Too Risky: Thomas Cook

"Visitors don't need alcohol when they come to Egypt, they have enough of it at home."

The words are those of the leader of the Muslim Brotherhood in Egypt and they were spoken some days ago, around the time that the political wing of the brotherhood was taking around 50% of votes in Egypt's election. The Freedom and Justice Party is said to be moderate, but with a hardline Islamist party having also secured a reasonable level of votes, the results and the utterances might have even more impact on tourism to Egypt than the uprising against Mubarak did.

Egypt will still of course welcome tourism, but whether it is tourism that arrives able to expect a glass or several of cold beer or to stretch out on a beach in a bikini, time is about to tell. And Egypt is not the only country to move towards a more Islamist political complexion - Tunisia and Morocco have as well.

However this complexion is styled, there is no escaping the fact that tourism to these countries is going to be affected. For Mallorca, it again means good news, but given the interwoven nature of political change and the travel industry it isn't necessarily all good news. Why not? Thomas Cook.

Within the business world, there is a whole industry devoted to risk analysis. It is an industry that goes beyond the financial risks that the credit-ratings agencies deal in specifically. It takes in all manner of issues, such as the risk of turmoil and the threat to internal security. These, by extension, mean risks to anyone doing business in a country or even simply visiting it.

Though Egypt, along with other destinations, was stable for many years, it always came with a risk. The Arab spring was the manifestation of that longstanding risk, and the post-Mubarak era is a further manifestation as it gives rise to uncertainty. What most businesses want least of all, as do tourists, is uncertainty. But in Egypt, they now have it.

So where does Thomas Cook fit into this?

The financial troubles at the tour operator have been the headliner that has tended to relegate to the small print of the news columns the company's business strategy, and it has been one founded on a risk, that of placing an emphasis on the newer tourism markets - Egypt, Tunisia, Morocco and Turkey.

A criticism that has been levelled at Thomas Cook by the hotel industry in Mallorca is that it turned its back to an extent on Mallorca and took business away from the island to the new markets. The reasoning lay, or so it is said, with Thomas Cook's belief that Spain was no longer "competitive", a position that has contrasted with that of its main rival, TUI, which has continued to look to develop the Mallorcan and Spanish markets.

Tourism is and remains a business that demands the minimisation of risk. This is true of most business, but tourism is a particular case; one in which financial prudence sits alongside an assessment of potential disruption and the loss of business. And of the "big two" tour operators, TUI has played it safer.

The accusation that Thomas Cook turned its back on Mallorca is rather unfair. For summer 2012, for instance, it has, through its UK operation alone, 35 hotels and/or apartments which are being marketed on its website under the Thomas Cook name or those of its divisions.

Nevertheless, what the company's strategy will now entail is unclear. As part of its new financing arrangements, it has to shed a whole load of hotels from its portfolio, and it is reckoned to look less than favourably on the three-star sector; quite a number of the 35 hotels are three-star.

This is just one question that is now exercising the thoughts of the Mallorcan and Spanish tourism industry, as is Thomas Cook's treatment of suppliers, for which you can probably read hotels, as it is the secretary general of the Spanish Confederation of Hotels and Tourist Accommodation who has spoken of poor treatment. He doesn't, though, believe that Thomas Cook having to lose a number of hotels over the next three years will be a problem as there will be other takers. But who? TUI?

One hopes sincerely that Thomas Cook emerges a stronger business from its current troubles. It needs to, or else the big two tour operators become the "Big One". And if the company ultimately renews its concentration on Mallorca and Spain, then Mallorca and Spain will emerge the stronger. The time for risk-taking has passed.


Any comments to andrew@thealcudiaguide.com please.