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BA CEO Alex Cruz’s, customer service is more Ryanair than British Airways.

I may be the only Silver Card holder who hates BA, but I sadly doubt it!

British Airways historically focused on servicing business class passengers focusing on service and flexibility, but seem to have completely lost their way under Alex Cruz’s guidance.

As a regular traveller on the BA shuttle between Manchester and Heathrow, I have learnt to my cost, that booking a return flight rather than two singles is a big mistake. Even though its exactly the same price either way, if you book a return and then your plans change and you don’t take the flight down, they automatically cancel your return and it simply disappears off the App without a word of explanation.

Having learnt this lesson, when my plans changed for a recent trip and I decided to stay south and fly directly from Heathrow to Los Angles, rather than from Manchester, I rang BA to notify them that I would not be catching the Manchester to Heathrow leg but would fly direct from Heathrow. A simple enough tweak for a business traveller I thought.

Oh, no. This is a major change requiring all four sectors to be re-ticketed or they cancel all my flights. The flight cost change was a reasonable £181 which I was willing to accept, until the agent then informed me I had to pay 4 X £60 change fees taking the total to a ridiculous £421.

So to summarise to not take one flight would cost me more than a return flight from Manchester to Heathrow on exactly the same flights as originally booked. How can BA justify this rip off?

BA still refused to budge even when I escalated the issue to the Silver Card customer service team, making a mockery of loyalty cards.

This experience follows 12 months on from BA forcefully down grading me from business calls on a 12 hour flight to Hyderabad, which was handled appallingly. Having not been notified at check in, in the lounge or at the gate, I was left to find my seat was not in business, when I walked past business!

On querying this with the purser I was told that I had been downgraded, because business had been over booked and that I should write in to complain. When I then sat in an empty business class seat and refused to move until compensation had been agreed, I was immediately threatened with the police being called! Then having moved it took 6 months to get the difference in fair back because BA demanded a copy of the boarding pass showing I had been downgraded.

Working in the travel sector, I recognise that it’s a complex world and mistakes can be made. However, BA’s policies seem antiquated and there is clearly no longer a focus on customer retention and a customer service approach make Ryanair look a friendly airline in comparison.

I may have no choice but to continue to fly BA from Manchester to Heathrow, but please beware that this is one very angry and upset Silver card holder, who will never recommend flying with BA to anybody, until it reverts to its old customer centric self and unfortunately this may require a change of leadership.

Why OTAs need to get a grip of the back end to avoid waving their customers goodbye

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Last week saw a war of words break out between the alternative accommodation giant Airbnb and its more mainstream competitor Booking.com.

A recent Morgan Stanley report highlighted Booking.com’s rapid growth in the ‘alternative’ accommodation sector, leading bookings owner’s Priceline to crow about how their growth would squeeze Airbnb’s market share.

Fascinatingly, Airbnb’s response was to trumpet their back office tools for owners as the key to its future success, criticising Booking.com’s lack of investment in its own tools and resulting inconsistency of customer experience.

Airbnb issued an open challenge, that unless the major OTA’s invested at least 5% of its marketing budget into these tools, the peer-to-peer giant would win this crucial battle.

From a consumer point of view, I personally think Airbnb’s back office experience is far superior to Booking’s, with customers being put into direct contact with owners by phone or chat tools within the Airbnb app.

This creates a much easier dialogue with owners than Booking’s more traditional email route.

I’ve never been left waiting outside an Airbnb property but have several times struggled to get access to properties booked via Booking.com.

Given the importance of customer retention in controlling ever escalating Google or aggregators’ marketing costs, the UK’s beach holiday OTA community may need to take note and look at its own back office tools as a means of delivering competitor advantage.

How long before we see OTA apps offering online check-in for all low cost carriers and tracking technology to show how far away a coach is from picking up customers from their hotel to take them back to the airport?

Customers may also want to use the same app to book in resort restaurants or attractions, using consolidated consumer reviews of other like-minded UK guests, who have stayed in the same hotel previously.

Why not combine the provision of a 24-hour duty office with tools to help customers access medical assistance via virtual doctors over skype and app tools to capture medical expenses and assist with insurance claims?

The options are many and the bottom line is that when you are operating in a commodity market place, where competitors can source the same hotels at the same costs, it’s going to be a race to the bottom in terms of margin, unless brand loyalty can be created.

Ironically, in its core city hotel market Booking.com is a market leader in this art, using its higher frequency of booking, to drive stickiness via its secure retention of credit card details and clever suggestive marketing. However, in the beach sector, like most UK OTAs, it is guilty of the so-called ‘Tarmac wave’.

This is where an OTA lavishes care and attention on the booking journey and pre-departure communication, but then waves goodbye at the airport and simply hopes that the most crucial part of the purchase – the holiday itself – goes well.

In-resort experience is crucial to holiday enjoyment and this is where traditional tour operators like Tui score massively over OTA’s, with their extensive in-resort infrastructure and customer care.

In the past, concerns about principal status and triggering higher VAT liabilities have caused OTA’s to steer well clear of operating in-resort structures and consolidated third party services like Destination Care, which I invested my own cash in before it failed and was written off as being ahead of its time.

However, has that time finally arrived? Possibly, but I think it will be a while before the back end, drives the OTA car.

Booking.com grabs the cash, but will it impact sales?

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Booking.com, the world’s largest OTA in terms of hotel nights sold, recent accounts highlight a major pivot in strategy, in terms of the importance of cash.

Booking.com built its business based on the “Pay at Hotel” agency model, because it believed hotels would sign up faster and give better rates to an OTA who delivered payment on arrival, compared to payment many months after departure in the case of the leisure beach market. Analyst in part, credit this stance as one of the reasons they expanded globally faster than arch rival Expedia, who primarily operate a “Merchant model” where customers pay them directly.

However, Bookings latest accounts show a marked shift towards the Merchant model with revenue jumping 53.4 percent to nearly $1.05 billion, while its agency revenue grew less than one percent to $3.54 billion.

The obvious advantage of the shift is the cash flow gained. Unlike ATOL bonded holiday revenues,  the cash does not need to be held in trust accounts and can be invested into more acquisitions or higher levels of brand advertising, to drive a virtuous circle of increased sales and cash flows.

Ironically, there also appears to be a “commission” advantage in the Merchant model with average commission being 20% compared to 18.6% for the pay at hotel model, but this may be down to mix issues, as it’s hard to see why Hotels would pay more to receive cash later.

Hoteliers reaction to the shift will clearly depend on the payment terms being offered by Booking.com under the Merchant model, but there unlikely to be better than payment of arrival and a lot likelier to be worse.

Interestingly the major European bed banks like Hotel Beds operate a very different cash flow model to gain their commercial advantage.

Bedbank’s operate “B2B2C” models, where the hotels they offer are sold via third party OTA’s who act as merchants, retaining the customers cash and only pass it to the bed bank on customer departure. The bed banks then pay most hotels 60-90 days after departure, to create a cash pot that they use to “pre-pay” and give turnover guarantees to other hotels. These “Castles”, as they are known, in return give the bed banks “Exclusive Rates” that allow them to dominate the price driven beach sector, whilst still allowing them to make higher than average margins.

Historically, this practice allowed booking.com to gain rapid entry into the leisure beach sector, because their payment terms where so much better than either the major tour operators or the bed banks.

It would appear therefore that booking.com are switching from a hotel “land grab” mode, to a brand dominance mode, where they grow faster than competitors by simple out spending them on brand awareness and  relying on superior platform technology to keep customers brand loyal.

 At the end of the day cash will always be King, but it’s how that cash is used which seems to be evolving.

 

Can Thomas Cook make longhaul work when Norwegian Airways can’t?

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Norwegian Airways woes are well documented, with a lack of fuel hedging this year further undermining a business model, that is simply not working financially.

 Last year Norwegian where ranked second to last in financial results when compared to 75 other global low cost carriers, with an operating profit of -8%.

 The short haul low cost formula operated successfully by the likes of Rynair, is to have stage length of 5 hours or less and to operate at airports which allow it to turn its aircraft around very quickly in order to maximise flying hours and its aircraft utilisation.

 They also try to operate as few different aircraft types as possible, as this reduces the cost of carrying spares and allows higher utilisation of its pilots and crew, due to the interchangeability a single aircraft fleets delivers.

 These unit cost efficiencies, allow low cost carriers to offer lower prices than traditional carriers like British Airways and drive higher average load factors, which in turn yield higher profits.

 However, when we move into the Longhaul sector different aircraft types are required and the benefits of turnaround times are mitigated, simply because the aircraft land less frequently.

 Secondly, traditional carrier have a major average revenue advantage because of the high yields delivered by their business class passengers. These passengers tend to be locked into the traditional carriers via loyalty schemes, business lounges and the connectivity delivered by their hub networks.

 Traditional carriers can therefore more easily fight off competition from supposed “long haul low cost carriers”, by simply discounting seats at the back of the aircraft to similar or lower prices, whilst using the premium cabins to subsidise the average revenues per flight.

 Hence, we have seen many long haul low cost carriers go bust since the days of Freddie Laker’s Sky Train and most pundits seem to think Norwegian may be heading the same way.

 So given Norwegians struggles, why are Thomas Cook continuing to increase its long haul flying program with new city routes such as New York, San Francisco and Seattle.

 The answer appears to be that these routes are just icing on its longhaul cake, with its core destinations remaining beach destinations such as Mexico, Florida and the Caribbean.

 Within these destinations Thomas Cook combines their flight seats with holiday hotels, to sell packages on a convenient point to point flying basis, utilising high density aircraft configurations and via a distinctive leisure distribution network.

 Beach routes have allowed Thomas Cook to become Manchester’s largest longhaul carrier and to then add city routes such as San Francisco, where it faces no direct competition from traditional scheduled carriers.

 Hence, in Thomas Cooks case, if you can’t beat them, simply avoid them and extra profits should come flying in!

Meta on Meta. How can it make sense?

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Initially, when Google launched its “Hotel Finder” product, it fan faired how the product would allow more hotels to advertise their own direct web sites, delivering providing lower prices to customers and lower commission payments for hotels as they cut out layers of the distribution chain.

Today however, Google hotel finder continues to be dominated not only by the big OTA’s, Booking.com and Expedia, but more surprisingly by other Meta price comparison sites such as Tripadvisor and Kayak.

 So what’s with the Meta on Meta game?

 Google initially resisted allowing other meta sites to advertise on its services, as it felt that the customer friction from a “Russian Doll” booking process, where customers clicked from one site to another to another, would be highly unsatisfactory. However, as deep linking of hotel and date details improved, this friction was reduced and the benefits of offering the lowest price outweighed these concerns.

 But what’s in it for the other meta’s? The simple answer is a combination of bid arbitrage and brand halo.

 The aim is obviously to charge the meta’s own advertiser more than the meta pays Google and amazingly at times this is clearly possible. However, the longer term game clearly revolves around “Brand Halo”.

 All hotel meta’s such as Tripadvisor, Trivago and Kayak are investing millions into “above the line” TV advertising. Within this media they are generally advertising to a relatively unqualified audience, who may or may not be looking to book hotels in the near future. However, it is done not for the immediate ROI, but to build brand awareness and to introduce new bookers to the brand that then can be retained to book time and again.

 Advertising on another Meta such as Google Hotel finder, delivers 100% qualified audience of potential bookers and even if the arbitrage is negative and the initial booking is acquired at a loss, it is often a less expensive acquisition tool than above the line advertising.

 Hence, the key is customer retention and what drives this.

 For hotel meta’s its clearly the utility delivered by price comparison and the belief that one visit to the site delivers the best price for a hotel. 

 They also have the advantage over Hotel direct sites, of offering a massive range of both beach and city hotels, increasing the likelihood of a repeat purchase, which in turn gives it deeper advertising pockets, with an initially negative ROI’s being acceptable when hotel direct sites will rarely advertise this aggressively.

 The intersecting question however is which Meta site does the customer go to next year? Google hotel finder or the end Meta?

 The same dilemma applies to all Hotel OTA’s advertising on Meta’s and hence the push from beach hotel OTA’s to add extra utility by offering flights, transfers and holiday insurance during the hotel booking process. The more of these products customers buy from OTA’s, the greater the chance of building “Utility” and stickiness, over pure Meta sites that just provide hotel only price comparison.

 So at the end of the day Google is likely to be dominated by those with the highest customer retentions levels and subsequently deepest advertising pockets as it’s a deeply capitalist bidding market place.

 However, the depth of the pockets depends on both customer retention and potential upsell revenues, so don’t expect the same results across beach and city destinations as the specialist beach OTA’s have a number of advantages over their more generic hotel competitors.

 I think it will remain a fascinating battle ground over the next few years!

 

What shape will Easyjet loyalty scheme take.

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Traditionally, low cost carriers like Easyjet have relied primarily on low prices to keep their customers loyal, but as they attract more business travellers to complement their leisure travellers base, they are increasingly over lapping with traditional carriers It is therefore not surprising to hear that new CEO Johan Lundgren’ will be taking their “Loyalty” scheme much more seriously moving forward and investing into it.

Currently, Easyjet say 46 percent of its passengers fly once per year and that returning customers book twice as many flights a year as new customers. This obviously reduces marketing acquisition costs and is as also likely to driver higher ancillary conversion, as returning customers tend to trust the brand more to deliver ancillaries such as transfers and hotel accommodation.

Legacy carriers base their loyalty programs around lounge access, free pre-booked seating and points based access to free flights anywhere on their networks. This allows them to incentivise and inspire business travellers based on free upgrades and seats for leisure travel on both its short haul and longhaul networks.

EasyJets low fair mentality and sophisticated yield model, make the provision of discounted fares based on mileage points unlikely. Similarly, Easyjet are unlikely to want to operate expensive airport lounges, which are primarily required by business travellers needing to work whilst travelling and less attractive to its core leisure customers.

Easyjet could get radical and create a low cost version of airport lounges. For example why not do a deal with common airport locations such as Starbuck’s to offer free coffee and dedicated Easyjet phone charging ports?

It might also decide to offer free or discounted in resort or home to airport transfer services via its existing partnership with Holiday Taxis (I wish!!).

Ironically, the biggest problem Easyjet face is the success of its paid for “Easyjet Plus”  Booking Card. This costs £199 a year, but for frequently travellers flying more than 5 times a year, this still provides great value as it provides an extra carry-on bag, pre-booked seats, priority security clearance and speedy boarding.

It’s hard to see what else Easyjet could cost effectively offer frequent travellers and as such I would expect Easyjet to launch a points based system to reduce the cost of this card for its frequent flyers. This would appeal to both business and leisure travellers alike and would be relatively simple to administer as an add on to its existing “Manage my booking” section which already records all previous and upcoming flights.

The only “Extra” I’d like to see added is some free hold luggage, but given how much revenue low cost carriers make from luggage, now they are yielding prices by flight, I think this may be to “heavy” a cost for them to bare.

The old adage is that “loyalty” comes at a cost, but in today’s google dominate world, this cost is often lower than the acquisition costs of recruiting disloyal customers each time via ppc or price comparison sites.

So for me “Low cost loyalty” is a must and not just a tradition carrier concept.

 

The Evolution that saved Travel Agents

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I recently came across a presentation I gave 18 ago to a group of financial analysts, to explain the various role’s played in the holiday booking process

It talked about three stages of booking a holiday, “Dream, Research and book” and looked at the roles travel agents, call centres and online players played in the booking process.

At the time I was fairly dismissive of Travel agents, who I described as “Inconvenient Brochure Warehouses” that acted as intermediaries for either there in-house tour operator owners or where “Independent” selling a range of pre-built from multiple  holiday companies.

I wrongly predicted a rapid decline of high street agencies, as more customers migrated from “Walking”, to “Talking” to a call centre or “Clicking” to book unemotive travel online.

To be fair this “CWT” migration circle did occur, but ironically the biggest shift in the longer term has been from talking to a call centre to booking online via intuitive and content rich OTA sites that are delivered via high speed broadband connectivity. Although the overall number of High Street Travel agents has sharply declined, Independent agents have survived or even thrived once you include the home working sector.

To me the reason why is simple.

Travel Agents have evolved from being intermediaries, to become “Travel Advisors” who offer a massive range of “Dynamically packaged” holidays or specialist tour operators whom offer differentiated and complex product that is not easily booked online.I personally think the key element is not the product sold, but the word “Advisor”.

In an internet enabled world where online sites offer millions of holiday options, “Personalisation” and “Recommendation” are key online buzz words and the primary focus of most IT development teams.

Online players struggle with the above, because most customers search their sites without ever revealing who they are and have to know what they want before the can search, severely restricting the data required for personalisation.

Contrast this to a shop environment, where the customer is sat in front of the “Advisor”, who with experience can often identify the right products by just looking at them and can ask them much more complex questions about what types of holidays and destinations they are willing to consider and flexibility over departure dates to get the right holiday.

Good travel agents can also influence the “Dream” stage by recommending destination customers may want to visit and as all online players know, the earlier you capture a customer in their holiday booking process, the more loyal they become. That’s not to say some customers won’t just walk out of the shop and simple holidays online with an OTA or directly with supplier.

However, “Advise” does have value, particularly when applied to more complex or higher spend holidays, where customers still want the reassurance of advice from a travel “Expert” before booking.

Lastly and probably most importantly, online advertising costs continue to rise and are now so high that the average “success only” commission paid to travel agents, mean that agents are again the preferred distribution for many cruise lines, most touring and adventure operators, not to mention new entrants like the OTA On the Beach.

The mantra of “If you can’t beat them, state using them again, has never been more true”

 

 

Is the new European Package Regulation a protective shield for UK OTA’s?

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The hotel only sector in the UK is inevitably becoming commoditised as its easy for customers to compare prices by visiting multiple sites via Google or price comparison sites such as Trivago and Tripadvisor.

The same can be said for the flight only market, as I can’t remember the last time, Skyscanner was not my first point of choice, when looking for flights.

However, the same cannot be said when looking for holidays, although players like Kayak and Travel Supermarket are trying to establish a position.

Dynamic Packaging has exponentially increased customers holiday choices with thousands of both flight and hotel options, which when multiplied together yield around 100 million holiday options that each OTA can offer on their sites.

Putting an aggregation and comparison layer above this is very hard, with current sites only comparing offers on the cheapest flight option and passing customers onto the OTA to modify their flight choices. Given that most OTA’s have access to the same flight and hotel suppliers, the savings available from comparison are low compared to the total holiday price and often customers simply use the comparison sites as a listing of OTA’s to look at before booking.

The biggest comparison threat therefore comes from Google, who could combine their already successful flight and hotel search’s to allow customers to Dynamically Package their own holiday options in the same way the OTA’s do.

However, the new European Package Directive puts a massive regulatory block on this, as it clearly states that facilitating the booking of flights and hotels requires the provider be a “Principal”, provide bonding and taking responsibility for the delivery of the product.

This is completely alien to the Google media model and unless they enter the process via a partnership with a global player, willing to take on these responsibilities, its simply not going to happen.

You then look at the Global market place and quickly realise that the major players such as Booking.com and Tripadvisor only really operate in the hotel only market and currently not packages, leaving only Expedia is a likely option for the European market partner.

Although, Expedia worldwide are a major player, they have never fully got their heads around the European package market, leaving players like On the Beach, Love Holidays and Teletext to dominate the UK dynamic packaging sector. Combine this with the large element of the holiday market still accounted for by the traditional holiday giants of Tui, Thomas Cook/Jet2 holidays and you can quickly see that even Expedia could not provide an effective comparison tool for Google

So my simplistic conclusion is that although Google and Booking.com are set to dominate the hotel only sector, the Package Travel Regulations provide a substantial barrier against entry into the European package holiday sector, allowing further growth for the UK’s leading OTA’s not only in the UK market, but increasing in other fertile markets like Holland, Poland and potentially the highly competitive German market place.

This growth however is likely to come via acquisition, as the cost of establishing a brand in other European markets, is often greater than the cost of buying an established player and improving its performance by utilising shared technology and bed buying synergies in the background.

Cross European consolidation of the dynamic packaging sector is definatly coming, but it’s just as likely to be driven by UK OTA’s as international giants like Priceline, Tripadvisor and Expedia. However, don’t rule out China’s C-Trip buying one of the UK’s major OTA’s as the first building block to establish a European strong hold.

Are On the Beach creating the next Evolution of Dynamic Packaging?

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On the Beach’s move into B2B distribution via independent travel agents, is a highly logical move for the UK’s leading OTA and reflects the changing regulatory environment.

 

Prior to June’s role out of the new European Package Directive, OTA’s operated under the much lighter touch “Flight Plus ATOL” arrangements and therefore avoided B2B trade distribution, because selling via third parties was not possible under flight plus and required a full ATOL licence. This required principal status and incurred higher operating costs in the form of higher Public liability insurance, duty office and compensatory framework.

 

However, under the new regulation Flight Plus has effectively been scrapped and full ATOL licence are required for both B2C and B2B distribution, so why not exploit high street distribution?

 

From OTB’s point of view, high street agents provide risk free distribution, with commission only being paid on booking, creating a known cost of customer acquisition (CPA). Contrast this with the greater risk from an ever increasing cost per click (CPC) Google advertising model and you can see the attraction, particularly when there is a clear argument that the high street attracts a different customer sector to those who book online.

 

Significantly, OTB has one of the highest online margins per booking, created by a slick booking process where customers are initially hooked by ultra-low flight prices, derived by mix and matching different low cost carrier flight option, before booking directly contracted “Recommended” hotels and integrated holiday extras such as transfers.

 

These high margins will allow OTB to pay attractive commission to the trade, whilst retaining a small element of profit to cover their administration and bonding costs. Trade distribution will never be a massive profit driver for OTB, but it could easily add a third more volume, boosting its buying power with hoteliers and potentially making it a more attractive channel for airline partners to reach high street agents.

 

From a agents perspective the key question is “Why would high street agents book OTB’s Classic Online packages, rather than packaging the same elements themselves?”

 

The answer probalby boils down to speed and risk. OTB’s booking interface is better than any B2B booking tool I have seen and is provided free of charge. It will also come with full financial protection and public liability insurance, so as long as commission are competitive, it provides a simple and fast booking platform with much reduced risk to the travel agent.

 

I am sure some travel agents will be worried about supporting a “Competitor”, but holidays will be sold via a separate B2B brand and I’m sure OTB will be providing guarantees about not using email address or mobile numbers, to remarket to these customers in the future.

 

Interestingly, it may be the low cost carriers themselves who object to OTB’s move. It is expected that Easyjet Holidays will be following Jet2 Holidays lead and launching their own trade tour operation for Summer 2019. How will they feel about competing with OTB for trade distribution, when OTB are often under cutting their prices by combing outbound Easyjet Flights with inbound Ryanair flights?

 

You can certainly imagine some friction occurring here, but conversely Easyjet may be perfectly happy to take the extra £30 a booking they earn from flight API fees on these trade sales without having any of the hassle of actually selling a holiday!

 

Adding Trade distribution is a logical step for On the Beach and could easily be a win:win for both them and trade partners, however I would not be surprised to hear some trade consortia saying “Not on my Watch”.

The Trump effect on holiday prices!

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The main drivers of change in year on year holiday prices are Fuel prices, dollar aircraft leasing costs and individual destinations exchange rates. The impact of these changes is also effected by when and how much tour operators or airlines, hedge fuel price and currency costs.

Historically, tour operators printed brochures with fixed prices and hedged enough fuel and currency to cover the first print run up until December. The aim was always to hedge at the same time as your major competitors, to remove any fluctuations within the competitive landscape. However, as brochures have become less relevant in the internet age and fluid pricing has become prevalent, the period and dates tour operators hedge have aligned themselves more to those of low cost carriers, who tend to hedge as they put the next seasons programs on sale in October.

As I explained in my last blog, rising fuel costs are likely to reduce flight capacity in the market place as airlines cut back the amount of marginal early morning and mid-week flights they operate. Unfortunately, for airlines the dollar to pound exchange rate, although it soared as high at 1.48 is now level with the start of the year at 1.28 to the pound, meaning that there is no reduction in aircraft leasing costs to dampen the rising fuel costs.

At the moment it seems Donald Trump’s announcements can have a major impact on  currencies relevant to beach holidays.

With Brexit looming it seems inevitable that the Sterling/Euro exchange rate will become more volatile over the next year as we appear to be staggering towards a hard Brexit. We have already seen what impact a Trump announcement about Brexit and a quick trade deal with the UK can have on the value of the pound.

Less expected was a doubling of steel trade tariffs against Turkey. This combined with a fragile Turkish economy has led to a 20% reduction in the value of the Turkish Lira in the last week and a year on year devaluation of over 40% versus the pound.

You would naturally expect that this devaluation would feed directly into lower holiday prices and make Turkish holidays better value against Euro beach destinations, however in reality it’s not as simple as that.

For a long time Turkish hoteliers have contracted with UK tour operators and bed banks primarily in pounds sterling or to a lesser extent dollars. Therefore, Turkey has seen a benefit as the Sterling to Euro exchange rate has deteriorated over the last few years, but most of this is already backed into holiday prices as the fall in the last year has only been from 1.17 to 1.12.

Obviously, customers in resort spending power has been dramatically increased and the average cost of a beer down to £1.60. However, again this is mitigated by a 65% plus mix of All Inclusive sales, which where contracted in sterling and the customer rarely wonders away from their Free bar!

Here it is the hotelier who is getting the short term benefit of being able to buy more Lira with their sterling receipts, which in turn reduces their costs of operating.  Unfortunately, with an inflation rate of 17% this benefit will be eroded quickly and is not likely to be passed on in lower hotel prices next year.

With self-catering properties being available from £1 per night in Turkey during  October, there is likely to be a strong late demand for self-catering in the next few months, but with Google advertising costs relatively fixed, OTA’s need to make sure there are not selling this product at a loss given the low average booking values!!

Love him or hate him, the Trump factor is likely to impact into next year’s market. The problem is that it’s virtually impossible to predict how!