The holiday industry is bracing itself for its worst period for more than a decade as the gloomy world outlook sends bookings plunging by up to 18 per cent.

The holiday industry is bracing itself for its worst period for more than a decade as the gloomy world outlook sends bookings plunging by up to 18 per cent.

Traditionally, January and February are peak months for booking summer holidays but the spectre of tanks parked at Heathrow and the looming war in the Gulf have led many people to cancel or delay their travel plans.

Companies are reluctant to divulge detailed figures, but a survey of the industry by AC Nielsen showed that bookings in January were down an average of 7 per cent on the same period last year, which, in the aftermath of the 11 September attacks, was in itself about 10 per cent down on the previous year.

Another survey, by Advantage Travel Centres, which comprises independent travel agents, suggested that one in four people has delayed booking or considered cancelling. Companies are offering discounts, cheap flights and cost-free cancellations and alterations to lure customers.

Andrew Wallis, spokesman for Thomas Cook, said bookings were about 10-15 per cent down on last year, in common with much of the industry.

The Tui group, the country's biggest tour operator, which owns Lunn Poly and Thompson, said: "Sales have been disappointing and they haven't picked up."

Most of the holidays hit are in the eastern Mediterranean, the Middle East and North Africa; bookings to the Americas, Canaries and South Africa are less badly affected.

A spokeswoman for the Association of British Travel Agents said: "Experience suggests that bookings will come back very quickly when the situation [in Iraq] is resolved. And places out of the line of fire are still doing well."

The trade is pinning its hopes on the example of the last Gulf War in 1991 when bookings plummeted by 30 per cent but recovered to the point where the drop was only 2-3 per cent over the whole year.

However, there is one bright spot among the gloom: holidays in Britain are doing well, continuing a boom that began in the wake of 11 September. Simon Tregoning, managing director of Classic Cottages, which has properties through south-west England, said: "We saw sales increase by 20 per cent in 2002 and the picture so far is matching last year and is maybe even up a few points. The summer is looking very healthy."

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