I just popped to see if you had anything on Select World Travel. So sorry to hear about it. People who booked with them will be ok as all underwritten by the Travel Trust Association but so sad to see an independent agency like that go. And one that gave so much advice to other people too.

I hope people will support their local agencies etc more, we work with a few who sell our trips amongst many others of course and they have challenges. They also say things like people treat them like a public service and then will also say they are off down the local Thomas Cook or whatever shop to save £10.

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Oh ok, assumed you’d had. Yes, very sad.

I’m now feeling more sympathetic to Thomas Cook after seeing some of the criticism. At the end of the day they hire 20k (another 10k elsewhere) people in the UK. That’s a lot more contribution to the economy than most. Tough times, we all need to help each other.

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It is really sad that Thomas Cook are struggling. I have friends who work for them – both directly and indirectly. But it is also sad that they seem so blase about another £100m of debt – but also that could rise to £1.5bn before the year end?!!!?

My point is surely it is time the banks re-addressed their business strategies – there is no way any small business would be given the business financing TC are given. From memory, this isn’t just a short-term issue – TC have posted losses regularly haven’t they?

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Darren

Further update. The problem turns out to be that the accounts think Thomas Cook did not borrow enough money last time.
The other point to make is Thomas Cook as a whole is profitable. The money was borrowed originally to make purchases (such as Co-op in the UK) and to cover the unexpected losses they gained though the last 2 years (Ash Cloud, Arab Spring, Japan etc.).

I will allow Mark Twain to have the last word “The reports of my death have been greatly exaggerated.”

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Paul

Thomas Cook has posted a profit every year since 2006 and will again this this year.

This years profit is expected to be around 300 million

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I read today that the banks have bailed out Thomas Cook to the tune of £200milion to keep them in business. We will not be booking our 2012 holiday with them after going through the farce of trying to get our money refunded from the crash of XL Leisure Group.

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Has anyone thought of the impact on the London 2012 Olympics if Thomas Cook goes into administration? We have booked accommodation and tickets through them for a few sporting events 2012, and are concerned.

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I have been involved in the retail travel industry for more years than I care to remember and if anyone thinks Thos Cook will survive in it’s current format are barking mad !

All you need consider is new forward bookings. Who, in their right mind would now place a booking with Cooks ? Yes, they generally have financial protection of both ATOL, to a degree ABTA and if they paid by credit card or Visa Debit, BUT no potential client would want the hassle – they want the holiday or travel and not wait upwards of two years to get their money back which it could be given a company the size of Cooks.

People wanting to place new bookings will avoid Cooks like the plague and if they knew about the losses posted by Thomson, they would also avoid them. The safest route is the small long established independent who know just how to tightly control his business and give a better service to boot.

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Interesting this. Thomas Cook are a long established, well respected company. There is nothing wrong with having loaned money – Thomson Holidays aka TUI (account as at 30Sept2010) are not exactly debt-free. Indeed, even banks need to have money “leant” to them – 52 billion at the last count.

The issue is much deeper. It is the systemic failure of the travel industry to address it’s real problems – which is, inter alia, that holidays (and flights, for that matter) are sold far too cheaply. Travel signed its own death warrant back in the 1980′s (perhaps earlier) – many may well remember the ever more despotic signs offering un-sustainable discounts and holidays abroad for the price (almost) of a cup of tea.

This cannot/ could not continue. Consumers do not have a right to cheap air travel or cheap holidays, any more than I have a right to a cheap Ferrari. A fundamental re-think is needed. Holiday and many flight prices should double, if not treble in price to produce realistic, sustainable margins through the flight or holiday food chain. I do not mean just the selling process. Not too long ago, Spanish hoteliers were angry about the amount of money they were getting for rooms – not to mention the amount of time they had to wait to receive that money.

Airlines need to rethink as well. Cheap economy fares must go and business orientated fares should come down. There must be a change in the ethos that the business person (who makes money for UK PLC) can afford to pay for the leisure traveller (who costs money for UK PLC). APD, fo example, should bear down heavily on the leisure traveller and come off the business traveller (to the extent that it could be made corporation-tax deductible). (There are a couple of exceptions to airlines at the present time – e.g. RyanAir – but we shall see)

Imagine that the holiday you buy is a pie – in that pie there is a portion for the hotel, for the operator, for the airline and yes, even for the agent (online or offline) Now, over (a long) time, there evolved a way of dividing up that pie so each received his or her portion. Problems started when the stronger elements in the chain said “My portion is not big enough, I want your protion”. It never occured to anyone that what was needed was either a) A bigger pie or b) More pies. True, some decided that more pies, but much smaller in size may be a good idea but that proves to be the wrong way forward. It has not worked. And we have seen that it has not worked ever since Court Line … Clarkson Holidays… Intasun …. Exchange Travel and more recently, Excel.

In a sense, the Great British Public have brought all these woes on themselves. They have demanded a lot and not been prepared to pay much for it. The profits of *any* of the large operators do not go that far when you look at the burn rate to achieve that profit – that’s the underlying issue, here.

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Murray – the British public are already voting with their feet notwithstanding the unsustainable pricing you claim. Thomas Cook is just the tip of the iceberg.

Foreign travel is down 20% in the last four years.

Package holidays have dropped from nearly 100% of that to about 30% in the last couple of decades.

“Holiday and many flight prices should double, if not treble in price to produce realistic, sustainable margins through the flight or holiday food chain.”

What do you think those numbers would be if that policy were put in place?

Low cost airlines and direct booked hotels are taking more and more share in a falling market. Some of this is changing holiday patterns, but some is in packagers’ core market. Without major surgery to show why packaging are better for the internet-toting, self-packaging consumer, over the next few years we will just be watching a car crash in slow motion.

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In short, reassert their expertise.

The internet is great at making people think they’re experts. My favourite analogy is with the DIY stores – just because you can buy a Haynes manual and visit B&Q, it doesn’t make you a plumber. After a few disasters, people realise that.

Now that people go away more often and for shorter periods, there are many trips people just don’t need advice on, and the internet is great for that. But I for one find the amount of ‘advice’ on the internet so overwhelming and of variable quality that I yearn for the days of an expert travel agent whose level of knowledge I could never match with a few internet searches.

For my longer holidays I would much rather pick up the phone and know that the person I was speaking to could get the nuances of what I wanted, and recommend the perfect trip. Sadly, the internet has stripped away some of the ‘bread and butter’ work but in my view the need for the expert packager/agent is as strong as ever.

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Yes, Darren. The comment that the GBP (Great British Public) are to blame is incorrect. They have been led into the belief (since the late 1970′s and 1980′s) that the annual overseas holiday should be a) As cheap as chips and b) a right. This comes from the travel industry being intent on signing it’s own death warrant. Now, the GBP do still bear some measure of responsibility in that they compound the error as demonstrated by the likes of the BBC programe Watchdog which makes a big fuss every time someone on such a holiday finds a broken tile. That said, the fault lies with us in the industry, so I stand corrected.

As regards numbers – yes, they would be down. And? If numbers were to go up, which in the present state of the economy would mean, perhaps, even cheaper and even less financially sustainable holidays being offered – then the picture would get worse, not better. What unpackager is missing is the big picture. I am not referring, when I mention holidays, simply to package holidays – holidays (and for that matter (air) travel) in general no matter how booked or assembled will have to increase in order for all elements in the holiday “pie” to be able to make a sustainable profit.

I made the point that cheap travel and holidays are not a right. Indeed, before the advent of the charter flight in the 1960′s “a holiday” would mean no more that a week at, say Margate or if exotic, then Torquay. Before that time, any time that one was able to spend with the family was considered a bonus. In our present climate, it is true that people are voting with their feet – but that is because they can’t afford a holiday, not because there is something fundamentally wrong with the package holiday as a “model”.

Here, though, Governments should take note. The GBP have Julius Ceasar on their side. Casear once remarked that the way to keep the poeple happy was with “bread and circuses” – Cheap(ish) food we have. The “circus” which in those times was a mechanism for relaxation and enabled people to take their minds of the daily drudergy of making a living, could easily be replaced by the holiday; given that nowadays it would raise some concern if anyone of any religious persuasion were to be thrown to a pack of wild animals. If you remove those two fundamentals, food and the “some relaxation” element, from the daily life of us proles in general, then you would have a big problem – and there are a lot of us on this Island.

The cheapness (sic) of travel *is* the problem. It is the size of the pie that is important, along with the number of them. It is quite likely that us proles will have to accept a lot less overseas travel. We may well have to accept that travel to exotic places may, once again, become the preserve of the wealthy. Sorry, people, but we will have to accept that as well… none of us have any right to cheap discounted safaris or cruises or anything else. So, too, will the industry have to accept this and adjust accordingly. Foreign travel may be down … but there will a lot more happier landladys in Blackpool or Weston or Bournemouth and as far as UK PLC is concerned, the money stays in our economy and not someone elses’. (There is a side issue here re: third world and developing countries economies dependent on tourism etc etc but that’s another discussion).

Just a word on travel agents (can’t resist it!) I have said on many occasions over the last few years and it still holds true. Travel Agents, given all the changes going on, have only one thing to fear: That they will have to become Travel Agents.

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Murray makes a number of valid points, especially on travel as a ‘right’, but I’d dispute a few things.

First, low cost airlines and direct booking agents (and their client hotels) are making a very nice profit, thank you very much, and often the holiday ends up costing more than a package. This is only partly due to stealing market share from the traditional airlines. This is the reason why this debate always focuses on packages and agents – because theirs is the model that is suffering most. Pricing is not unsustainable across the board.

Secondly, Murray says:
“In our present climate, it is true that people are voting with their feet – but that is because they can’t afford a holiday, not because there is something fundamentally wrong with the package holiday as a “model”.”

No, package holidays have been in massive structural decline for decades regardless of the economic climate. Most people now self package. If that’s not evidence of a fundamental problem with package holiday model, I’m not sure what is. In addition, the fall in overall foreign travel over the last four years has been far more severe than in any earlier recession, suggesting there’s a lot more behind it than affordability, especially when many packages cost less than UK holidays.

I don’t disagree with Murray’s comment that pricing is unsustainable in *some* (shrinking) parts of the market, but direct hotel and low-cost prices aren’t going to match any price rises. You would have to be comfortable with (a) much lower indirect and package volume and (b) fundamental reform to the package/agent model – to demonstrate the value over self-packaging.

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Thank you, valid points. Let’s say *some* or perhaps *a few* low cost airlines are making money – at present. Many however, have gone belly-up. What you say about direct booking agents and hotels is interesting and harks back to an earlier observation of mine made elsewhere, that the money in travel is being made at the peripherary of our industry – such as the hotel booking agents – but not by many who are involved in the provision of the actual service. The airline debate is also of interest in that, many- perhaps most – low cost airlines are parisitic – they cherry pick the best routes – best in terms of distance, turn round and profitability. This then does do a lot of damage to legacy airlines, who have to operate medium and long haul routes. Now, what can happen here, is that legacy airlines then cut unprofitable routes and there is this thing re: old colonial maps and links for developing nations losing vital connections to developed world. Further, the costs get loaded onto the front end cabins – often frequented by business travellers and that increased cost to the firms involved then (ultimately) reflects itself in increased costs to us for end products. (though that is, again, another debate/ responsible tourism/ business users using some low cost airlines etc).

The package holiday model is not flawed. The way the package holiday is/ has been put together and it’s attendant image is flawed – but the idea of buying a package that offers (proper!) door to door care with all elements included in one price is still a very valid concept. Self packagaing is there for those that know what they are doing, but there have been many times when I and no doubt, many other agents, have had to untangle some pretty horrendous attempted self booking disasters. Given the entaglements and the dogs dinner that has now been made of consumer protection, this sitation could get worse, not better.

Yes! Overseas holidays cost less than UK ones – Exactly … why? More importantly… how? Is £80 per person a night for a half decent hotel on B & B a good sum? That’s £560 … a two hour flight … £200? That’s £700 add in some transfers… £800. Now, how can a foreign holiday sell for £400 a head and be sustainable?

In this sense, yes, we need a fundamental reforn of the package model (we can keep agents out of this pro tem) … and if there is a lower volume of people going overseas – so be it. As long as we proles get some relaxation time, if that means Dartmoor or a landlady in Blackpool, then that’s what it will have to be.

(I have a “reasonable” income and have not been able to afford an overseas family holiday for some time … but we have had some great times in the UK and next year will (hopefully) take our trusty old Volvo Estate down to the French Atlantic coast which we are looking forward to. For those who have the money to travel overseas – enjoy. I don’t begrudge anyone that. So, yes, I “self package” ! Can’t see why anyone would want all that hassle of shell-suits at dawn at Gatwick, anyway)

Good debate.

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Not going to waste anytime posting lots of the same info already available here – the fact is Thomas Cook WILL survive. They will restructure and hopefully learn a few lessons along the way. No doubt their many staff will suffer the most.

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Thanks for not posting my last note ! Waste of time website if you ask me – too many travel dinosuars

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Bigger Picture

Your right Thomas Cook will survive and as a profitable tour operator rightly so. I have no idea why this was a story in the first place given the state of both larger and smaller company’s.

Thomas Cook also rescued other famous brands like the Co-op this year and is what partly caused the accountants to say that Thomas Cook should be ready to borrow some more money to cover the cost of saving brands like the Co-op.

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Thomas Cook have debts of £900 million, and borrowed another £200 million to pay urgent bills from creditors threatening to issue bankruptcy proceedings. They also shut 200 shops, and got rid of 500 sub-par hotels which had landed them with thousands of 2010-2011 holiday makers complaints. If you pay in advance a 2012 Thomas Cook prepaid -travel bill then your taking a big risk, What they don’t tell you is ATOL won’t pay out for ages any claims you might have, if your on holiday and they’ll go bust the hotel will want you to pay your accommodation bill again or they’ll evict you out of the hotel. Holiday makers will be sleeping in airports and wiring home for emergency funds. Don’t book with Cooks, read the press and watch TV.

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Robert, Just to correct a few statements

Thomas Cook has a £850m revolving credit facility to which they added 200 million loan. This does not mean they will use it, a credit facility is like an overdraft.

In 2011 Cooks purchased the Co-op travel section and it’s700 shops and from that announced they will be closing over 2 years 250 loss making shops, that is normal business. They sold a loss making hotel chain and an under used office block, again normal business.

They made 320 million profit in 2011 and since have announced plans to get rid of poor performing areas of there business which will increase there profit. This does not sound like a company in trouble, more like press on a bad news week. Add to this the banks reducing their security demands on the loans and credit, sounds more like a company thats a safe bet.

If you’re that worried about Cooks you should look at other large travel company’s.

ATOL will pay hotel owners direct if the hotel owners will take the money. Problem is most preferred to charge holidaymakers more money than the original contract cost which is all ATOL pays. Package holidays are the only industry wide system that gives you your money back, unlike say when MFI failed and people will wait years just to see if they get part of there money back, system is not perfect and the trust is working on improving that, but it still gives you your money back.

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Nick, have you been to an African ostrich farm or something ?

If you think Cook’s are not in financial trouble you are either living in cloud cuckoo land or working for them dear boy !

If it is the former, I understand the advice being given by those in the know is to steer well clear of the ‘Don’t just book it….’ as you might be ‘Don’t I regret it !

If it is the latter, I would suggest you start scanning the Situations Vacant column in the TTG and other trade papers.

Malcolm Sperring-Toy
Independent Travel Advisor for over 40 years with no axe to grind !

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