This year has been disastrous for the tour operators. Having over-estimated consumer demand for mass-market package holidays for summer 1995, their problems were compounded by the unexpectedly good weather which turned rainy Margate into the climatic equivalent of Marbella and encouraged Britons to holiday at home.
The travel industry’s year-round policy of discounting seems to have backfired. It has eroded already tight profit margins, and Airtours and the Thomson Group have issued profit warnings. As a result, new short-haul brochures for summer 1996 – which hit the travel agencies’ racks two weeks ago – included a ten per cent price rise. Hours later, the large travel agents – some of which are owned by the tour operators – announced discounts of 15 per cent, repeating last year’s discounting pattern.
It is a pattern that has gone on for years. And it is dispiriting for consumers who book early, only to see the holiday of their dreams available more cheaply later on. But they have begun to anticipate the waves of discounting and are changing their booking patterns, committing themselves later to exploit the desperation to fill plane seats and hotels.
And it is these canny holidaymakers that are forcing change. For so long tour operators have been complacent. As industry sources admit, it’s an incestuous business as the same old faces move from company to company. Consequently, there is little fresh thinking on how to improve the industry. Consumers have been treated as little more than a commodity, with holidays sold like tins of baked beans or toilet rolls. People are packed into the same aircraft and the same resorts by all the operators.
Tour operators claim that they are sorting out their problems by investing in branding to differentiate their products from those of rivals and by launching new deals. Airtours is offering pre-bookable duty-free and pre-bookable airline seats and is empowering reps to move disgruntled customers to new accommodation while they are on holiday rather than offering an apology on their return. First Choice has launched a brochure for the Mediterranean featuring an “all-inclusive” programme which bundles in everything from entertainment to ice creams.
But although the products are different, analysts say that tour operators face a long struggle if they are to break the late-booking mentality that consumers have adopted. They add that it is the operators themselves who created the vicious circle.