Impact of credit crunch?

Saturday, Oct 11 2008 by

It will be interesting to see what the impact of the current crisis will be on Thomas Cook's operational trading performance. Clearly, on the one hand, UK discretionary spending will come under major pressure but, to counteract that, I can see 2 effects:

1) Supply capacity is coming out of the market following the collapse of XL Leisure - http://www.ft.com/cms/s/0/d8073a4a-812c-11dd-82dd-000077b07658.html

2) Indications are that holidaymakers were switching to package holidays in order to be financially protected in the event of a failure - http://www.telegraph.co.uk/travel/travelnews/3171511/Holidaymakers-return-to-travel-agencies.html.

 

"Holidaymakers are returning to traditional booking methods and visiting travel agencies again because they believe they offer more security during the economic crisis... The move back to travel agencies is significant. In the past two years, TUI and Thomas Cook, Britain’s two largest operators, have between them shut 250 shops".

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Thomas Cook Group plc is a holiday company. The Company's segments are United Kingdom, Continental Europe, Northern Europe and Airlines Germany. Its hotels and resort brands include Sentido, Sunprime, Sunwing, Sunconnect, Smartline and Casa Cook. It has airline operations in Belgium, Scandinavia and the United Kingdom. It has a fleet of over 90 aircraft under the Thomas Cook Airlines and Condor brands. It operates from approximately 20 source markets in Europe and China. Its Sentido brand has operations in Germany, Austria, Switzerland, Belgium, Hungary, Poland, Netherlands and Czech Republic. Its Smartline brand has operations in Germany, Austria, Switzerland, Belgium, Hungary, Poland, Netherlands and Czech Republic. Its Thomas Cook brand has operations in Germany, Austria, Switzerland, Belgium, Hungary, Poland and Netherlands. Its Sunprime Hotels brand has operations in Germany, Austria and Switzerland. Its Neckermann brand has operations in Germany and Austria, among others. more »

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2 Posts on this Thread show/hide all

Murakami 11th Oct '08 1 of 2
1

Interesting article on that theme here actually - business.timesonline.co.uk/tol/business/marke...

It also raises the question about fuel costs and the threats that this poses to Thomas Cook and TUI, although it argues that this will be less of an issue - "While fuel accounted for about 50 per cent of XL’s costs, thanks to its high proportion of flight-only business, it represents an estimated 15 per cent of the big two’s costs". 

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Murakami 11th Oct '08 2 of 2

Another potentially negative factor could be the shift in consumer preferences back towards domestic tourism. I don't know the split for Thomas Cook but I would assume that they are much geared towards international travel.

This article is interesting, suggesting that it will be a record year for domestic tourism: tinyurl.com/44pley

“People will still want to go on holiday, but they are likely to take short breaks closer to home, as and when they can afford it. It will be a case of 'pack up the car and go'."

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