TTG Intelligence: Bespoke sector keeps growing

Travellers are increasingly looking to create their own bespoke trips, prompting tour operators to seek to add new destinations to their programmes.

That was the conclusion of the Hayes & Jarvis long-haul trend report, released last week.

The long-haul specialist said that customer demand had pushed it to put in place plans to add holidays to Zimbabwe, Mozambique, Java and the east coast of Sri Lanka for 2016, as clients seek new adventures.

Tailor-made bookings are also on the up. Hayes & Jarvis said it defined a tailor-made booking as those which include visits to three or more destinations in one trip, and added that these were now forming an “increasing part of the business”.

“Tailor-made itineraries really are the focus for us,” said Verity Rice, general manager for Asia, Africa and Latin America. “In the Far East travellers have already ventured to Thailand and Bali, so they are now planning to go somewhere different.”

One such destination is Vietnam, where Hayes & Jarvis said it had seen a 12% increase in bookings compared with this time last year. Despite its recent political turmoil, Thailand is also proving popular, 
with 68% of those travelling to the Far East visiting the country at some stage of their holiday.

Other more interesting holiday destinations include Kenya where, despite the recent troubles in Mombasa and warnings from the Foreign Office, the tour operator insisted tourism remains largely unaffected to the beach resorts and on safaris, which tend to attract a more confident and adventurous traveller. The company said it would be resuming booking holidays to the Kenyan coast from December 2014, although it added it would “continue to monitor the situation closely”.

Old favourites
Meanwhile, although some travellers continue to look for new destinations and experiences, figures to June 2014 revealed that the firm travel favourites have retained their hotspots. US favourites such as New York and Las Vegas ranked first and second, while the Indian Ocean’s Maldives and Mauritius came in at three and four. Mexico was fifth.

For the summer period – May to September 2014 departures – the picture was similar, but Las Vegas took the number one spot, while California was number five, largely Hayes & Jarvis said, due to self-drive and touring success. Tennessee is the tour operator’s fastest growing destination with a 20% increase in passengers this year.

Shona Swain, the tour operator’s general manager for the US and Canada, said touring and self-drives in the US had proved to be a real growth area. The Deep South and New Orleans are also seeing further growth, while Canada saw an 11% increase in sales.

Elsewhere, Hayes & Jarvis said it expected an increase in certain destinations due to heightened publicity. This includes Barbados and Grenada, with the new Sandals resorts significantly raising the profile of the islands. The tour operator also anticipates a boost to its Brazil sales after the World Cup, while sales to Costa Rica also spiked following their success in the tournament.

Sourced from TTG Digital


Analysis: Bookings plunge 7% in June

Analysis: Bookings plunge 7% in JuneLatest booking figures show little sign of a pick-up in the summer market. Ian Taylor reports.

Bookings for this summer 
remain down on last year following a 7% year-on-year fall in sales in June, a third consecutive month of decline, according to analyst GfK.

The shortfall against June 2013 came after a 3% fall in bookings year on year in May and an 11% fall in April.

The three-month decline followed a flat March, leading GfK to report season-to-date bookings to the end of June down 2% on 2013 and total revenue down 1%.

GfK business group director David Hope said: “It is unlikely the market will be positive at the end of the season.”

The slide in sales followed a strong start to the year but confirmed reports of softening demand for holidays, despite improving consumer confidence in the economy as a whole.

The First Rate Holiday Confidence Index, published this month, showed a fall on April (Travel Weekly, July 17).

However, latest figures from the Office for National Statistics showed a 4% increase in overseas holiday departures year on year in the three months to May. This followed a 4% rise in annual departures last year over 2012.

GfK attributed the June decline to a combination of the World Cup, good weather at home, lower footfall on the high street and “most important, lower availability due to better demand management”.

Strong sales early in the season almost certainly account for some of the bookings decline since, and some companies have cut capacity. Thomas Cook reported a 1% reduction in UK capacity this summer, in line with a 1% fall in bookings to early May.

However, other companies have added capacity. EasyJet reported a 16% increase in seats from Gatwick this summer and financial analyst HSBC reported an overall rise in short-haul seat capacity of 6% for the season.

The GfK figures account for a significant proportion of the market and there will be winners as well as losers, with volume of less concern to some companies than others. Tui Travel reported a 3% decline in summer bookings to May 4 but a 5% increase in average sales price.

Package holiday bookings remained ahead of the market in June and short-break bookings were up year on year.

At the same time, not everyone is solely focused on late bookings, with two other seasons on sale.

GfK reported bookings for winter 2014-15 close to flat on a year ago after a poor June but a strong May, but with revenue down 4%. The analyst suggested passengers were “trading down to a shorter or cheaper holiday”. However, it reported family bookings up 5% and short-haul bookings up 16%.

Hope said: “It’s difficult to call this season. Many operators have erred on the side of caution and cut some capacity.”

All-inclusive bookings continue to show growth – up 4% year on year for next winter – with package sales up 2% on the same stage a year ago. GfK reported the largest growth in holidays priced between £1,399 and £1,599.

Early bookings for summer 2015 also appear strong, with sales and revenue up almost 20% on a year ago.

Sourced from Travel Weekly

Monarch to terminate Swissport Gatwick contract

Monarch to terminate Swissport Gatwick contractMonarch Airlines is understood to have told baggage-handler Swissport that it is terminating its contract at Gatwick amid continuing problems at the airport.

Monarch has already moved to use alternative provider Menzies at Luton and Birmingham airports, and has put Swissport on 120 days’ notice at Gatwick and Manchester.

Aviation industry sources told Travel Weekly about the move by Monarch following a series of baggage handling delays in recent weeks caused by staffing problems.

Both Monarch and Swissport refused to comment on contractual arrangements. However, it is understood Monarch has already started looking for a new contractor at Gatwick.

The Times has reported that other airlines may follow Monarch’s lead and predicts further chaos this weekend as the big summer getaway continues.

It quoted unnamed airlines as saying the situation could be wore this weekend than during previous pinch points, particularly at peak travel times.

The latest problems at Gatwick occurred last weekend when passengers experienced severe delays late on Saturday night and into Sunday morning.

This followed problems earlier this month, when customers had to wait up to 90 minutes for their bags, and in June.

Swissport issued an apology saying the latest problems came after “a sustained period of consistent baggage handling throughout the busiest day of the year”.

It conceded service levels fell in the early hours of Sunday morning but blamed the volume of delayed arrivals.

In a statement it said: “Despite having already increased our resources to support the off‑schedule activity we were still unable to fully accommodate the handling of off-schedule arriving aircraft during this period.”

A Gatwick spokesman told The Times: “Gatwick is working closely with its airlines to improve the performance of Swissport in line with the airport’s own high standards of passenger service.”

Sourced from Travel Weekly

Airline consolidation to bring pros and cons, convention told

Consolidation in the global airline business is to gather pace over the next five years, according to industry experts.

Speaking at the Global Business Travel Association’s annual convention this week, a panel of senior travel executives said joint ventures (JVs) and mergers would have both a positive and negative impact on the corporate travel community, and could hasten the demise of the big three airline alliances: Oneworld, SkyTeam and Star Alliance.

Bob Brindley, principal and vice president of
 Advito, the research arm of travel management company (TMC) BCD Travel, said future activity would be driven by those involved in the three major transatlantic JVs.

When US Airways merged with American Airlines it left Star Alliance to join Oneworld, but more significantly it became part of the relationship with British Airways, Iberia and Finnair.

United Airlines and Lufthansa, both Star Alliance carriers, formed their transatlantic partnership a little more than a year ago, while Skyteam’s Delta last year bolstered its JV with Air France-KLM and Alitalia by buying a 49% percent stake in Virgin Atlantic.

“An alliance is really just a marketing relationship and the partners, technically, remain competitors,” said Brindle.

“A JV is where there is ownership and sharing of costs and revenues and in [the next] five years we’ll see consolidation in all its forms, most likely the big three JVs adding partners in different parts of the world.”

Brindley predicted consolidation would result in less choice for corporate travel buyers and mean many would have to focus on working with one or two JVs to obtain worthwhile negotiated fares and discounts.

“Buyers won’t be able to work with them all, and that may mean taking tough decisions and leaving some partners behind,” he said.

The exception to the rule, according to Brindle and fellow panelist Yon Abad, a director at the Carlson Wagonlit Travel (CWT) Solutions Group, would be those buyers whose travellers are buying high-yield, unrestricted tickets.

“If you are a customer who buys a lot of high-yield tickets it makes you more desirable to an airline and gives you far more leverage. They will be at your door trying to get as much business as possible,” said Abad.

On the plus side, the panel said that though consolidation and shrinking capacity were making choice more limited, carriers were investing more in product and service in order to win business.

Aside from the transatlantic JVs that predominantly include legacy carriers from North America and Europe, GBTA delegates in Los Angeles heard it was the cash-rich airlines from the Middle East that would shape the future of aviation.

Holly Hegman, founder and editor of aviation news website, said Qatar Airways, Emirates and Etihad were turning the business upside down.

“They don’t need alliances,” she said. “They are cherry picking [the airlines] that will bring them the most money.”

She cited Etihad’s equity alliance with airlines such as Air Berlin, Jet Airways and Air Seychelles as the model of the future, and said all eyes should be on the imminent merger with ailing Skyteam carrier Alitalia.

Sourced from Travel Weekly

Thomas Cook hails ‘significant’ improvement in UK late sales

Thomas Cook hails 'significant' improvement in UK late salesThomas Cook reported UK trading in this summer’s lates market has “improved significantly”.

The group posted third-quarter results for the three months to June this morning, reporting UK bookings for the summer to date flat year on year and average selling prices down by 4%.

However, Thomas Cook noted: “Recent booking volumes in the ‘lates’ market have improved significantly, indicating a later booking pattern for the summer season than last year.”

The company described both UK bookings and average sales prices as “broadly similar to when we previously updated the market in May” – although in May, Cook reported UK bookings for the season down 4% year on year.

Cook reported 85% of UK summer capacity sold – “the same as this time last year”.

“Lower average selling prices are mainly due to product mix and a higher proportion of shorter duration holidays reflecting customer demand,” it said.

Cook added: “We expect selling prices to improve over the medium term as we sell a higher proportion of exclusive hotel product to UK customers.

“Bookings for these products have shown strong growth for the Summer 2014 season, and we expect this will make a more meaningful impact on average selling prices in 2015.”

Cook reported being “very encouraged” by UK bookings for this winter “which are over 7% higher than last year, with an increase in average selling prices of 3%”.

Bookings and average sales prices in Continental Europe were flat year on year, but sales in Central Europe – including Germany – were up 2% on last year.

Cook reported bookings in Northern Europe 4% higher than last year although average selling prices were 1% lower.

Bookings were also up by 2%, but prices down 4%, at the group’s German airlines.

Sourced from Travel Weekly

Aer Lingus posts improving results after issuing profit warning

Aer Lingus posts improving results after issuing profit warning 

Aer Lingus reported a 40% increase in operating profit for the six months to June despite issuing a profit warning only last month.

The Irish carrier said its full-year operating profit should at least match 2013’s following a “significant improvement”. Aer Lingus forecast its annual profits would be 20% lower than expected in June.

However, the airline posted its best second-quarter results for four years yesterday despite a cabin crew strike at the end of May which cost €10 million (£7.9 million).

Aer Lingus reported revenue growth of 6% over the six months and a 1% increase in passenger numbers.

It reported a “creditable short-haul performance in a tough environment”, but said: “Long haul continues to perform very strongly.”

Long-haul passenger numbers rose 24% year on year in the second quarter and average revenue per seat was up almost 9%.

Aer Lingus said: “Management expect [the] full-year 2014 operating profit will be at least in line with 2013.”

Chief executive Christoph Mueller expressed delight, saying: “We sold the 25.3% additional long-haul capacity deployed in Q2 2014 with . . . 5.3% higher long-haul yields.

“We continue to attract more passengers in the North Atlantic transfer market from both European and US locations, most of them through our online booking portal.”

Mueller added: “Improved connectivity via Dublin now allows us to significantly extend our markets into continental Europe while also enabling us to grow further in secondary UK markets from already solid positions.”

Sourced from Travel Weekly

Thomas Cook posts third-quarter profit increase

Thomas Cook has reported an increase in third quarter profit and “stronger late summer 2014 bookings in the UK, Germany and Northern Europe”.

The Thomas Cook Group reported a fall in revenue year on year for the three months to June from £2.35 billion to £2.22 million.

But it posted an ‘underlying’ profit of £33 million for the quarter against £1 million a year ago – although the group showed a statutory loss of £43 million for the period.

Chief executive Harriet Green said: “Every business improved and the UK delivered the most significant contribution, accounting for over three quarters of the total rise.”

Underlying profit for the 12 months to June rose to £306 million from £252 million a year earlier.

Cook reported an operating profit margin on its UK business of 3.1% for the last 12 months and said it was confident of hitting a margin of 3.5% for the full year to September.

The company reported “signs of discretionary consumer spending on holidays on the increase” and said: “We are confident that our new products, digital development, enhanced yield management and lean operational efficiencies will enable us to more than deliver.”

Cook reported summer 2014 bookings for its differentiated ‘Concept’ hotels up 43% on a year ago and for its ‘Partnership’ hotels up 10%, along with “improved online and mobile bookings”.

It posted £51 million cost savings and profit improvements in the quarter.

The company noted: “Full year 2014 sales growth has been inhibited by external events, [but] we remain confident our new product strategy will enable us to deliver an improved revenue performance in 2015.”

Green said: “Our transformation is progressing very well. Today’s announcement represents our eighth consecutive quarter of increased profits.

“Twenty four months into our transformation, we are confident our actions to improve operating efficiency and yield management, digitise our business and develop new exclusive products that build on the strength and trust that our brand represents, will significantly improve Thomas Cook’s profitability and growth trajectory.

“Our operational performance remains in line with our expectations.”

Sourced from Travel Weekly

Tourism VAT campaigners take their case to government

Tourism VAT campaigners take their case to government 

Campaigners demanding a cut in VAT for UK tourism firms will hand over research to the Treasury today claiming the move would boost the economy by up to £4 billion annually.

The Cut Tourism VAT Campaign also claims reducing the sales tax would net the government a £3.9 billion one-off windfall.

The Nevin Report, commissioned by the campaign, says that a cut from 20% to 5% for visitor accommodation and attractions would boost the UK’s tourism economy.

This is in addition to a boost to GDP each year peaking at £4 billion per annum, and the creation of over 120,000 jobs around the UK.

The group says political backing for the Cut Tourism Vat campaign has grown with over 70 MPs indicating their support.

Nick Varney, chief executive of Merlin Entertainment, said: “Doing a few fancy posters saying ‘Heritage is Great’ and putting them up at Shanghai Airport is not going to turn around 30 years of constant decline. If all UK holidays became 15% cheaper, economics tells you what’s going to happen.”

The campaign group claims UK is currently one of the most expensive destinations to holiday in the world – ranked 138th out of 140 for price competitiveness by the Travel and Tourism Index.

It says it is one of just four countries in Europe not to have a reduced rate of VAT for the tourism sector.

The Nevin Report states cuts made in France, Germany and Ireland in the last five years have been hugely successful.

The new report adds to a Deloitte study conducted in 2011, and analysis by Prof Adam Blake using the Treasury’s own model in 2012 who said: ‘cutting Tourism VAT represents one of the most, if not the most efficient, means of generating GDP gains at a low cost to the Exchequer.”

A series of tourism firms, operators and organisations and MPs in the UK have thrown their weight behind the campaign

Patrick Dempsey, managing director of Whitbread Hotels and Restaurants, said: “We fully support the initiative to cut tourism tax.

“A cut would deliver a huge financial boost for tourism around the UK and 120,000 new jobs with 8,000 already being created by Premier Inn by 2018.”

Ufi Ibrahim, chief executive of the British Hospitality Association, added: “As the driving force behind our recovery, it’s vital we help smaller firms grow.

“Cutting VAT to 5% not only allows the sector to be competitive with Europe, where the majority of countries charge less VAT, but it shows hard grafting businesses the government is behind them.

“No one denies the cut would dent tax revenues initially, but this is a chance for politicians to prove they are really in it for the long by making an investment in an industry which is the UK’s biggest employer of young people.”

Graham Wason, chairman of the Cut Tourism VAT Campaign, said: “This new research is the economic proof the Treasury has asked for to prove what every other country in Europe knows – that cutting VAT on holidays is profitable for governments.

“Many of our coastal towns are ignored but cutting VAT would help them thrive. More than 60 cross-party MPs have signed our parliamentary motion and more than 1,000 companies and groups are backing the campaign.

“David Cameron and George Osborne should remember that next election will be won or lost in the regions and in coastal constituencies who would benefit from the huge boost cutting tourism VAT would add to our economy.”

Dermot King, managing director of Bourne Leisure, which owns Butlins, said: “As the pound continues to strengthen against the Euro driven by a combination of Mark Carney indicating higher UK interest rates and the European Central Bank considering a programme of quantitative easing, the gap in price competitiveness between the UK and her European partners widens.

“Outside of the London bubble, UK tourism continues to try to compete with not just one but increasingly two arms tied behind it’s back.”

Margaret Ritchie, MP for South Down said: “A cut in the rate of [Tourism] VAT would create demand, which would spur job creation and go some way towards reducing youth unemployment.”

Sourced from Travel Weekly

Ryanair hints at flights beyond Europe

Ryanair has hinted that it might start offering routes beyond Europe following a potential deal with the Cypriot government.

Ryanair aircraft

The Telegraph has reported that the airline could use the country as a base from which to offer services to the Middle East and Russia.

The airline has said it would be “very interested” in expanding in southern Europe while it has also entered a non-binding expression of interest in buying Cyprus Airways which has been put up for sale following years of heavy losses.

However, chief executive Michael O’Leary has said the expression of interest was only made at the government’s request and instead it is believed the interest comes as discussions are held over offering Ryanair a license to offer low-cost flights from Cyprus to the Middle East and further afield.

The news comes following yesterday’s announcement by the airline that it is upping its full-year profit guidance having reported first-quarter net profits of €197 million, a year-on-year increase of 152%.

Sourced from TTG Digital

Ryanair raises profit forecasts amid aggressive plans for European growth

Budget operator plans to to open bases this winter at Cologne, Gdansk, Warsaw and Glasgow

Ryanair raised its full-year profits guidance after more than doubling first- quarter earnings and setting out aggressive plans for expansion in Europe.

The news comes after the budget airline announced in May it was returning to Cardiff Airport after an eight year absence.

The operator has invested in a route from Cardiff to Tenerife.

Ryanair chief executive Michael O’Leary said it was “overrun with growth offers” from airports on the continent as rivals scaled back operations.

But he warned against “irrational exuberance” as the second half of the financial year was likely to see downward pressure on fares as a result of competition and Ryanair’s increased capacity. Shares opened 5% higher.

Profits after tax for the Dublin-based carrier in the first quarter to June 30 were up 152% to 197 million euros (£156m) though Mr O’Leary said this was distorted by the absence of Easter in the same period last year.

The carrier said more passengers, fuller flights and shaved costs meant full-year earnings were now expected at 620-650 million euros (£491-£514m), up from 580-620 million euros (£459-£491m).

For the first quarter, passenger numbers were up 4% to 24.3 million and they travelled on planes that were 86% full after a rise in load factor of 4%.

Revenues were up 11% to 1.34 billion euros (£1.06bn) as fares rose 9%, boosted by a strong Easter period.

The carrier managed to raise “ancillary” revenues by 4% as reductions in airport and baggage fees were offset by a rising uptake of allocated seating.

Mr O’Leary said four new bases at Athens, Brussels, Lisbon and Rome were “performing strongly” with bases due to open this winter at Cologne, Gdansk, Warsaw and Glasgow.

Routes and frequencies at Stansted and Dublin are due to increase “substantially” while there will be more investment to make routes attractive to business customers.

Mr O’Leary added: “We are overrun with growth offers from primary European airports whose incumbent flag and regional carriers continue to cut capacity and traffic.

“These new airports along with our existing 69 bases offer Ryanair significant growth opportunities as the first of our 180 new Boeing order delivers this September.”

A business service will be launched in September to include same-day flight changes, bigger bag allowances, premium seat allocation and fast-track through security at many airports.

The carrier plans to return 520 million euros (£411m) via a special dividend to shareholders in the fourth quarter.

Mr O’Leary said that, based on the first quarter results and forward bookings, it was clear the firm is on track for a strong first half.

“However we would strongly caution both analysts and investors against any irrational exuberance in what continues to be a difficult economic environment, with some company-specific challenges in H2,” he added.

Sourced from walesonline


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