Package holiday bargains sell out

Cheap deals: Last-minute giveaways scarce as tour companies vow not to repeat last summer's suicidal discounts

Anyone looking to match 1995's last-minute package holiday giveaways could be left kicking their heels at home, according to two of Britain's largest tour operators.

Airtours and Thomson believe that a combination of discounts for early bookers and a sharp fall in the number of holidays on offer has foiled the bargain hunters.

Harry Coe, the finance director at Airtours, said that lower capacity had led to fewer bookings - down 16 per cent on last year - but that it had also put an end to the suicidal discounts that had stung the industry last summer.

"If you walked down the high street last weekend and looked at the prices being demanded for departures in August, you'd have seen prices were pounds 60 higher than was the case at the same time last year.''

A typical example was a fortnight on the Costa Brava, on offer in high- street travel agents for more than pounds 300, compared with an original brochure price of pounds 350. Last year the same booking might have been as little as pounds 225, said Mr Coe.

Thomson claimed to have given only half as many discounts this year as in 1995, with much smaller price reductions.

In recent years the holiday market has been dogged by job insecurity, hot summers at home and an increasing weariness with tacky, over-developed holiday destinations. Now more upmarket holidays, including long-haul trips and cruises, are the most buoyant area of the market.

Tour operators are still licking their wounds from a disastrous 1995, when 10 million holidays failed to find enough buyers.

By August last year the likes of Airtours, First Choice and Thomson were giving away breaks at prices that barely covered aircraft charter and hotel block- booking.

Profits at leading companies plunged and they vowed last autumn not to make the same mistake again. This summer, capacity has been cut to 8.5 million holidays. Mr Coe said it means customers have found it increasingly difficult to buy the holiday they want.

As a result of smaller discounts, many are plumping to pay full price for a named hotel they can see pictures of rather than take a chance on an unnamed venue for a saving of maybe only pounds 40.

The tone was set for this summer when Thomson introduced "fluid pricing" last autumn. It rewarded early bookings with discounts and promised higher prices as summer approached. The threat to holidaymakers was that hanging on would increase the cost rather than throw up the bargains they had come to expect.

A spokesman at Thomson said: "It was such an obvious idea, it is amazing really that no one had thought of it before."

Airtours added a new twist to the cut-throat battle for a share of the package market this season when it launched its summer 1997 brochures at the beginning of July, before many holidaymakers had left for this year's trip. The move caused a furore in the travel business, with agents complaining they were being forced to sell holidays for three seasons at the same time.

Yesterday, however, Airtours claimed the tactic had been an overwhelming success, giving it 50 per cent of the holidays so far sold for next year.

The spokeswoman for Thomson said the claim was meaningless, as it had only launched its own 1997 holidays last week. She said Thomson had sold more holidays in three days than Airtours managed in the whole of July.

Mr Coe said it was too early to suggest a return of the feel-good factor to the holiday market. But he said more costly holidays, including trips and cruises to faraway destinations, were the most expansive area of the market.

Analysts said the holiday companies appeared to have made a better fist of matching supply and demand this year but they questioned whether the industry had really cured itself of its volatility.

Rising profits, they said, would inevitably lead to more capacity, increasing competition and the return of the last-minute bargain.

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