Steve Jones

Travel Bulletin - - CONTENTS -

It is of­ten noted how travel is ex­posed to the va­garies of world events. Ter­ror­ism, eco­nomic con­di­tions, po­lit­i­cal in­sta­bil­ity, nat­u­ral dis­as­ters and ex­change rates all have the abil­ity to dampen de­mand, and from a share­hold­ers point of view they can also hit the bot­tom line. Yet even a cur­sory anal­y­sis of the re­cent per­for­mance of the travel sec­tor shows maybe our hand wring­ing is mis­placed. There will al­ways be chal­lenges and the is­sues are real. But what the re­sults have il­lus­trated is not only our al­most in­sa­tiable de­sire to travel – we might get spooked for a day or two but the ner­vous­ness rarely lingers – but how travel firms have, by and large, coped and adapted dur­ing these times of un­prece­dented un­cer­tainty. There have been bumps in the road, but most have en­joyed a pos­i­tive year. One such bump was en­coun­tered, per­haps un­ex­pect­edly, by Flight Cen­tre, the in­dus­try’s money-mak­ing ma­chine which re­ported profit dip­ping al­most 6% to $345m. Yet ac­cord­ing to MD Gra­ham Turner, that was not so much the result of poor trad­ing con­di­tions, or sales hit by world events, but down to rock bot­tom air­fares. There is, to put it sim­ply, an over­sup­ply of seats which is putting down­ward pres­sure on fares. Great for trav­ellers, not so for mar­gins - although on the flip side cheap deals do stim­u­late the mar­ket. Over at Hel­loworld, An­drew and Cinzia Burnes seem to be get­ting the busi­ness into rea­son­able shape. One is­sue ad­dressed by Burnes has been se­nior level salary with a “re­align­ment of ex­ec­u­tive re­mu­ner­a­tion to more ap­pro­pri­ate lev­els” - mean­ing “pay cut” to you and me. I thought that was an im­por­tant state­ment of in­tent. You need to pay top dol­lar for top ex­ec­u­tive tal­ent, but there’s a bal­ance. And in re­cent years the busi­ness lost sight of that by paying ex­or­bi­tant sums de­spite the busi­ness stum­bling along - re­sult­ing in dishar­mony in the ranks. The in­dus­try’s other bricks and mor­tar re­tail net­works have also fared well. Mag­el­lan con­tin­ues to pros­per, as does Trav­ellers Choice, which re­ported an­other record profit. In such a com­pet­i­tive en­vi­ron­ment, that is no mean feat and tes­ta­ment to the man­age­ment teams which have in­stilled a sense of to­geth­er­ness in their re­spec­tive net­works. We­b­jet, ev­ery agents’ favourite OTA, has con­tin­ued to grow, and done so – as we all know – while hav­ing a dig at its bricks and mor­tar coun­ter­parts. On that, those TV ads are just ap­palling. Ex­cru­ci­at­ingly pompous and un­bear­ably sanc­ti­mo­nious. But, as I’ve said be­fore, agents have hardly been shy to put the boot in to OTAS over the years, and con­tinue to do so, and they can’t have it both ways. What is clear in the re­tail sec­tor is that there’s room for ev­ery­one. It would be wrong to sug­gest it’s all sun­shine and roses, and chal­leng­ing times re­main. But all things con­sid­ered, the re­tail land­scape is in pretty good shape.

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