2nd Aug 2018
Tour operator Thomas Cook has seen a reduction in profits due to this summer’s heatwave, with more people choosing to stay at home and soak up the sunshine instead of booking last-minute package holidays.
Despite an 11% rise in summer bookings – which was supported by strong customer demand for Turkey, Greece and Egypt – these have slowed in recent weeks as Europe has witnessed a sustained period of warm weather in June and July.
Chief Executive Peter Fankhauser commented: “Customers across our European markets have delayed decisions about their summer holidays as they enjoy the record temperatures at home.”
In the UK, bookings are up 1%, although hotel price inflation in Spain has led to a 7% increase in prices. Peter Fankhauser said: “We continue to experience margin pressure due to a highly competitive market for Spanish holidays. While we have seen good growth to higher-margin destinations such as Turkey and Egypt, this has not been enough to fully offset the margin pressure which has largely impacted holidays to Spain to date.”
Figures are currently in line with last year’s, meaning that the company expects to deliver lower annual growth operating profits than initially anticipated.
The summer months are typically amongst the most profitable for Thomas Cook, but financial services company Jefferies remains optimistic with regards to the company’s long-term prospects: “This year's abnormal weather does not affect our longer-term investment thesis, which remains unchanged.”
The news serves as a reminder for UK tourism businesses to be particularly vigilant this summer when it comes to keeping customer satisfaction levels high. Last year, research from The Institute of Customer Service suggested that 57% of people were prepared to pay more to guarantee high levels of customer service.