Tourists seek alternative to sun and sand: Exchange rate provides timely assistance for package-tour operators hit by recession and worst trading summer in 18 years

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The Independent Online
BRITISH tour operators are hoping that the rising strength of the pound against the US dollar will provide a much-needed boost to the ailing fortunes of the package holiday industry.

Britain's biggest operator, Thomson Holidays, announced yesterday that it is cutting the price of holidays to Florida by 8 per cent for next summer and is offering child places from pounds 99 to attract early bookers.

Owners Abroad, Britain's second biggest operator, announced last week that it will be doubling its Florida programme from 50,000 to 100,000 holidays.

However, Airtours, Britain's number three company, has said that it is 'slightly reducing' its Florida programme - claiming that the US destination will not enjoy the success next year that many are predicting.

'People will not go to Florida every year in the way that they go to the Mediterranean every summer,' said George Marcall, the marketing director of Airtours.

The excellent dollar exchange rate - the best it has been for more than a decade - is about the only good news at the moment for Britain's hard-pressed tour operators.

After the toughest year in the travel business since the collapse of Court Line 18 years ago, Thomson Holidays has warned that there will be further casualties this summer.

Launching Thomson's programme for next summer, Charles Newbold, its managing director, said that at least 'one or two companies' were unlikely to last until the end of the season.

All holiday companies have suffered this summer, not so much from poor bookings but from too much capacity. Following the collapse of Intasun last year, and an expectation of a consumer boom in the wake of the Conservative win in April's general election, there was a dramatic increase in the number of package holidays available.

At the beginning of the year, tour operators were hoping to sell more than nine million packages; it now looks as if the total sales will barely exceed 7.5 million.

With supply heavily exceeding demand through June and most of July, tour operators were forced to make holidays available at low prices; return flights to the Mediterranean were offered from as little as pounds 49.

The price war has affected the profitability of the whole industry, forcing a number of companies into bankruptcy. 'I have no sympathy for them. Their commercial incompetence has weakened the entire industry,' Mr Newbold said yesterday. But, while Thomson has been quick to blame rival operators for the industry's problems, other operators are equally critical of Thomson.

Dermot Blastland, managing director of Owners Abroad, said that as market leader Thomson should have performed well in this difficult year.

Mr Blastland said that confidential industry statistics show that Thomson lost four market share points this summer. 'The fact that Thomson slightly lost market share shows that it is losing touch with the changing package holiday market.

'Thomson's brochures reflect the market as it was in the late Seventies and Eighties: mostly hotel holidays in Spain. People are asking for much greater flexibility,' Mr Blastland said.

Evidence from the Government's Central Statistical Office supports the view that the British public is retreating from the traditional sun-and-sand package holiday. International Passenger Survey figures published last week show that in 1991 the number of package holidays sold fell by 7 per cent to 10.6 million, while the number of independent travellers increased to 13.9 million.

While the tour operators have had trouble filling charter flights this summer, ferry companies have been reporting brisk business in cross-Channel, self-drive motoring holidays. With the Channel tunnel due to open next year, the trend towards independent travel seems certain to accelerate.

This year tour operators have managed to maintain sales through low prices, effectively buying customers and so disguising the real slump in the package holiday market.

Thomson is continuing to place the emphasis on low prices in its bid to attract early bookers for summer 1993. Average prices for next year have risen by 3 per cent, but the company says that it has cut the prices of 500,000 holidays - and is offering savings on regional flight supplements and 'thousands' of free child places.

The continuing emphasis on promoting cheap holidays will dismay the main Mediterranean holiday destinations.

The Algarve region of Portugal, for example, has particularly suffered from the promotion of cheaper holidays. It estimates that it now makes 50 per cent less from each British tourist than it did 10 years ago. The region's tourist board complained last month that the tour operators were sending tourists who were happy to live off plates of chips and tomato sauce.

The major operators, anxious to restore larger profit margins in order to please shareholders, are hoping that next summer's total capacity will be reduced. Thomson will offer the same number of holidays as it did this year: 2.25 million.

Airtours has also said that it will not be increasing the size of its programme, while Owners Abroad will announce today that it is cutting capacity by 5 per cent.

It remains to be seen whether smaller operators will follow suit. If anyone threatens Thomson's market share, the company warns that it will react strongly. Mr Newbold said: 'We have drawn a line in the sand. We're not going to be pushed back. There is no choice for us: either we surrender and close up shop or else we fight.'

With summer 1992 almost over, holiday companies will now have to concentrate on promoting sales of winter holidays.

Thomson has admitted that sales of skiing holidays are depressed, with sales of ski holidays to America particularly slow. With the recession affecting the South - the traditional heartland of British skiers - operators are certain to have a difficult time.

(Photograph omitted)

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