Published on Wednesday, February 6, 2013
More than 70 tour operators are showing the same characteristics as HMV, Comet and Blockbuster, according to a review of the industry by financial analysts Plimsoll Publishing.
It said sales at 77 travel companies have declined in the last year and profitability has plummeted to such an extent that these businesses are now operating under severe financial pressure.
David Pattison, senior analyst on the project, said: "As seen with the recent closures and administration of big high-street stores, these were all victims of outdated business models. It's much the same in the tour operators market, the overall market is healthy, but these companies are falling behind.
"The tour operators market is continually adapting to the way we use technology, delivery methods and trading hours.
"These phases of the business cycle often lead to casualties. What's different this time is the pace of this change as, in the past, it's taken up to 10 years for a large company to fail, but technological changes have meant it's now only taking a few years."
Seventy-seven have seen their sales fall by up to 20%.Two-thirds are losing money and many have seen productivity fall to such an extent that they are becoming increasingly uncompetitive in a fast moving market, it said.
Pattison added: "Historically, these businesses would have been seen as good acquisitions. But today you would need to question their value and how they would sit in the future market."
However, the latest Plimsoll Analysis confirms TravelMole's article yesterday (see here) that the travel market is in a healthy state. It said sales are increasing at 7.2%, with margins sitting at 1.8%.
It said 50 companies are showing increased profitability and sales.
"The good news is if we do see job losses, it's highly likely that by moving to an up-and-coming rival, jobs will be created and the overall number of staff in the market could stay the same using transferable skills," it sad.
The Plimsoll Analysis, which is also available in an online format, provides an individual profile of each of the UK's top 1,000 tour operators. It also offers an overall financial rating on each company.
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The recent insolvency of Low Cost Travel Group, one of the large players in the travel industry had a big impact on the travelers, hotels and all related players from both wholesale & retail arms. There were about 27,000 people on a holiday who had booked through the company comprised of a €200 million wholesale arm and €500 million OTA / retail arm.