.

Long said its “strong order book” for next year demonstrated the destination mix was right. Destinations selling well include Cozumel, the Bahamas, the Dominican Republic and Orlando.

Long is also confident of increasing operating margins to 5% across the group from 4.2% by 2007.

Specialist businesses accounted for 50% of group profit at £24.6 million, up 19% on the previous year.

There are internal targets to expand its specialist range – which includes operators Hayes and Jarvis and Sovereign – to 66% of profit, but no deadline has been given.

The mainstream sector recorded an operating profit of £48.5 million, up 6% year on year.

Long said the company had also eliminated losses within its Canadian business and Island Cruises.