Eerie silence as bookings slump
Comment by Jeremy Skidmore (www.jeremyskidmore.com)
It’s one of the worst booking periods in living memory and, not surprisingly, little can be heard from many of our spokespeople.
The industry’s rent-a-quotes are suddenly avoiding the press and abandoning talk of expansion, flotation and world domination. In football parlance, ‘it’s all gone quiet over there’.
What has really made this summer so dreadful for companies selling holidays? The sun may be shining, or trying to, but there’s hardly any sign of a repeat of ’77 which, incidentally, was just called a damn good summer. Now it would be confirmation of global warming.
People are booking late, but they’re still booking holidays and plenty of them. The statistics show that more people book more holidays more often than ever before.
Of course, millions are happy to make their own arrangements. TUI told us again this week that they are restructuring their business and now selling 60 per cent of their holidays online. To me that seems an incredible statistic, but I’m sure they can back it up.
However, don’t imagine that online is the holy grail. Many accommodation-only sellers on the internet, the very people who you would expect to be thriving, are having a terrible time.
Meanwhile, Ryanair chief executive Michael O’Leary has warned that demand will soften for no-frills flights.
The truth is that across almost every sector there is massive overcapacity, driven largely by the no-frills airlines.
Thank goodness the big four are becoming two and will at least be able to hide any difficult figures this year in the overall cost savings made from merging.
In years gone by, when demand was poor, Thomson would flood the market with cheap deals and see who had the biggest balls. Invariably they did, they rode out the storm and others either clung on for dear life or went out of business.
Now, it’s not the tour operators who call the tune, but the airlines. Ryanair has made it absolutely clear that its strategy during a tough market is to be ever more aggressive. O’Leary says that ambitious growth can only be delivered by discounting fares and reducing yields.
He believes that those with the deepest pockets who keep offering the cheapest prices will come through the crisis.
So, it’s not the consumer that will lose out, but operators to areas served by the airlines.
Softer demand will lead to ever lower prices for a public that has been fed a diet of ludicrously cheap holidays in recent years.
Of course it will end in tears for some. As Sunvil’s Noel Josephides says, we are an industry in complete chaos that doesn’t know where to turn next. The only companies that seem to be surviving or thriving are those in a niche market.
We will see more casualties, of course, but that is a necessity if we are to see any kind of stability in the market.
Jeremy Skidmore
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