As life returns to normal post Covid-19, I have again returned to the Ski slopes this winter to feed for my addictions for “white speed” and boozy Après ski nights out, with family and friends across European Ski resorts.

Historically, Ski holidays were part of the “mainstream” with each of the big four tour operations each having ski brands. These rarely made large profits, but were another way of utilising their internal charter aircraft in the quieter winter months, even though fixed weekend hotel “changeover” dates did force many peak Saturday or Sunday morning slots to be handed over to the ski division.

Each holiday was usually a weeklong and included all the key ski holiday elements of flight, accommodation, transfer, and ski packs for one inclusive price. This created both a convenient “one-stop” purchase for customers and allowed buying power via scale.

So why over time has this market virtually disappeared, with there now remaining only relatively small ski tour operators, who no longer operate or own charter flights?

Like many things in our industry, I believe it is a combination of the growth of low-cost carriers and customer access to the internet, which has created a large DIY marketplace.

For example, when traveling to Andorra to ski, I use Skyscanner to find the best combination of flights from the North and South of England, which arrive at similar times, so that I can combine the various members of my dispersed family on to one private transfer from Barcelona for the 3-hour journey to the resort.

I then use Andorra Travel service a local resort-based ground handler to book my hotel, lift passes, ski hire, and even restaurant bookings, to complete my complex ski needs.

Many upmarket Ski operations have built similar business models, using low-cost airlines to provide non-committed flight stock, to power their destination-specific tour operations to Verbier or other well-known ski resorts.

Ski holidays on average cost twice as much as a 7-beach holiday, so initially it may seem surprising that none of the top 5 UK ATOL holders, including the people providing most of the flight capacity for the ski market i.e. Jet2 or Easyjet, have created their own tour operations to exploit the demand created.

The complexity of the product is probably the main reason for the lack of interest, as it does not fit into a simple online booking journey and would require call center staff and in-resort, operations to deliver effectively. Brexit and in particular French restrictions have effectively banned UK staff from providing traditional repining and childcare services, that are still available in large beach hotels.

Transfers have also become much harder, as traditional weekend hotel “changeovers” have been scrapped, with customers now arriving throughout the week and often for 3-4 days ski breaks over weekends. Hotels have adapted, by charging more on a nightly basis to cover any gaps in occupancy compared to the easier back-to-back week holidays. 

However, it is now much harder for ski tour operators to focus enough demand to fill the 56-seat coaches, that used to dominate the transfer market now that they are not delivering 100s of skiers on one charter flight. Often, the airport-to-resort transfer element now costs more than the flight itself.

In some ski destinations like Andorra, local coach businesses such as “AndBus” are thriving, offering 2 hourly pre-bookable, low-cost shuttle services from Barcelona and Toulouse to resort. When talking to “Andbus” owners, it is fascinating to discover that hardly any sales come via UK tour operators or travel, with most customers discovering the service by word of mouth or Facebook groups.

I do have to wonder if homeworking groups are missing a trick here, by not working more closely with local ground handlers, to create high margin Ski packages for often affluent customers that may also book other high-end summer holidays. Bluntly, if you can afford to ski you often travel on holiday multiple times per year.

Adding expertise and value to complex long-haul holidays has allowed many homeworkers to thrive, so why not explore Ski?

It may be more complex but the crucial in-resort partners are out there if you look.

During the recent ITT conference in Qatar, I posed a direct question to Garry Wilson, CEO of Easyjet Holidays. I asked, “At present, 2% of EasyJet’s 100 million seats are sold as holiday packages. To become the market leader, this volume would need to triple to 6%. However, presuming the overall market does not expand this swiftly, from whom do you anticipate taking market share?”

Garry’s diplomatic response was that the growth would originate from converting more of EasyJet’s flight-only customers into holiday packages.

This straightforward remark underscores the significant strategic advantage of EasyJet Holidays over its competitors.

Over its lifespan, EasyJet has cultivated extensive brand recognition. This, bolstered by prominent advertising, generates enormous visitor traffic to its website. Here, customers are automatically presented with a cross-sell option to purchase a holiday package in addition to the flight to their chosen destination.

EasyJet has publicly stated that 88% of its Holiday Divisions traffic comes from “Free” sources, which gives Easyjet Holidays a dramatic advantage over OTA who spend 30% of revenue on advertising costs. Consequently, they are positioned to either offer the most affordable pricing, maintain superior profit margins, or effectively balance these considerations.

Converting another 4% of their 100m flight passengers to holidays is a straightforward task, and itself would make Easyjet Holidays the UK market leader. However, why would they stop here?

Consequently, the question facing many travel boardrooms is, “Who will lose share as EasyJet Holidays expands?” and “How do we make sure it’s not us?”

The answer will be significantly influenced by the distribution channels EasyJet Holidays focuses its efforts on.

Jet2 Holidays have stolen the march in distribution via travel agents, flexibly allowing agents to decide their commission levels. However, if agents want price parity with the company’s online pricing, their earnings are limited to a low 6% commission payment, potentially making them vulnerable to attack by Easyjet.

Interestingly, Jet2 Holidays’ current success in transitioning its business into a tour operation-led group presents challenges to further growth. Currently, 60% of Jet2’s flight seats are packaged as holidays, and this proportion rises to 80% for “beach holiday” routes. Therefore, unlike Easyjet, they must broaden their route network to expand their holiday business further, leading to the initiation of new bases, like Liverpool. However, this expansion process is considerably slower than simply increasing the share from 2-6% of flight capacity.

Historically, Tui’s tour operating branch boasted a “differentiated” offering through exclusive hotel contracts with some of the most ideally situated establishments. However, the repercussions of Covid-19 and the substantial debt incurred by the Tui group have significantly reduced its exclusive inventory, exposing it to vulnerability in short-haul locations within Easyjet’s flight range. Nevertheless, Tui’s fleet of 13 Dream Liners provides a distinctive advantage, enabling the holiday firm to provide long-haul beach vacations to destinations such as the Caribbean, USA, Mexico, and Goa, an offering that Easyjet cannot match.

The top online travel agencies (OTAs) face the greatest threat from expanding low-cost carriers’ in-house tour operations, given that they lack proprietary airlines and rely on access to third-party flight seats. Paradoxically, their key strategic advantage is the access to low-cost seats of Ryanair, an airline that has publicly expressed disdain for them.

Featuring all the low-cost carriers equips the OTAs with a superior flight program in terms of route diversity and scheduling. However, if they are burdened with Easyjet’s API booking fees amounting to £6 per individual per sector, leading to a substantial £48 price disadvantage for a family of four, they evidently cannot compete on equal footing in terms of price with Easyjet. Nevertheless, by utilising Ryanair flights, they often can match or even surpass EasyJet’s holiday prices on numerous routes, making access to Ryanair, the only low-cost airline without an in-house tour operation, a vital strategic defence.

Online holiday consumers typically browse 23 websites before finalising their booking, reflecting their considerable promiscuity when choosing the holiday brand to book with. This tendency is frequently fuelled by Google PPC advertising, a sector primarily dominated by Love Holidays. Unlike its major competitor, On the Beach, Love has not invested in above-the-line brand-building advertising, potentially making them vulnerable as Easyjet enter this space.

While it is currently unclear who stands to lose, logic dictates that Easyjet Holidays is set for rapid expansion and will be the largest UK tour operator within 5 years.

So, whether the future is bright or not, it’s likely to be Orange.