Pay on return plan to woo holidaymakers

Travel wars: Tour operators put new long-haul deals at the forefront of campaign to win business for depressed market
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Chief Reporter

Holidaymakers were being courted from all sides yesterday, with 15 per cent discounts, low child fares and a special "go now, pay later" charter for bad savers.

Despite a decision within the travel industry to reduce availability by 10 per cent, to avoid last year's price-cutting, the big operators and travel agents are already vying for a larger share of a depressed market.

Airtours fired the latest shot yesterday by offering 10,000 child fares to Florida for pounds 199 each and pounds 349 two-week fly-drive holidays for adults.

The Airtours move was seen as a bid to grab a bigger share of the growing long-haul market. Industry experts believe that long haul - to North America, India, Thailand, Africa, South America and the Far East - offers the best opportunity for expansion while traditional Mediterranean destinations stagnate.

There is also a growing expectation that the long-haul market will benefit from an unexpected source - the Government's decision, five years ago, to introduce the Tax Exempt Special Savings Account (Tessa). In the first week of January, 4.3 million people will see the first Tessas mature, releasing pounds 25bn into the economy. Individual savers are likely to recoup a tax-free pounds 12,000 after investing pounds 9,000.

The money could provide a huge boost to a market down by as much as 20 to 30 per cent on last year.

John Sim, a spokesman for long-haul holiday specialists, Kuoni, said: "The timing of the Tessa money is good news for us. We usually do very well in January and now there are a lot of people around with money they would not normally have." The travel agents' organisation, Abta, described the windfall as a godsend.

Yesterday, Aspro Holidays, another Airtours company, put 5,000 summer Mediterranean holidays on sale from pounds 99, as well as 15,000 "child-goes- free" breaks.

In the high street, Lunn Poly announced the first "go now, pay later" scheme for travel agents. Customers are being offered the chance to make up to four payments up to a year after returning from their holiday.

Peter Povey, Lunn Poly's marketing director, said: "Our research has shown that around one person in four would prefer to spread the cost of their holiday, rather than take a discount."

However, along with rivals Thomas Cook and Going Places, Lunn Poly is offering discounts of up to 15 per cent for those who would like to pay first.

Thomson, Britain's biggest holiday company, said last-minute bargain hunters would end up paying more. It has slashed more than pounds 50m from brochure prices but predicted costs would steadily increase, until only full-priced holidays were left.

Thomson managing director, Charles Newbold, said: "We believe that the best prices should be offered to our most loyal customers, those who book early."

Tony Bennett, managing director of Going Places, which has reduced prices by up to 15 per cent, said: "We have seen a return of consumer confidence post-Budget and with strong early bookings, we expect January sales to top 2 million."

Among the Lunn Poly deals are holidays provided by Manos, Summer Sun, Sunworld Florida, Sunworld Beach Villas and Twenty's.

Destinations range from Mexico (flight and two weeks' accommodation with First Choice for pounds 692) and Cyprus (flight and one week with Twenty's for pounds 269), to seven nights in Ibiza with Thomson for pounds 89.10.

Keith Betton, spokesman for the Association of British Travel Agents, said: "The tour operators have reduced capacity by 10 per cent this year in order to increase demand and avoid having to discount as heavily as they did last year.

"Most of the discounts offered at the moment amount to about 10 per cent. It gets silly when they go to 15 per cent, effectively removing all the profits on holidays, other than the margin on travel insurance, which they make their customers buy.

"All being well, the reduction in capacity should result in a more stable industry and more sensible prices."