What the Thomas Cook Collapse Means for the Travel Industry
U.S. travel agents, like many in the travel industry, expressed sadness and some surprise following Sunday’s collapse of Thomas Cook, Britain’s oldest travel agency and travel services firm.
Although the former sentiment was virtually universal, several agents contacted by TravelPulse said the company’s failure was not an overnight phenomenon.
“I saw their stock plummet in the past three years,” said Jennifer Doncsecz of VIP Vacations. “I believe it went from $140 per share to less than $2 just two weeks ago,” she said. “When you look at a company that had a 175-year history with over $15 billion in sales annually and 19 million customers a year, it is baffling at how quickly it deteriorated.”
The massive UK travel company’s failure raises a multitude of practical issues. The shutdown stranded tens of thousands of Thomas Cook customers whose flights and holidays were scuttled. The UK Civil Aviation Authority tweeted Sunday that all Thomas Cook bookings had been canceled.
British government officials vow that no travelers will be left stranded; UKCAA is reportedly organizing repatriation flights. But for travelers, resort properties and destinations, flying people home is just one element of the Cook collapse.
Thousands of would-be vacationers with deposits on Thomas Cook travel bookings must also determine their next move. And the shutdown will likely have implications for visitor arrivals in destinations including the Caribbean.
“The initial hit will be for those reservations that Thomas Cook hasn’t processed (including) payments to the resorts and the service has already been consumed,” said Tom Carr, owner of Preferred Vacations.
“The midterm concern is what happens to future (deposited) bookings. Does (UK travel firm) TUI or another provider step in, or will the resorts need to bring the bookings direct?” Carr said. “This is reminiscent of the collapse of Club America in the U.S. market, only much larger.”
Indeed TUI booked some of its own clients aboard flights operated by Thomas Cook. “We are sorry to learn that the UK tour operator and airline Thomas Cook has collapsed,” reads a statement on the TUI site.
“As we offer a small selection of TUI holidays featuring Thomas Cook flights, as well as selling a small number of Thomas Cook holidays through our stores, we’re now working alongside CAA to assist affected customers,” the statement continues.
“If you are currently on a TUI or First Choice holiday and were due to return home on a Thomas Cook flight, please visit thomascook.caa.co.uk for the relevant and up to date information for your new travel plans.”
Agents say Caribbean destinations and resorts, always popular among UK travelers, will feel the impact of the Thomas Cook shutdown.
“This will definitely impact the Caribbean,” added Kelly Fontenelle-Clarke, a Caribbean travel marketing consultant. “Thomas Cook did operate in the Caribbean and was a major contributor to the arrival number. This will certainly put a dent in the Caribbean arrivals,” she said, “especially as we are heading to the winter period.”
“It will have a huge impact on the Caribbean, especially on the resort side,” said Carr of Preferred Vacations. I’ve already seen a FB post from Sandals in the UK with a hotline for anyone with reservations.”
Doncsecz of VIP Vacations said Thomas Cook’s collapse was due in part to events beyond its control.
“We all know how outside world events can make companies topple. Their market to Egypt especially the beach areas became non-existent following the Arab spring,” she observed. Doncsecz also cited “the rise of consumers booking online” and a progressively unwieldy structure, as their storefronts in London city previously employed as many as 500 agents, she said.
Other difficulties were self-inflicted, Doncsecz said. “They made poor choices with acquisitions which consumed their liquidity. Some might also attribute (the collapse to) poor restructuring and high debt.”
Doncsecz wasn’t as sure the Cook collapse would cost Caribbean destinations. “The immediate impact for the Caribbean will be a good deal less than for Mediterranean and U.S. destinations,” she said. .
Yet she did agree that travelers and suppliers would face difficulties in the wake of the company’s failure. “The aftershock of Thomas Cook’s demise is the real concern as it will undoubtedly affect other tourism suppliers and companies due to unpaid bills, loss of business, etc. It is here that the Caribbean may suffer,” she said.
Agents said the situation is also a cautionary tale for travel companies in the U.S. and beyond. “This is an eye-opener for all operators at this time,” said Fontenelle-Clarke. “Thomas Cook was a staple in the travel industry being in the business since the 1800s.”
“For U.S. travel advisers, we should watch and learn,” said Doncsecz. “Having a plan for tough times in the market that could slow down businesses, advising our clients to purchase travel insurance and utilizing companies (tour operators) that have a solid financial history are critical.”
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Thomas Cook UK Plc and associated UK entities have entered Compulsory Liquidation and are now under the control of the Official Receiver.
The UK business has ceased trading with immediate effect and all future flights and holidays are cancelled.
A dedicated support service is being provided by The Civil Aviation Authority to assist customers currently overseas and those in the UK with future bookings.
Please visit: thomascook.caa.co.uk for further information.