This week, 178-year-old travel company Thomas Cook collapsed, leaving more than 150,000 travellers stranded around the world. What does this mean for the future of package holidays – will they still exist in years to come? Jenny Southan shares her predictions
With the rise of self-booking on the internet, whereby people arrange their own accommodation, flights and itineraries, traditional tour operators have struggled to stay afloat. As we saw on September 23, 2019, the Thomas Cook Group went into liquidation, putting 21,000 jobs at risk after the government refused to bail it out.
Originally founded in 1841, Thomas Cook Group plc was formed in 2007 when Thomas Cook AG merged with MyTravel Group, a decision that proved to be a bad one as the latter was saddled with “insurmountable” debt, as Peter Fankhauser, chief executive of Thomas Cook, described.
Thomas Cook had 186 own-brand hotels and resorts, as well as Thomas Cook Airlines, which was launched in 2003 and flew to more than 80 destinations, and various subsidiaries such as Airtours. But a summer of heat waves across Europe, which drove Brits to stay at home, as well as the on-going saga of Brexit, pushed Thomas Cook to the brink.
Fankhauser said: “We have worked exhaustively in the past few days to resolve the outstanding issues on an agreement to secure Thomas Cook’s future for its employees, customers and suppliers.
“Generations of customers entrusted their family holiday to Thomas Cook because our people kept our customers at the heart of the business and maintained our founder’s spirit of innovation.
“This marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world.”
What next for package holidays?
The other big European package operator is Tui Group, which has Tui Holidays, First Choice and Tui Airways (formerly Thomson Airways). Given that Thomas Cook had over 19 million customers annually, there is now an opportunity for its competitors to aquire these.
Part of Thomas Cook’s downfall was due to its inability to adapt to the digital era. Most of its holidays had to be booked on the phone or at physical Thomas Cook branches (of which there were about 600 around the world) on the high-street.
For tourists, the package holiday has been a reliable, good value, convenient way to book a trip, with everything from hotels and transport to meals and tours included in the price. But with Thomas Cook customers typically over the age of 65 and those from lower socio-economic classes, the market was not enough to keep it going in modern times.
These days, the majority of travellers are much more confident and informed about the world, and online travel agencies such as Expedia, Kayak and Booking.com have served them well in enabling them to find the best deals.
Alongside this, the younger generations have shunned package holidays in favour of bespoke trips designed exactly the way they like them, with no chain resorts, all-inclusive buffets, coach tours and other tourists to contend with. These kinds of trips hold no social currency anymore.
Instead, they have been using Airbnb as a base to explore cities, for example, rather than seasonal fly-and-flop sunshine getaways to beach destinations. And unique, personalised experiences have become the ultimate status symbol. Somehow, stories have became more important than sun tans.
Airbnb hasn’t stopped at home rentals. In fact, if there is one disruptor that everyone should continue to be watching, it is this one. Not only did it launch an Experiences portal a couple of years ago, but this summer branched into Adventures, and in September, bought Atlas Obscura, which curates “curious and wonderous” excursions that are now bookable on Airbnb.
All this means travellers can build their own trip with the same company. In fact it probably won’t be long until Airbnb starts offering flights and ground transport, the missing link in the “repackaged” package.
Other companies such as startup Nemo Travel, which launched in September, are also designing websites that empower people to build their own bespoke trip rather than choose one off-the-peg from a tour operator.
Co-founder Tom Harding told Globetrender: “Firstly we inspire through our search tool which asks you three simple questions before suggesting a range of itineraries. Secondly, our unique itinerary builder enables users to pick and choose hotels and activities that work for them in terms of price and style, as well as being able to control the duration of their stay in each place.
“We’re trying to bridge the gap between the online travel agents and the full consultation approach, as we believe people increasingly want to be involved in the design of their itinerary.”
Interestingly, there is also a move towards all-inclusive at the luxury end. New resorts such as the Kudadoo in the Maldives doesn’t charge any extras on top of the nightly rate (about £2,500), allowing guests unlimited spa treatments, champagne, water sports, meals and excursions.
This suggests there is an appetite for fixed prices rather than “unbundled” charges for the individual components of a holiday. Travel companies just need to make packages cool again. Thomas Cook had done a great job with the launch of its new Casa Cook hotel brand, which is aimed at millennials, but it was too little, too late.
Package holidays of the future will need to cater to a more worldly crowd, interested in going off-the-beaten track, trying new things and taking a few risks. The 21st-century traveller wants trips that satisfy their specific needs and interests such multi-generational and eco. In the next few years, we will likely see the emergence of AI travel agents (you can already book flights through chat bots with airlines such as KLM).
Interestingly, with the continued rise of travel from huge markets such as China and India, the more traditional package holiday will probably endure. Thomas Cook India remains the largest travel company in the country, and may be looking to become simply “Thomas Cook”, now the name is up for grabs.
A similar thing happened to Royal Enfield motorbikes, which continue to be built and ridden in India but not in the UK. (The negative press around Thomas Cook, may, on the other hand, force it to choose another name completely.)