Holidaybreak imposes cuts at Superbreak and Explore
Tuesday, 18 Feb, 2009
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Holidaybreak has been forced to make cuts worth £2 million at its Superbreak and Explore operations.
The education, leisure and activity travel group said it was seeing later bookings during the economic downturn.
The adventure travel division’s managing director Simon Tobin is to step down at the end of February and his role will not be replaced, the company disclosed.
Group chief executive Carl Michel will chair the adventure travel division and the managing directors of its individual businesses will report to him.
Former British Airways chief executive Bob Ayling’s second three-year term as Holidaybreak chairman comes to an end in June when he will retire from the board and a successor is being sought.
A further announcement will be made when appropriate, the company said.
Michel said: "The group’s current trading performance is creditable given an unsettled and unpredictable consumer environment.
“More than ever this year will be about providing unique products, value for money and exceptional service to our customers. We will benefit from the strength of our well-known and respected brands.”
He described overall trading as being “broadly flat” for the year to date while the market is booking later than usual.
“Nonetheless we are seeing benefits from our sales to eurozone-based customers, from our prudent expansion of our education division, and from overhead savings already implemented,” said Michel in an interim management statement for the period October 1, 2008 to February 17.
“We anticipate performing in line with management expectations for the year ending 30 September 2009."
Sales for the hotel breaks division, which includes Superbreak, is 10% below last year.
“We have taken out about £1 million of costs in the current year at Superbreak, primarily through headcount reduction,” the company said.
“For the summer we are seeing some growth in UK short breaks and a decline in demand for European destinations, reflecting the weakness of sterling. The net effect is modestly positive, despite lower average booking values.”
Adventure Travel, the smallest division, is 61% booked with sales up one per cent on lower volumes.
“Demand for adventure trips has been adversely affected by higher prices due to the strength of both the Euro and US$, although certain non-euro destinations, such as Turkey, are performing well,” Holidaybreak said.
“We are expecting a later booking profile as customers defer big-ticket expenditure. To mitigate for the weaker demand and reduced margins due to adverse currency movements and inclusion of ad-hoc local payments, we have taken out about £1 million of costs in the division, mostly at Explore.”
Capacity in the camping division has been cut by around four per cent for this year and sales are down by five per cent, with approximately 62% of sales booked compared to 67% last year.
“Our research suggests that a high proportion of last year’s UK customers are planning to book later in 2009 than they did in 2008. We continue to focus on improving occupancy and yields remain strong and in line with target,” the company said
“We are experiencing weakness in trading in Ireland (historically about seven per cent of the business) as a result of the very difficult economic environment.
“However, the strength of the euro will increase the sterling equivalent yields from Dutch and German bookings, thereby underlining the trading resilience of this division.
“Overall, we remain confident on our high season sales but there is some uncertainty about low season given the later booking trends. We continue to broaden the range of our Camping offer, introducing new destinations in the United States, and have, for this summer, a number of safari tents on test.”
The education division, which accounted for around a quarter of 2008 group revenues, is 85% booked for 2009 and 14% for 2010, in line with previous years.
Sales for the division are currently 13% above last year including a contribution from EST, acquired in June 2008. On a like-for-like basis divisional sales are up 7% over last year.
“We have not detected any material signs that the division is being affected by the recession,” Holidaybreak said.
The annual general meeting will be held next Tuesday at The Lowry Centre in Manchester.
Interim results for the six months ending March 31 are due to be released on May 18.
by Phil Davies
Phil Davies
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