Demand for foreign holidays slowing

• Chief executive blames ‘fragile consumer sentiment’ • UK demand lagging European neighbours • Tour operator cutting capacity • £20m bill from Middle Eastern unrest Demand for foreign holidays has fallen sharply in the UK in recent months as weak consumer confidence continues to bite, Thomas Cook warned on Tuesday. The holiday group said that Britain was lagging behind other European countries, with the rate of bookings for summer trips “slowing noticeably” in the UK this year. This has forced Thomas Cook to cut the number of holidays it offers UK customers. “Summer holiday bookings are ahead of last year across most segments, with particularly strong growth in our German tour operator and airline, as well as in northern Europe,” said chief executive Manny Fontenla-Novoa. “It is a weaker picture in the UK where recent trading has also been affected by fragile consumer sentiment. In response, we have taken a more prudent approach to capacity.” Although the UK recession officially ended more than a year ago, consumer confidence has slumped to its lowest level in nearly two years – due in part to growing inflationary pressures and austerity cutbacks. Economists have warned that this means many “big ticket” purchases are being shelved. Thomas Cook reported on Tuesday that it has sold just 1% more holidays for summer 2011 to UK customers than at the same stage a year ago. On 8 February it told the City that bookings were 6% higher than in 2010, indicating a sales slowdown during the last two months. This followed a 5% drop in cumulative bookings from the UK for winter breaks. Trading is stronger in central Europe. Sales to Germany, Austria and Switzerland are 4% higher than a year ago. In northern Europe, including Sweden, sales of summer holidays are 11% higher. The ongoing unrest in the Middle East has also caused disruption for Thomas Cook and left it with a £20m bill . It spent £5m repatriating holidaymakers early, and also lost another £15m of potential profits due to travel restrictions. A total of 150,000 holidays to Egypt and Tunisia were cancelled. Most restrictions on flights from Europe to the Middle East and North Africa have now been lifted, and Thomas Cook reported that hoteliers are offering “attractive discounts to rebuild confidence in the area”. Thomas Cook Travel & leisure Arab and Middle East unrest Consumer spending Economics Graeme Wearden guardian.co.uk

Posted by on March 29, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.