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.

Ten years ago I used to talk about “Click, Walk, Talk” distribution and the rapid migration from walking to shops, to talking by phone via call centres, driven by online research. Followed by the migration from calling to just clicking, once online technology matured. Given this view I have positioned the On Holiday Group business to be strong online, supported by call centres, without a high street shop in sight.

TenHowever, I have never predicted the death of High Street shops and believe independent high street agents could be in a strong position once the major operators have decimated their current over weight shop networks.

TenHarriet Green the new CEO of Thomas Cook comes from a background of modernisation, using the Internet as a key distribution platform to cut costs. I therefore think she will take a hatchet to Thomas Cooks 1,200 shops, cutting them to less than 400 over the next 5 years, as she maximises the benefit of the massively strong Thomas Cook brand online.

TenAlthough, Google click costs have escalated massively in recent years, reducing the cost effectiveness of the Internet for travel companies without a strong brand, for those who attract customers directly to their brand, the Internet is massively more cost effective than shops.

TenHence logically the big 2 UK brands Thomson and Thomas Cook will continue cut shops as Internet sales naturally grow or more rapidly if they drive this channel.

TenThis cut back provides a massive opportunity for independent high street shops or homeworkers if they evolve slightly. They are best positioned to offer customers independent advice on the whole travel market, across both the price sensitive commodity market driven by Dynamic packaging systems and the higher priced “Differentiated” product offered by the major operators. This will be a key advantage over the single product focused shops of the majors and may give them an advantage over the online players such as Travel Republic. Currently these only sell dynamic packages and it’s unlikely that the tour operators, focused on driving their own online sites, will allow other online players to sell their products.

TenHowever, Independent shops do need to evolve to make themselves more convenient for customers. Personally, I would look to make a shop the central point for a local network of homeworkers. Each homeworker would be rotated between staffing the shops, where they would deal with personal appointments or walk in enquires and offsite work such as house visits or out of hours phone support.

TenEach shop would have its own personalised web site where customers could review availability, but still look for personal advice before making their selection via the shop, on the phone or in their homes.

TenSo will I be putting my money where my mouth is and opening shops? Possibly, but more likely I will be partnering with people who have them and want to evolve. Know anybody?