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
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
News
news
PROMOTED VIDEO
News
i100
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
tv
Life and Style
fashion
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all