Thomas Cook reveals impact of terror attacks on bookings
Terror attacks in Sharm-el Sheikh, Paris and Istanbul hit Thomas Cook bookings in the final quarter of last year, but the operator said its current trading is in line with expectations.
It said ‘robust’ demand in UK and Northern Europe had offset tough trading conditions in continental Europe and its German airlines.
Overall bookings were down 2% in the three months to the end of December.
It has sold 82% of its winter programme, which is broadly the same as this time last year but at significantly higher prices, it said. Sales to the operator’s higher margin differentiated hotels were up and sales to its own-brand hotels increase 24%.
Its summer programme is only 29% sold, 2% behind last year, suggesting some people are putting their holiday plans on hold. With capacity cuts for summer 2016, Thomas Cook bookings are down 5% year on year, but prices are 4% higher.
The operator has pulled 29% of its Turkey programme following the recent terrorist attacks in the expectation of increasing demand for alternative destinations such as Spain, Greece, Cyprus and Bulgaria.
Chief executive Peter Fankhauser said: "We’ve made a good start to the year, despite challenging trading conditions.
"Having acted fast to offer our customers a broad range of alternatives to Tunisia and Egypt, we delivered a one per cent increase in revenues in the first quarter.
"It is clear that the awful attacks in Paris and Istanbul impacted confidence, leading some customers to delay booking their holidays. However we’ve seen clear signs of recovery in recent weeks: customers still have money in their pockets, and want to go on holiday."
Fankhauser said there was evidence that more customers were opting for packages. "In this uncertain geopolitical environment, we are also seeing more of our customers choose a package holiday, valuing the greater security it provides," he added.
"We will continue to focus on delivering our strategy – strengthening our own-brand hotels and flights offering, and investing to ensure that customers who choose Thomas Cook get consistently excellent customer service.
"Thomas Cook is now a significantly stronger and more resilient business, and we are well positioned in a challenging market. We are maintaining our previous guidance for the 2016 financial year, provided that the recent recovery we have seen in customer confidence is sustained."
The operator’s stock fell 3% following the release of the first-quarter results. Senior market analyst Connor Campbell from spreadex.com said: "It seems that investors may be concerned about the cancelling of all British flights to Tunisia, suggesting that, whilst Thomas Cook’s performance is solid, there could be turmoil ahead in the confusing and chaotic current geopolitical climate."
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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