View from City Road: A holiday in hypeland

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The Independent Online
Holiday price war or publicity stunt? The knee-jerk fall in Airtours and Owners Abroad shares last week suggested the former. But common sense has prevailed and the fall has been corrected. Even travel industry executives are owning up that it was all hype. As one pointed out, there are two ways to market your holiday brochures: make out there's a price war and get the gullible press to do your advertising for you; or don't imply heavy discounting and so pay for your own advertising. Now which route do you think travel firms are going to pursue? The costs of one or two genuine discounts in the brochures are more than re-couped by the free advertising on the front pages of national newspapers.

Just as cynical is the way prices are artificially boosted so the travel trade can claim an even bigger discount. The 1995 summer brochures that came out last week are just the first editions. There will be second, third, and even fourth editions. Watch out for a subtle rise in prices. It happens every year, although perhaps the difference this time is that the cheap deal illusion has been the biggest yet. The Consumers' Association has already warned that what the holiday firms give with one hand they take with the other. The introduction or raising of compulsory insurance charges by travel companies can wipe out a discount. Real travel industry price wars - the selling of holidays below break- even - never occur over forthcoming holiday seasons. They take place in current seasons as firms desperately unload hundreds of thousands of unsold trips.

So what is happening this summer? There are about 1.2 million holidays unsold, a relatively small number and one that suggests the industry has got the balance between supply and demand about right.