Don't Just Book It ...

Mr. Thomas Cook does not quite fit with the image of the current-day tourism industry. A follower of the Victorian temperance movement, Mr. Cook organised trips for fellow abstainers (or those who did in strict moderation). His first excursion was from Leicester to Loughborough, which must have been exciting.

Mr. Cook will probably have long been turning in his grave. Though by no means all the tourist descendants of the Loughborough excursionists are on the extreme binge-drinking wing of the tourism market, some are and are therefore very much not adherents to the concept of temperance, even if they knew the term or understood it; for example, Club 18-30 is part of Thomas Cook.

More than just the devils of drink, Mr. Cook would doubtless be alarmed to learn that his name is associated with a company that finds itself in dire financial straits. Moderation in everything, money matters included, would have been the Cook mantra.

The love of money is a root of all kinds of evil, as a prominent Victorian didn't say in that he didn't first come up with the expression but most likely did declare it, repeatedly, from a pulpit of the times. And money has been the root of Thomas Cook's contemporary problems. It owes a mere one billion quid to lenders. Remarkably, only four years ago, the company could brag that it had nearly four hundred million sitting in the bank.

The tour operator has had a number of issues to confront, so its problems are not solely down to financial imprudence, but a lot of them are. A share buy-back and a series of acquisitions have helped to push the company to the brink. It is hanging on through the largesse of banks, which it hopes will continue to stump up around a hundred million a month, if current financing requirements persist.

One of Thomas Cook's more recent ventures into expansion was the protracted merger with Co-Operative Travel. Finally agreed to earlier this year by UK competition commissioners, the combined operation now finds itself having to plan the likely closure of some 200 travel agency shops.

The name which regularly crops up in discussions of Thomas Cook's troubles is that of its former chief executive who left in August: "Super Nova", Manny Fontenla-Novoa, often described as "colourful", which is shorthand for all sorts of things. Super Nova had raked in only 14.5 million quids worth of salary and shares in the four years prior to his somewhat sudden disappearance.

There is no small amount of schadenfreude among some elements of the Mallorcan tourism industry at both Thomas Cook's woes and the downfall of Super Nova. This stems, in part, from a dislike of the power that one of the Big Two tour operators wields, which can manifest itself in different ways, such as the way in which Thomas Cook decided that it would apply a so-called discount to hotels' invoices in late summer 2010; the discount was in fact a reduction by 5% on what was due.

The schadenfreude is misplaced, however. The power of the Big Two may not be liked by all, but the local tourism industry would be in a fine mess without them. So if the Big Two became the Big One, and Thomas Cook went under, where would the industry be then?

It's unlikely that this would happen. Thomas Cook does operate profitably. Special financing arrangements are normal in the winter period for tour operators, so there is nothing unusual in Thomas Cook seeking loans. The problem is the accumulated debt.

It is the uncertainty that its financial woes arouse that is troubling. Despite its operating profit and reassurances from the company, holidaymakers are likely to think twice about committing themselves to booking with a tour operator whose troubles are being given such a public airing. This may just slow down bookings to Mallorca for next season, while it might also be noted that a loss of consumer confidence caused by the Euro crisis has been one of the very recent and uncontrollable factors that have affected Thomas Cook.

In the circumstances, therefore, it wouldn't be surprising were holidaymakers disinclined to "book it " with Thomas Cook. Not just yet anyway. This might be good news for other tour operators, but, and schadenfreude notwithstanding, it isn't particularly good news for Mallorca.


* As a footnote to this. Here is another article that has failed to get through the Bulletin sensitivity test. "Manny" is a mate apparently.

** But as a second footnote. Having been apparently rejected, it then appeared, as it was all right after all. Most odd.

Any comments to andrew@thealcudiaguide.com please.