11/25/2011

Cook's tours in danger?

In England "Cook's Tours" has long been synonymous with package holidays. However, the tour operator is in financial trouble, with its shares nosediving. Geneva airport could be affected.


The name Thomas Cook has been a byword for organised tours since 1841, when a gentleman of that name organised the excursion of a group of temperance campaigners to go from Leicester to Loughborough in order to attend a rally. For this, he profited from a newly-opened railway line, charging the campaigners 1 shilling for the rail trip and food on the journey. He was thus the founder of the Thomas Cook company which still carries his name.

After having received bank guarantees for £100 million in October of this year, the Thomas Cook firm last week said that it was seeking another £100 million to stay in business. The reason was stated to be the fact that November is a quiet month for income, but needs expenditure to plan for both the coming ski season and Summer 2012. However, this news sent the company's shares into free fall: from around £45 this Autumn, they dropped like a stone to £10. Fortunately, as of yesterday, they are reported to have secured the loan, and their shares are back up to £15. I cannot help thinking that some financial whizz-kids made a lot of money, perhaps by short-selling shares when rumours started, perhaps by spread-betting on the share price.

Of course, part of the problem, both for Thomas Cook and for other package tour operators, is the current economic climate, but there are other factors specific to Thomas Cook. They have been hard hit by the Arab Spring disturbances in the Middle East, and also the floods in Thailand. Their venture into the Russian market, via an agreement with Intourist, does not seem particularly performant either.

On top of this, it is likely that people are hesitating to book winter ski holidays in Europe because of the continuing lack of any signs of snow. Geneva Airport is clearly affected by this: from mid-December last Winter their airline (Thomas Cook Airlines) operated Saturday flights to and from London Gatwick and Manchester. However, it is reported that they have already sold several aircraft of their fleet.

On Tuesday of this week, when visiting Guilford I happened to be standing next to a television team from Sky News reporting on the events (I did NOT stand behind the reporter and wave!). Part of their report was that the small travel offices of Thomas Cook, such as one in front of which they were standing, were no longer in the mainstream of business, and thus in danger of closing. Media reports suggest that up to 200 such small agencies could be closed as an economy measure. Included in the report was the fact that the extra £100 million would bring their total borrowing up to £1 billion.

One of the problems for travel agents is the number of people doing their own research on the Web and booking their own holidays. I did, however, find one reason for using them: a package tour booked through any travel agent normally includes an automatic insurance against the tour operator going bust. Note, however, that this insurance does not cover a simple booking on the airline (including Thomas Cook Airlines!

Let us all hope for snow in the mountains and rain on the plains in central Europe!

 

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