Saga Group’s tour operations are suffering a slump in revenues and its cruise arm will report a £3 million half year operating loss despite the addition of a new ship.
The over-50s travel firm’s interests are being affected by political uncertainties and “very competitive” market conditions.
Booked revenues at Saga’s tour operations for 2019 are 4% down at June 15 against the same period last year.
Margins this year will also be affected by competitive discounting, the company warned in a trading update this morning ahead of its annual meeting.
While cruise bookings are “more resilient”, Saga expects a £3 million operating loss for its cruise arm for the half year.
This is due to the sale of Saga Pearl II in April, and “consequent short-term reduction in revenues, as well as training, launch and marketing costs relating to the Spirit of Discovery”.
The financial benefits of the new ship are expected to start accruing from the date of the first cruise next month, Saga added.
“The group expects to be in line with target booking levels for departures this year,” the company said.
“Forward bookings for the 2020-21 year for the two new ships are broadly on track, with a significant step up in marketing activities planned for the next three months to coincide with the launch of the Spirit of Discovery.
“In line with our plans, Saga expects to report an operating loss of around £3 million for the cruise business for the half year.”
Saga said: “Conditions in the travel market are very competitive and affected by current political uncertainties.
“The group’s tour operations business is not immune to such pressures, with booked revenues for the full year down 4% as of 15 June when compared to the same period last year.
“In addition, margins for this year will be impacted by competitive discounting.”
The company revealed that Sprit of Discovery had achieved 85.9% of its full year target for revenue booked for 2019-20 departures and 31.1% for 2020-21 sailings.
The figure for second new-build Spirit of Adventure was at 30.6% based on trading to the week ending June 8.
Outgoing group CEO Lance Batchelor said: “We are resolutely focused on the execution of our new strategy and have a clear set of priorities.
“Against challenging headwinds in both travel and insurance, we see early signs of progress in stabilising our retail broking business and forward bookings for the cruise business have been resilient.”
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