Travel trade bookings plunge

Holiday hiatus: Small operators face collapse while giants prepare to slash capacity

The British travel industry yesterday disclosed that it has suffered a further slump in bookings that could force holiday companies to drastically reduce capacity next year and drive smaller operators and travel agents out of business.

The potential crisis follows industry figures which show that 1996 bookings are down by more than 30 per cent on this year.

Cumulative figures to September show bookings at Thomson, Britain's largest tour operator, are down 40 per cent. Bookings at Airtours, the second- largest group are down 50 per cent, while those at First Choice show a 6 per cent drop.

Shares in both Airtours and First Choice fell yesterday although the latter denied that the bookings slump might jeopardise its pounds 44m rights issue.

Although autumn is traditionally a quiet time for holiday bookings, the industry is looking nervously to the key January period, when many summer holidays are traditionally booked.

If bookings for summer 1996 do not pick up then, holiday companies will be forced to reduce capacity further. This follows a nightmare summer for holiday companies when travel groups overestimated demand and were left with a million unsold holidays. These were then heavily discounted.

Larger operators such as Airtours and First Choice have already said they will reduce capacity for 1996 by 10 per cent and increase brochure prices by around 8 per cent.

But for smaller travel companies, many of which have already experienced poor trading this summer because of the heatwave, it could be the final straw. "Some of the smaller companies might find it difficult," a spokesman for the Association of British Travel Agents said. ABTA said many smaller companies were already feeling the squeeze as suppliers' bills were arriving, while bookings were weak.

The figures on low 1996 bookings confirm the trend towards the late booking of holidays, which destabilises the industry. Holiday companies prefer customers to book holidays early as they can earn interest on the cash. Early bookings also tend to be made at the full brochure price, while last-minute deals are usually sold at a discount.

Tour operators were saying yesterday that the slump in bookings appears worse than it really is because the 1996 brochures were launched in September this year rather than in August. This means travel groups have had less time to sell the holidays. Other factors include uncertainty ahead of next month's Budget. "There is no panic," one said. "No one will really do anything before they see what January is like."

Tour operators say holidays in Spain - nearly half the market - are selling poorly. Cyprus is another poor performer. Winter sun holidays have been selling poorly.

The crisis follows the hot summer that has ravaged the travel trade's profits, with many British people choosing to bask in the sun at home rather than book overseas holidays.