The “Have’s and the Have not’s”

I can honestly say I was one of the few people in my circle of travel friends who was confident before Christmas that January would be as strong a booking period as ever. My logic has remained unchanged since the recession started 2 years ago and is based on the premise of the “Have’s and Have not’s.

The “Have’s”
Have mortgages, have kids and most importantly have job’s. This customer segment have never been better off financially, due to the exceptionally low interest rates on their family homes, which historically have tied up a lot of their disposable income. This sector books early and hence its not surprising to me that the current January booking period has remained buoyant.

However, like most companies involved with Online Travel sector, we have been surprised by the sharp rise in online searches this year with On Holiday Groups B2B search traffic running 85% up year on year, with Google reporting a 26% year on year increase in search’s overall for the travel sector. Unfortunately, bookings have not risen at the same rate, as it appears customers are searching around much harder for their online holiday deals. This in itself is not a massive surprise given the recession, but it does mean that yet again the biggest winner is Google who must be rubbing their hands and whilst many OTA’s are seeing margins eroded due to falling conversion levels.

It would also appear that Thomas Cook’s financial woes have impacted both its tour operation whose bookings are rumoured to be running 33% down year on year and its 1,200 strong high street shop network. How much of this is due to the recent negative PR about the Thomas Cook brands or a very passive discounting policy compared to TUI is not clear. However, the increased online traffic has to have come from somewhere and this is an obvious potential source.

“The Have Not’s”
Have not got job security and have not got the same access to credit they had pre-recession. Traditionally a lot of the late holiday market has been funded by credit cards and last year we saw a relatively weak late’s market due to this.

Make hay now, as it may not last.
Sorry to be the harbinger of doom in such a good sales period, but I can only recommend you fill your boosts now, since its likely to be long hard late booking market.
Sales may be great now, but the “Have not’s” have not kicked in yet and this year we have to deal with both Euro 2012 in June and the London Olympics in August. So be warned its still going to be a tough year with the only obvious ray of sunlight being the strengthening pound which will boost holiday makers overseas spending power compared to UK holidays and of course the unreliability of the UK weather!!

If only “Differentiation” was a Christmas Present

Thomas Cook recently announced a new strategic direction, focused on increasing its “Differentiated” product from a claimed 30% to a healthy 50%. But what exactly is “Differentiated” product??
The tour operators seem to have been slow to define this! My own definition is very simple “ Product demanded by customers, which can only be brought from that tour operator”. The key phase, which makes defining differentiated product hard, is “demanded by customers”. There is little point having “Exclusive” product that you cannot sell, because customers are buying the hotel next door for £50 per person cheaper!!!

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