Under-Cooked: Tour operators' profits down

The tour operators are facing significant drops in their profits, Thomas Cook issuing a profits' warning. The reasons are not too difficult to work out. Like all other parties in the tourism industry this year, the tour operators have not been immune to economic pressures and the totally unexpected. The good news in all this is that there are some remarkable bargains to be had, "The Guardian" reporting yesterday that anything up to 60% off can be expected once the school holidays are over, while 40% off this month can be obtained. The less good news is destinations that are on offer, the Balearics heading the list.

With TUI, Thomas Cook and others suffering falls in profit, a question that has to be asked is what this might mean for next season. There was some indication that tour operators' prices had risen this year in the expectation of a better year, one that has failed to materialise. Price rises in 2011 might be on the cards, but they would be folly, especially for some destinations, including Mallorca and the Balearics.

The island's hoteliers have come to the end of their contract arrangements for next year: they can expect no or only a one per cent increase in their own prices. One per cent is the maximum that the tour operators will give them. Yet, you have a situation in which certain hotel associations, such as the Alcúdia-Can Picafort one, are saying that up to 30% of places have been left unsold in July and August this year; some hotels have reported far worse.

But go further behind all this, and one finds a rather mysterious situation, or one that is being alleged by hotels in Puerto Pollensa. Against the background of a potential rise in all-inclusive there, hotels have accused the tour operators of not selling holidays to Pollensa, the operators claiming that hotels are sold out, when they are not. The hotels also reckon that the tour operators have been diverting clients, who would have booked in Puerto Pollensa, to hotels elsewhere.

Without knowing the precise nature of the contractual agreements tour operators might have with different hotels in different resorts, it is hard to comment on this. If what the Puerto Pollensa hotels allege is true, and they say it is, albeit that "sources" preferred to maintain anonymity when this was reported on a few days ago in "The Diario", might this be interpreted as a bit of pressure to conform with a tour operator desire to change the status of offers at certain hotels - to all-inclusive, in other words?

In the same Guardian article, a spokesperson for travelsupermarket.com says that there will be a "bloodbath" of last-minute deals in September and October. If the tour operators are going to get so badly burned this year, might we be facing a different sort of bloodbath, that of hotels not being contracted with? It is already the case that individual hotels are making pre-emptive strikes, effectively removing themselves from under the tour operators umbrellas and going for independent, direct bookings in a far more aggressive fashion than has been the case until now. It may be that others have to do likewise. What they can expect as revenue from the tour operators will not increase in real terms; indeed it is down this year in many instances. And to what extent will they be willing to take the tour operator shilling in return for offering something - all-inclusive - that many are loathe to?

2011 is going to be a lively year. It could also be make or break for many hotels, assuming they are not already broken.


Any comments to andrew@thealcudiaguide.com please.