Late bookings hit Thomson
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The hot summer weather and weak consumer confidence claimed another casualty in the travel sector yesterday when Thomson, the UK's largest tour operator, announced a heavy half-year loss.
Thomson, which is part of the Canadian Thomson Corporation and includes Horizon travel, Lunn Poly travel agents and the Britannia airline, said bookings of package holidays were being delayed until the last possible moment, causing heavy discounts.
The announcement comes two days after Airtours, Britain's second-largest travel group, issued a profits warning saying profits for the year could be down by as much as 25 per cent.
Thomson said the delay in booking last-minute deals had forced a higher- than-expected level of discounting, which was having an adverse affect on margins. The problems have pushed Thomson's travel business into a $1m loss in the six months to June.
The company said it expected to achieve a "modest" increase in bookings for the summer as a whole in a market which has shown no growth.
The UK travel industry has been caught out this year by lower-than-expected demand coupled with a record-breaking summer. The industry was forecasting a 5 per cent increase from 10 to 10.5 million packages. But the growth failed to materialise, leaving about 500,000 extra holidays which had to be sold at knock-down prices. Capacity will be cut next year and holiday prices will be higher as a result of increased accommodation prices and VAT increases. The industry is forecasting price rises of 8-10 per cent.
There was better news at Thomson's airline, Britannia Airways, which is operating at near-maximum capacity this summer. Winter bookings for next year have started well and are 7 per cent higher than last year. The Lunn Poly travel agency chain is performing satisfactorily despite "difficult market conditions".
In property letting, Country Holidays is trading in line with expectations, as are the two recent acquisitions, Blakes and English Country Cottages.
The decline in the travel business knocked the gloss off otherwise improved results in the Canadian-owned Thomson Corporation. In the six months to June profits increased from $175m to $216m on sales up 15 per cent to $3.2bn.
In publishing, the UK regional newspapers, all in the process of being sold, improved profits with significant gains in display and recruitment advertising revenue. In July, Trinity Holdings, the Liverpool-based press group, successfully offered to buy the British titles outside Scotland in a deal worth pounds 280m.
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