Current indications are that this year's summer holiday market will be even worse, but the runes are becoming much harder to divine. Independent figures suggest bookings in January, traditionally an important buying period, were down by anywhere between 13 and 25 per cent. If carried through to the summer, that trend would mean a massive 2.5 million people had suddenly decided not to take a foreign holiday this year.
It is hard to believe that the leisure patterns of the average Brit have changed so radically in the space of just 12 months. The "feel good" factor may still be largely absent, but if anything the background has improved, given tax cuts in the last Budget and lower mortgage rates.
More likely, holidaymakers are growing accustomed to waiting to the last moment to book. Over the past few years, the industry's notorious inability to forecast capacity has led to huge discounting in May and June as the tour groups desperately unload excess holidays to recover at least some of their costs. As a result, savvy consumers may be shifting their peak buying season for holidays to later in the year.
But if the industry is to be believed, they may be in for a rude shock this year. Airtours and First Choice have already said they will reduce capacity by between 15 and 16 per cent for this summer, a cut that the much smaller Inspirations group said yesterday it would match.
If their forecasts turn out anywhere near accurate - a big if on past performance - the squeezed capacity means that supply and demand should be in better balance and those hoping for late bargains will be disappointed. That should help protect margins, which, at around 6 per cent typically, are hardly fat at the best of times.
Although the two big groups appear firm in their commitment to cut further if conditions dictate, they are limited in how far they can go by the need to protect market share.
Airtours says the market has recovered, but with its own bookings currently down 30 per cent, that only highlights its own plight and helps explain this week's pounds 200m deal to sell a 30 per cent stake to Carnival, the US cruise line. A profits recovery to around pounds 77m this year would put the shares, up 10p at 460p, on a forward multiple of around 12. First Choice, where bookings are down a more modest 14 per cent, is on a similar rating, assuming it achieves pounds 26m in 1996 with the shares unchanged at 69p. Not dear, if the industry gets its act together this year, but past history suggests it won't.