Travel firms raise prices and cut capacity

Britain's tour operators, smarting from this summer's last-minute price-cutting, plan to cut back heavily on capacity and increase prices next year.

When 1996 holidays go on sale on Friday, packages to Spain - Britons' most popular destination - will show rises of about 10 per cent on brochure prices. "We have reduced planned capacity for next summer by 15 per cent," said Peter Phillipson of Britain's third-largest tour operator, First Choice.

"The message to the customer who wants a specific resort or hotel is to book early."

Travellers who have become accustomed to holidays costing pounds 99 or less this summer may be unwilling to heed the message, but a cut in supply and the weakness of sterling will mean higher prices even among bargain- basement deals.

The mass-market travel industry has been hit by over-optimistic projections, a trend towards late booking, and the exceptionally fine summer weather in Britain.

After a decade of rapid expansion, Airtours - Britain's second-biggest operator - is reducing the number of holidays it plans to offer next summer by 10 per cent.

Airtours marketing director Richard Carrick said the company was relaxing its pursuit of market share in the face of low consumer confidence. "There seems to be a far higher degree of conservatism around than we've seen for many years."

Thomson Holidays, the UK's largest tour operator, brings out its brochures today. The company is expected to follow the same pattern of reduced supply and increased prices.

One target area for growth is in fully inclusive holidays, where everything from seats to sangria is included in the price of a holiday. First Choice sold three-quarters of its fully inclusive programme for 1995 before Christmas, bucking the trend towards late booking.

The increased popularity of long-haul destinations is set to continue. Airtours is moving into the Dominican Republic and Mexico, while First Choice has new programmes to Tobago and Sri Lanka.

The cut in capacity has been welcomed elsewhere in the travel industry, but Sue Ockwell of the Association of Independent Tour Operators warned that special offers should be looked at carefully before buying. "You need to ask yourself if they are sticking you on a night flight, or expecting you to share an apartment with several other people."

The cheapest early season loss-leader is from the Airtours subsidiary Aspro, selling a week on the Costa Dorada in May for pounds 89 - providing you are prepared to share an apartment with three other adults.

While Thomson, Airtours and First Choice set out their wares, bets are being placed about the possible casualties of this summer's touristic attrition. September is the most likely month for collapses, since earning dry up at the same time as bills come in. Along with the usual autumn crop of small operators, industry insiders believe that one or more mid- sized companies could fail.