Next month will be critical to travel companies’ bottom lines as selling prices continue to be slashed even before the late-sale period begins.
Prices for some destinations have dropped by 15% to 20% in the past week, particularly to Greece and Turkey, according to Steve Campion, managing director of Holiday Discount Centre.
He said: “June will be key. I suspect the industry will recover some lost ground, but if you don’t get the business back in June it will be a struggle.”
Icelolly.com chief executive Richard Singer said prices for Tenerife, Majorca, Costa Blanca, Dalaman and the Algarve were up to 20% down for July departures compared with 2018.
Travel Weekly found deals on Icelolly as low as £266 for seven nights’ self-catering at Arcos Playa, Majorca, from Luton on July 30 with easyJet Holidays.
Singer said: “There’s a lot of discounting, which is a continuation of what was happening earlier in the year. Advertisers have been more aggressive, which is stimulating the market. If the year ends flat, that would be deemed a good year. In terms of margins, operators’ holidays are a lot less profitable.”
Alistair Rowland, chief retail officer for specialist business at Midcounties Co-operative, said prices last week were down by about 5% year on year.
“It’s not good prices are lower; normally there is a 3% to 5% growth in prices [annually]. We haven’t seen selling prices going backwards for a few years.”
However, he stressed the market had not crashed.
Jane Schumm, Hays Travel retail and training director, said the agency’s tour operation was enjoying a healthy year-on-year increase in margins, but said prices from third-party operators were “exceptional”.
Experts fear prolonged discounting over recent months in a soft market has already “done the damage”.
He said: “The first person who flinches and starts discounting means everyone else has to go with them and it’s trashing the market.”
Alcock said a company “only really knows what its profits are when a customer has departed”, adding that the financial impact of discounting would “come home to roost” in autumn.
Alan Bowen, legal adviser to the Association of Atol Companies, said: “There is a general lack of demand for the ordinary family holiday. We have seen discounting since January. I suspect there is an awful lot of capacity left to sell and I fear discounts will get bigger and trash margins.”
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