Published on Wednesday, February 6, 2013

Dozens of travel firms on brink of collapse

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said: "As seen with the recent closures and administration of big high-street stores, these were all victims of outdated business models.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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  • travel agents lack knowledge? red rag to a bull!

    Hi Paul, my god this debate about 'who is best' does go on a bit, and its been boring us for over 15 years now of my 35 year career in travel (excluding my business and geography degrees of course!). Retail agent/internet tour op/internet agent/big tour op/small tour op/specialist tour op/consumers own research....etc etc. Does it really matter? Because in a changing market place (and rapid change hasn't as we're led to believe been a purely recent phenomenon, in the 70's when I started my career working for Intasun Holidays it was changing dramatically) there will be winners and losers. There will be those that adapt and those that don't- no different to David Attenborough's programmes on animal adaptations really. There is likely to be room for all of us (or most of us), but only those who are committed to hard work, perseverance, dedication, enthusiasm, customer service, mixed in with a little enjoyment (without that we may as well all give up now!) There will be those who have great knowledge of individual destinations like you Paul, just as there will be those consumers who bleed this knowledge from you to go and book a cheaper alternative elsewhere. We cannot stop this, and we cannot claim to enjoy it, but it will happen because there is little loyalty and certainly little good in most peoples nature when it comes to 'saving a few bob', there never has been and never will be. But lets have a bit less of the running each other down, We are all there to make a living in a market no more competitive than it ever has been , must as we'd like to think it. Your own comments in this thread Paul do make sense now that i see you are an Internet small specialist op. You obviously consider agents generally pretty useless beings, incapable of adapting to a high tech business environment, and incapable of having a knowledge of Kefalonia which you have obviously built up over many decades. I do not wish to change your ingrained opinion as it must be based upon your own experiences, and i think we have all had experiences of useless tour operators just as you have had experience of useless agents. In my own case I cannot claim to have recently phenomenal growth in sales, but i have a good client base which i carefully select (yes-I select them!) and have found this to sustain a reasonable growth for less effort, producing a less stressful workplace, and allowing me time to spend with my (rapidly growing) children at the weekends when they are at sport and play. That is what matters to me! One piece of advice though Paul, if I may be so bold as to offer it to such a fountain of knowledge. I have dealt with many excellent small specialist operators in the past who have sadly fallen by the wayside. Sometimes it is because having 'all your eggs in one basket' is very risky (whitehall leisure, which specialised for decades in Lanzarote is a case in point), and sometimes because limited growth opportunities in one destination leads them to expand into areas they have less knowledge of, diluting their expertise and losing their USP. So a purely Internet based operator for one destination is a very risky business model,and one which as an agent, were you even to consider this route (doubtful) I would be wary of offering my clients anyway. I do hope for your sake that the political situation in Greece ensures the stability of a region which is crucial to your success.

    By derek small, Wednesday, February 13, 2013

  • Not quite so Emma

    Emma, in many cases what you say is true. However not always so. We for example can only be found on the Internet and we only offer one small Ionian island (Kefalonia) we do not advertise in any paper or magazine anywhere, but I defy any high street travel agent to have our expertise, experience and knowledge of our market place. We are so committed to our product we have invested our own money in the island and own a property there. Few can claim that.

    By Paul Davis, Tuesday, February 12, 2013

  • Bucking the trend

    Its always sad to see a company go under but we are happy to report that we are having a bumper year so far with bookings almost treble what they were last year. The Olympics hit us hard as foreign trade was frightened off by the media writing scare stories of astronomical hotel prices and gridlock in the capital. As the article says, adapting to change is the key to success. Offering more tours in Europe and getting the best out of social media has worked for us. In answer to kucing kools comment, whilst it is easy now to put your own basic holiday together i.e a flight and a hotel, if you want to be sure of a great holiday, experience and knowledge can't be found on the internet and this is what we trade on.

    By Emma Burton, Tuesday, February 12, 2013

  • Plimsoll Reponse

    Hi there, I'm writing from Plimsoll Publishing in regards to the article above. Firstly, thank you for using the article. We would like to point out that we are not saying that dozens of travel firms are on the brink of collapse. Our press release was titled "Tour Operators struggle in a healthy market" and this was used to analyse our measured analysis of each of the UK's top 1000 tour operators. The report is designed to help those looking at the industry to understand the challenges in the market and who is winning and who is losing. The report shows great variation in the performance of the many companies and contains an individual analysis of each allowing them to be judged separately. As well as the 77 companies who are struggling, the article relates to 50 firms that are doing well within the industry. If you have any other questions or comments, please leave a message. Many thanks for your time.

    By chris glancey, Thursday, February 7, 2013

  • Bigger Smile!

    I rest my case y'onnour!

    By Paul Davis, Thursday, February 7, 2013

  • no prob for me

    It's a no problem for me if there will be less of these travel operators.. in this day and age, one can just consult the internet for travel information and tips.. no need travel operator staff to lure you into travel packages that only costs you more money when you can just buy ticket from an airliner and arrange all bookings yourself.. Me and family never use these operators, we are happy to arrange ourselves for local and overseas trips since the last 2 decades or so..

    By kucing kool, Thursday, February 7, 2013

  • Thanks for the smile Derek!

    I quote, "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." I read that as both large travel agents and tour operators, true the line between the two is blurred in some places. But happy to be corrected if need be.

    By Paul Davis, Wednesday, February 6, 2013

  • operators or agencies at most risk?

    Paul I must admit to being a little confused by your comments. The analysis from Plimsoll seems to refer to tour operators, yet you are only referring to agencies in your comment. Are you saying that travel agencies have been slow to react to changes and therefore it's not surprising that tour operators are at risk? And restrictive practices don't surprise me at all. Isn't the biggest operator of them all pretty much only offering hotels they can contract as sole supplier to the Uk market? Obviously this must be to maintain standards of their portfolio, not at all to avoid price competition?

    By derek small, Wednesday, February 6, 2013

  • Seen it before.......

    I am not surprised, and the sooner they all go the better for the industry. I have seen it all before with the motor trade when dealerships failed to react competitively to tyre and exhaust specialists cropping up everywhere. The net result is unless it is on warranty who goes to a main dealer for new tyres or exhausts these days? They are too expensive and generally lack the knowledge of a specialist. The same principles apply to the travel industry, the agencies have been slow to react to changing business practices and more seriously customer buying habits. Then tried (as recently seen in another thread here) to threaten and bully their way back into the market place. Won"t work, never has and never will. However, nothing surprises me more when it comes to restrictive practices while recently in Tesco (this morning) whilst having a coffee in Costa coffee, my phone bleeped me to the effect someone has made a post on my travel blog. I opened my phone browser and it automatically went to my own web site first by default.....only it didn"t. I got a very polite notice from the Tesco Wi-Fi service saying connection to this site is blocked. I was amazed, could I not connect to my travel site because most Tesco stores have a Virgin Holidays shop these days? If so, it is short sighted and stupid. I know Richard is listed as following my blog, there will be comments made!

    By Paul Davis, Wednesday, February 6, 2013

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