Your holiday is likely to be one of your biggest purchases this year and so it's very important to ensure that you book with a company that is going to be able to fulfill your booking.
The time between paying your deposit and travelling can be as long as 12 months and so it pays to evaluate how at risk the company you are thinking of using is.
Here is our ratings of the various types of holiday companies in the market at the moment. We keep this table up to date as market conditions vary:-
Summary
|
Risk
|
Companies
|
|
High risk
|
a) Small high street travel agents, b) tour operators with heavy discounting, c) small flight d) only companies, e) agencies and f) operators selling UK holidays
|
|
Medium risk
|
a) Smaller airlines, b) small hotels, c) medium size high street travel agencies, d) short haul tour operators, e) cruise agencies, f) medium size airlines, g) medium size tour operators, h) business travel agencies/operators, i) long haul high street agencies
|
|
Low risk
|
a) Large high street travel agencies, b) large tour operators, c) luxury high street agencies, c) non discounting internet tour operators, d) long haul online travel agencies, e) honeymoon/wedding companies, f) larger airlines, g) larger hotel chains.
|
Details - High Risk
|
Type of holiday company
|
|
Risk
|
|
Small high street travel agency booking discounted European holidays
|
|
The high street is a tough place to trade at the moment. Discounting on cheap short haul holidays makes the situation worse as you have to pay for high street rents on very little money.
|
|
Smaller flight only providers
|
|
Any company that books flights as opposed to holidays will have found things increasingly tough over the last few years. Airlines have cut their commissions to the bone and are now offering virtually identical prices online directly to the public.
|
|
Tour operators who sell direct to the public at a deep discount
|
|
The buck stops with tour operators when things go wrong. This means they have to have good financial reserves to cater for major events such as volcanic ash clouds, strikes, civil unrest etc.. Tour operators who operate on tiny margins are unlikely to have these reserves. Dream ticket was a perfect example. Rumour has it that it often made as little as £10 per booking and so did not have the cash to deal with a toughening economic climate.
|
|
Travel agencies and tour operators offering mainly UK packages
|
|
With the advent of the internet people are very savvy at where they can book UK breaks. They can compare prices, get reviews easily which means there is precious little for an agent to offer. Some specialist tour companies who organise more complicated itineraries should be ok but ones who organise simple trips may well struggle.
|
Details - Medium Risk
|
Type of holiday company
|
|
Risk
|
|
Smaller, independent airlines
|
|
Airlines are finding that rising fuel costs and taxes are really hurting their business model. Typically regional in nature these airlines heavily rely on traffic into their country and if that is disrupted for any reason it can hurt them. They often don’t have many other routes in other countries to continue to support them.
|
|
Small hotels
|
|
Whenever you book a holiday direct with a hotel you run the risk of it going bust before you travel. If the hotel is part of a chain then it is more likely to be financially robust. It is also more likely to be bought by another hotel group and run as a going concern if it is does get into trouble. Smaller hotels can just go under and remain empty for years.
|
|
Medium size high street travel agencies
|
|
These travel agencies have the same problems as the small high street travel agencies ie high rents and fewer consumers shopping on the high street. However they are more likely to start closing branches and making redundancies rather than going bust overnight. Because of these early warnings they are seen as medium rather than high risk.
|
|
European only travel agencies and tour operators
|
|
Consumers are becoming a lot more comfortable booking European breaks themselves. They may speak to a tour operator or travel agent to get some advice first but then book direct with the hotel. This means that European only travel agents and tour operators can spend a lot of time giving advice for relatively little reward.
|
|
Specialist cruise agencies
|
|
Up until a few months ago these companies would have been in the low risk category. Although competition is fierce in the cruise section margins were healthy. However there has been some high profile commission cutting in this sector and so some companies (especially the discount cruise agents) could well struggle.
|
|
Medium size airlines
|
|
Like the smaller airlines, medium size airlines have also been hit by rising fuel costs and taxes. Also increased competition from low cost carriers. Their size makes them a little more robust but as they are unlikely to be a national flag carrier they are not immune to economic turbulence.
|
|
Medium size tour operators
|
|
Some good mid market size tour operators have struggled recently. They sometimes find that they are caught between a rock and a hard place of a declining amount of business from travel agencies but not being able to heavily market or discount direct to the consumer for fear of annoying the remaining agency business that they have.
|
|
Business travel agencies and operators
|
|
When the credit crunch hit these companies were right in the firing line. Companies slashed their travel budgets and companies like American Express business saw drops in business of over 50% virtually overnight. The reason we have now moved these companies to medium risk rather than high risk is that if they are still around now then it shows they have managed to weather the worst of the storm and adapt.
|
|
Long haul high street travel agencies
|
|
A high street travel agency that sells holidays all over the world is generally less risky than the European specialists. This is because income is more constant all year round and also people generally need more face to face advice the further afield they travel.
|
Details - Low risk
|
Type of holiday company
|
|
Risk
|
|
Large high street travel agencies
|
|
While the high street is tough the larger agencies will generally downsize before they go bust. Also as we have seen with Co-op travel they would generally look to merge with another company in case of difficulties. While this may place staff jobs in jeopardy it is less likely to put customer holidays at risk.
|
|
Large tour operators
|
|
Like the large high street travel agencies, larger tour operators are more likely to downsize or merge before going bust. They are also more likely to have ATOL protection so that if they do go bust you should be able to get your money back.
|
|
Luxury high street travel agencies
|
|
A luxury travel agency in an affluent area should still be coping despite the credit crunch. Their customer base should still be spending and also valuing the face to face service that a high street agency can provide.
|
|
Internet tour operators with low discount levels
|
|
Tour operators who sell direct to the public through the internet have the benefits of lower overheads , lower marketing costs and the ability to cut the travel agent “out of the loop”. As long as they don’t heavily discount they should be able to use these costs savings to build up strong financial reserves and weather any storms that come their way.
|
|
Long haul online travel agencies
|
|
These agencies should have low overheads and should not have seen the big commission cuts that have happened in sectors like short haul and cruise. Providing that they are not discounting too heavily and are ABTA bonded you should be able to take comfort in booking with these companies.
|
|
Honeymoon and wedding specialist companies
|
|
They say there birth, death and taxes are the three certainties in life. You can add weddings and honeymoons to this! People are always going to get married and are always going to enjoy a good honeymoon. While their budgets may have reduced slightly they are still going to go somewhere. Honeymoon couples tend to value the advice of an independent expert rather than booking direct as they want to be sure to get it 100% perfect.
|
|
Larger airlines |
|
While the larger airlines are feeling the pinch if they are sufficiently large they should have enough routes to guard against disruption in a particular country. Many large airlines are seen as the national flag carrier as well and so when they do get into difficulties governments can step in to help.
|
|
Large hotel chains |
|
Occupancy rates may drop in economically uncertain times but the larger hotel chains are more likely to downsize gradually rather than go bust overnight. Large hotel chains are also one of the beneficiaries of the internet age as more customers feel comfortable booking direct with the hotel rather than through an agent or tour operator. This can result in higher margin and less administration for the hotel concerned. |
100% Privacy Guaranteed
