Profits warning from Airtours

Travel trade: hot weather claims first victim

The long spell of hot weather claimed its first significant victim in the travel sector yesterday when Airtours, Britain's second-largest tour operator, issued a profits warning. Airtours, which has grown rapidly in the past five years, said profits for this year would fall by around 25 per cent. The shares, which stood at 440p as recently as May, finished 14p lower yesterday at 345p.

Airtours chairman David Crossland, who has seen the value of his shareholding fall by nearly pounds 30m since the hot spell began, blamed the problems on the weather, fragile consumer demand and excess capacity in the UK travel sector, which had affected margins on holidays. Mr Crossland said the difficulties were not confined to Airtours. "Most of our competitors have similar problems," he said.

First Choice, the third-largest tour operator, which has also seen its share price slump since May, said: "The hot weather is not encouraging people to take overseas holidays. The late-bookings market is very competitive, although it is too early to say what the rest of the year will look like."

Thomas Cook, the travel agency group, said its sales were similar to last year's but admitted that the warm weather had affected last-minute deals. As many UK holidaymakers decide to stay in Britain rather than travel to the traditional resorts overseas, tour operators have been left with a surplus of 500,000 holidays. Mr Crossland said late-booking prices had been cut even further as a result. A holiday that would have cost pounds 280 last year could be booked for pounds 250 this summer, he said.

The fall in demand has wrong-footed the travel industry, which had forecast that demand would increase by 5 per cent on last year to 10m packages. In fact demand has stayed flat. Mr Crossland said that Airtours was now forecasting continued weak demand and expected only 9m packages to be available next year. Prices are expected to rise by around 8 per cent next year, thanks to the rising cost of accommodation and increased brochure print costs following the rise in paper prices.

Though travel agents and tour operators are seeing profits evaporate in the heat, British resorts have been enjoying record visitor numbers. The English Tourist Board said: "Seaside resorts around the country are enjoying a boom season. People who might normally have booked an overseas holiday at the last minute have realised that there is probably better weather here. Also, they don't have to worry about foreign currency, getting jabs, or problems at airports."

Airtours had been expected to make profits of pounds 75.8m this year but analysts have now downgraded forecasts to a range of pounds 57m-67m.

The company announced yesterday that it is paying pounds 37.6m for Sunquest Locations, a Canadian tour operator which carried 270,000 passengers last year and made profits of pounds 3.6m on sales of pounds 197.8m. Airtours said the contra-seasonal nature of the Canadian business should make the balance of earnings more even throughout the year.

Comment, above

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map