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The holiday company that made Europe our summer home

The demise of the Travel Club of Upminster marks the end of the package holiday era, says Simon Calder

The year was 1936. Foreign holidays were unthinkable for the vast majority of the British populace. Along came a ground-breaking travel company founded by a husband and wife and all that changed – the package holiday was born.

The Travel Club of Upminster opened up the Algarve as a holiday destination and laid the way for hundreds of successful imitators, but this week, after 74 years, it went into administration, unable to keep pace with the rapid change in the travel industry and the fickleness of holidaymakers. The firm’s demise ends an era in British holidaying history, and book-ends a second dismal summer for the travel industry’s outbound package holidays to Europe.

The package holiday was borne of a wheeze from a 23-year-old born into poverty in Canning Town, east London, who had acquired a passion for cycling. In 1936, Harry Chandler placed a small advertisement in The Daily Telegraph and The Times: “Young man going to Bavaria willing to take paying guests: 10 guineas, two weeks.” He needed 15 passengers to get reduced fares on the train journey and a free place for himself. He only attracted five people, but the germ was planted. He and his wife, Rene, set up the Travel Club of Upminster.

After the obvious logistical problems thrown up by the Second World War, their firm expanded across Europe – their initial package was from Bournemouth to Basel for 42 guineas (£44.10). Chandler is thus credited with inventing the package holiday.

The couple ran the first holidays to Portugal in the early 60s. Their son Paul, who took over the business but sold it to investors two years ago, yesterday recalled: “When we put the first charter flights into the Algarve in 1966, we served smoked salmon and steak on board. It was a world away from today's no-frills airlines.”

The southern shore of Portugal had two big advantages in the 60s: near-guaranteed sunshine, and the absence of other holidaymakers. Most locations on Mediterranean shores had a ready-made Continental catchment: Swiss and German tourists could easily access the beaches of Italy, while holidaymakers from northern France and Belgium headed to the Cote d'Azur or across the Pyrenees into Spain. British visitors were at a disadvantage in terms of both time and distance. But southern Portugal was off the map for holidaymakers from Europe’s industrial north until Faro airport opened in 1965, allowing the Travel Club to snap up beds for next to nothing.

In the early days of the package holiday, tour operators such as the Travel Club of Upminster, Horizon and Gaytours operated to a revolutionary business model that opened up Europe. The British holidaymaker was liberated from dismal weather and joyless seaside resorts, lured to the Med by fully inclusive holidays that "sweated" expensive assets to the maximum. In order to benefit from low prices, customers did what they were told - enabling operators to fly charter aircraft intensively, and fill hotel beds week after week.

Paul Chandler was eight when, in 1958, he was taken on his first foreign holiday, to Torremolinos, by his tour-operator father. “It was the end of austerity and the start of the golden age of holidays," he remembers.

Stephen Bath, the managing director of Bath Travel and a former president of the travel association Abta, is the son of another pioneering tour operator. He recalls that local businesses were desperate to entice the British: "In Spain, my father was feted as the new Messiah.”

At the time, only a small proportion of the population had ever been abroad - which, says Mr Chandler, led to some challenges. "We were the first to do car hire in the Algarve, and people would ask, 'What sort of car is it, because I can only drive a Ford?'."

In an era when international communications were fraught with problems and expense, tour operators offered immensely valuable expertise as well as good value. They also offered reassurance to British travellers with a thinly veiled suspicion of abroad, in the form of the holiday rep - today, an endangered species.

Standards were often basic: when Horizon launched its first package holidays to Calvi in Corsica, the accommodation was in former US Army tents. But at a time when sterling was reasonably strong, prices abroad were seductively low.

"We used to print in the Travel Club brochure a weekly shopping list comparing Upminster with the Algarve, showing how a basket that cost £5 in Upminster would cost only £2 2s [£2.10] in Portugal," said Mr Chandler. "Today it would probably cost more in the Algarve."

Throughout the 1960s, the package-holiday market expanded in parallel with increasing disposable income. Even the imposition of a £50 limit on spending abroad, part of a vain attempt to defend the pound, failed to dampen the British appetite for sun and indulgence on the cheap.

Between 1960 and 1967, the number of Britons going abroad each year soared from 2.25 million to 5 million. But by the early 1970s, independent travel had begun to blossom: the Hitch-hikers' Guide to Europe and the first Lonely Planet guide appeared. In 1974, the Miners' Strike combined with an enfeebled economy and the Middle East oil crisis to bankrupt numerous holiday companies failed - including the giant Court Line, which left 40,000 British holidaymakers stranded abroad.

Last year the number of British package holidaymakers to Europe fell by almost a quarter compared with 2008 to 10.7m - the lowest figure for a generation. The slump will likely continue when figures for this year are published. The recession and the weakness of sterling have had some impact on the British propensity to travel abroad. But what has really hit the package holiday model is that holidaymakers can access a vast inventory of aircraft seats, hotel beds and rental cars online. While they surrender the consumer protection offered by the traditional package holiday, many travellers believe that the flexibility and savings gained outweigh the risks.

"Life today is increasingly difficult for tour operators selling seven- or 14-night holidays," says Stephen Bath. "The no-frills airlines have made it possible for people to travel for whatever duration suits them."

In 2010, the Travel Club of Upminster is just the latest in a series of holiday company failures. It follows the high-season collapses of Goldtrail and Kiss Flights, which affected more than 100,000 travellers. Both companies were operating at the budget end of the holiday market, which has seen chronic over-supply and insufficient demand.

Last month Thomas Cook, the UK's second-largest tour operator, was selling a week in the resort of San Antonio in Ibiza for £75, including flights and accommodation. Hoteliers contracted with Thomas Cook have learned that the company will pay only 95 per cent of the money owed to them for accommodation provided in August and September; the firm blames the decision to withhold the last 5 per cent on a range of unwelcome events from the volcanic-ash shutdown of aviation to the General Election and the World Cup.

Travel firms less dependent on package holidays are more optimistic. Tim Jeans, managing director of Monarch – which operates both scheduled and charter flights – told The Independent that his airline has just recorded a record-breaking September, filling 94 per cent of available seats, with promising forward bookings. “Instead of the usual ‘autumn famine’, we’re looking at a very strong October.”

With rumours of the imminent failure of other tour operators, Paul Chandler, former owner of the Travel Club of Upminster, maintains "Travel professionals still put together a better package than an amateur". But he has left the mainstream industry and is now focusing on cruising - the one part of the travel business that, according to Stephen Bath, is "defying gravity" with its apparently unstoppable success. Strange, perhaps, given that a cruise is the ultimate package holiday.

Package Holiday Timeline

1855: Thomas Cook organises his first overseas expedition, taking travellers to the International Exposition in Paris.

1903: Ski Club of Great Britain founded.

1919: World's first international scheduled air service launched between Croydon and Paris.

1936: Travel Club of Upminster launches inclusive holidays by rail to Bavaria and Switzerland. Gatwick opens as the first modern airport.

1950: Horizon starts offering package holidays from Gatwick to Corsica, using former military aircraft.

1952: TWA launches the world's first discount cabin on a commercial airline. It is called "Tourist Class".

1957: A German tour operator builds the first holiday hotel in Benidorm.

1964: Fiesta Tours collapses, stranding 2,000 holidaymakers.

1965: The International Thomson Organization, a Canadian conglomerate, moves into the UK package holiday market. Its successor, Tui, remains Britain's biggest tour operator.

1967: Two British aircraft, both on Spanish charter flights, crash within 12 hours of each other, killing more than 160 people.

1974: Tour operator failures include Horizon and Court Line.

1986: First weekend package tour to Albania from Britain departs, price £195.

1991: The giant tour operator ILG, including Intasun and Air Europe, collapses.

1995: easyJet's first flight, from Luton to Glasgow.

1998: The first British tourists are allowed to visit Saudi Arabia. Women under 40 are required to travel with either a husband or a brother.

2008: XL Leisure Group, Britain's third-largest tour operator, collapses – taking with it 250,000 holidays.

2009: Year-on-year slump in package holidays to Europe from 13.9m to 10.7m, a decline of almost one-quarter.

2010: Goldtrail, Kiss Flights and the Travel Club of Upminster go into administration.