Harvesting The Perfect Summer

Well the sun’s finally made an appearance and may even stay a week or
too. But it’s too late to dent what is rapidly becoming a bumper harvest inthe crucial lates holiday market.

On Holiday Groups sales have been running 33% up year on year for June and July and feedback from the Dynamic packaging sector shows that this is just reflecting the very strong demand in the market place.Customers have had enough of the depressing weather and simply will not trust their precious holiday allowance to the UK weather.

The recent demand surge has come at a perfect time for the major operators, allowing them to maintain peak season prices and minimise the amount of stock they need to clear at a loss. The key peak season
is now locked away at high profits and the expectation is that the strong
demand will flow through into September/October where there is still a
high volume of holidays to sell.

Years ago when I ran the Airtours yield department, we had the luxury of being able to bring in last minute peak season flying from overseas airlines, to maximise capacity on strong selling destinations. However, the long recession has killed most of these airlines off and the majors programs appear to have remained fairly static. Hence, they may be regretting cutting capacity by 9% this year, but who could have predicted this weather?

Of the major two, it looks like TUI will be the biggest winner this year since they had the larger capacity and biggest lates stock. However, in a market where demand is strong and bed stock remains plentiful, seat capacity is the key ingredient. The Dynamic Packaging sector feasting off low cost carrier seats, have seen the strongest growth, by simply adding extra load factor points to the low cost carriers programs, which have probably never been so full.

History also shows us that when the UK has a really bad summer,customers book their next summer holiday early. So I would be very surprised if the recent trend for tour operators to cut capacity is not reversed next year.

The temptation to increase capacity will also be boosted by lower brochure prices on the back of reduced fuel prices and a stronger pound.This will give the major operators the option of boosting margins or decide to put the extra margin to the bottom line, as it would be nice if as the benefits of this perfect summer for tour operating.

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