Wish you weren't here?

British holidaymakers are cutting back, with shorter trips abroad and, yes, staycations. James Thompson reports

Bosses at the UK's two biggest tour operators, TUI and Thomas Cook, have always claimed that a summer holiday abroad is sacrosanct for the British. In August 2008, just before the financial crisis erupted, Thomas Cook said UK consumers would cut spending on cars, home improvement, clothes and weekend breaks before they would consider axing their two-week summer holiday.

But that argument appears to be crumbling like one of its customers' sandcastles at the beach after Thomas Cook posted dire interim figures yesterday.

The tour operator said its UK full-year results were "likely" to be lower than last year, as its underlying UK losses widened by £42.4m to £158.7m over the six months to 31 March. In short, Thomas Cook is having to offer UK customers cheaper deals to tempt them abroad.

Nick Batram, an analyst at Peel Hunt, said: "The problem is they are having to entice people into the market." While the tour operator's UK booking volumes were flat for summer 2011, its margins were lower.

But Manny Fontenla-Novoa, Thomas Cook's chief executive, was sticking to his guns. He said: "A summer holiday is still very much a priority for British people. A large proportion of people are still looking to book a holiday for this summer."

Not everyone is convinced, however. Mark Brumby, an analystat Langton Capital, said: "Despite protestations to the contrary from the tour operators, there appears to be some tangible evidence that UK consumers are giving up their holidays."

This will surprise few, given the pressure on discretionary spending from soaring petrol prices, stubbornly high inflation and recent tax increases. Last week, Roger Bootle, one of the UK's best-known economists, warned that the typical household would see its disposable income fall by 2 per cent this year.

In fact, Thomas Cook's results seem to mirror those in the retail sector, where those selling big-ticket items such as furniture and bathrooms are suffering the most.

But the real picture of UK spending on holidays is more nuanced than people scrapping their trips to the Maldives in favour of two weeks at home or on a caravan park in Great Yarmouth.

Slightly shorter holidays are one change afoot at Thomas Cook. Mr Batram says: "People are not going for 14 nights. They are going for 11 nights and clearly that has an impact on the business."

He added: "People are still going abroad but not in the numbers they were." This view is supported by the Office for National Statistics. It found the total number of visits overseas by UK residents fell by 6 per cent to 12.9m over the three months to February.

Indeed, Thomas Cook admitted there had been a "marked" shift in the destinations chosen by Brits, with the Balearics, Greece and the Canaries in vogue. This partly reflects a trend for UK holidaymakers to stay "closer to home" as they seek cheaper deals and avoid countries affected by political unrest, such as Egypt and Tunisia.

Thomas Cook said its UK summer 2011 bookings were up 14 per cent to the Balearics (primarily Majorca, Minorca and Ibiza), by 9 per cent to Greece and by 8 per cent to the Canaries. Mr Batram said: "Spanish and Greek hoteliers have priced their hotels pretty well this year and with the unsettling geo-political developments in certain locations people have looked closer to home for their holidays."

In a further sign of UK travellers wanting to limit their expenditure, Thomas Cook said all-inclusive holiday bookings were up 14 per cent, with demand for Turkey particularly strong. But overall, the margin hit on UK summer bookings, the later Easter this year and the unrest in the Middle East and Africa contributed to Thomas Cook's overall first-half losses widening by £35.6m to £165.8m. It suffered 160,000 cancellations from the travel restrictions to Egypt and Tunisia, which resulted in a £22m hit: £5m in repatriation costs and £17m in lost margin.

In the UK, however, tour operators will be praying for a sustained uptick in economic activity – because without one more people will continue to holiday on these shores.

While the so-called UK staycation has been much parodied, there now appears to be too much evidence to dismiss it as a flash in the pan.

Furthermore, April's balmy weather will have convinced many Brits to holiday on home soil this year, although they will pray that a wet summer does not materialise. Mr Brumby said: "It was only meant to be a one-year trend but now we are into the second, third or fourth year – depending on when you started counting – so it looks like the staycation is here to stay and has become embedded [in the public psyche]."

Irrespective of how Brits choose to spend their holiday, any slowdown in tour operators' sales volumes can have a negative impact on their bottom line.

Following Thomas Cook's results, Panmure Gordon slashed its operating profit forecasts for this financial year by £17m to £380m.

And unfortunately for tour operators such as Thomas Cook and other companies that rely on consumer spend, they are unlikely to see much upside until the UK economy is out of the woods. That said, the goods news is that when sustained growth returns most Brits will revert to their two-week jaunt overseas, as opposed to risking a potentially rain-soaked fortnight in Cornwall or Wales.

Mr Batram says: "I still think it is economic and geo-political led. Holidays are still a very important part of people's lifestyle and I don't think that is going to change."

News
The surrealist comedian at the Q Awards in 2010
people
Life and Style
Six of the 76 Goats' cheese samples contained a significant amount of sheep's cheese
food + drink
News
Russell Brand arriving for the book launch in East London
peopleRussell Brand cancels his book launch debate due to concerns about the make-up of the panel
Arts and Entertainment
Contestants during this summer's Celebrity Big Brother grand finale
tvBroadcaster attempts to change its image following sale to US
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
Julianne Moore and Ellen Page are starring together in civil rights drama Freeheld
film
Arts and Entertainment
Sarah Dales attempts to sell British Breeze in the luxury scent task
tvReview: 'Apprentice' candidates on the verge of tears as they were ejected from the boardroom
Voices
New look: Zellweger at Elle's Women in Hollywood awards on Monday
voicesRenée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity, says Amanda Hess
Arts and Entertainment
film

Marvel has released the first teaser trailer a week early after it leaked online

Extras
indybest
Life and Style
CHARGE BOOSTER: Aeroplane mode doesn't sound very exciting, but it can be a (phone) hacker's friend. Turning on the option while charging your mobile will increase the speed at which your phone battery charges
techNew book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone
Sport
Christiano Ronaldo enjoys his opening goal
champions leagueLiverpool 0 Real Madrid 3: Ronaldo and Benzema run Reds ragged to avenge thrashing from their last visit to Anfield
Arts and Entertainment
Awesome foursome: Sam Smith shows off his awards
music22-year-old confirms he is 2014’s breakout British music success
Arts and Entertainment
Sir Nicholas Serota has been a feature in the Power 100 top ten since its 2002 launch
art
News
Call me Superman: one of many unusual names chosen by Chinese students
newsChinese state TV offers advice for citizens picking a Western moniker
Travel
ebookHow to enjoy the perfect short break in 20 great cities
News
Wilko Johnson is currently on his farewell tour
people
News
Let’s pretend: KidZania in Tokyo
educationKidZania lets children try their hands at being a firefighter, doctor or factory worker for the day
News
i100
Voices
'Irritatingly Disneyfied': fashion vlogger Zoella
voicesVicky Chandler: Zoella shows us that feminism can come in all forms
Life and Style
health
Independent Travel Videos
Independent Travel Videos
Simon Calder in Amsterdam
Independent Travel Videos
Simon Calder in Giverny
Independent Travel Videos
Simon Calder in St John's
Independent Travel Videos
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Travel

    SCRUM Master

    £30 - 50k (DOE) + Benefits: Guru Careers: We are seeking a SCRUM Master to joi...

    Franchise Support Assistant

    £13,520: Recruitment Genius: As this role can be customer facing at times, the...

    Financial Controller

    £50000 - £60000 per annum: Sauce Recruitment: A successful entertainment, even...

    Direct Marketing Executive - Offline - SW London

    £25000 - £30000 per annum + benefits: Ashdown Group: A fantastic opportunity h...

    Day In a Page

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

    A crime that reveals London's dark heart

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
    Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

    Lost in translation: Western monikers

    Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
    Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

    Handy hacks that make life easier

    New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
    KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

    KidZania: It's a small world

    The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
    Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

    'Renée Zellweger's real crime was to age'

    The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
    From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

    Disney plans live-action remakes of animated classics

    From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
    Thousands of teenagers to visit battlefields of the First World War in new Government scheme

    Pupils to visit First World War battlefields

    A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
    The 10 best smartphone accessories

    Make the most of your mobile: 10 best smartphone accessories

    Try these add-ons for everything from secret charging to making sure you never lose your keys again
    Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

    Liverpool v Real Madrid

    Mario Balotelli substituted at half-time. Was shirt swapping the real reason?
    West Indies tour of India: Hurricane set to sweep Windies into the shadows

    Hurricane set to sweep Windies into the shadows

    Decision to pull out of India tour leaves the WICB fighting for its existence with an off-field storm building
    Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

    A new American serial killer?

    Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
    Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

    Sting to trap paedophiles may not carry weight in UK courts

    Computer image of ‘Sweetie’ represented entrapment, experts say
    Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

    Return to Fukushima – a land they will never call home again

    Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
    Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

    Wildlife Photographer of the Year

    Intimate image of resting lions claims top prize
    Online petitions: Sign here to change the world

    Want to change the world? Just sign here

    The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?