Tuesday, July 03, 2007

Vortex of change

Letter to the editor [Not often we get these! So old media] from Steve Endacott of the OnHoliday Group, responding to Paul Evans' column in the June edition of Travolution ("Grass roots are still important"):

"2007 could easily become the year the travel industry ran out of excuses and recognised the inevitable facts of life. Just as CO2 emission have become the accepted cause of global warming and belated actions taken, the travel industry needs to face up to the fact that the internet is scraping most of the rules and the “vortex of change” is spinning faster than ever.

"Yes, interest rates have gone up and consumer confidence has been hit, but the underlying influence over this year’s disastrous lates period for traditional package holiday companies and low cost carriers alike have not yet been recognised by many.

"Global warming in general has improved the UK climate in the summer months and holidays at home fuelled by the advances in gaming technology are no longer the nightmare they used to be for parents.

"Have you tried to sale the virtues of an overseas swimming pool, over 24 hour Sky TV, Playstation and broadband internet access to you kids lately? I have and as Expedia’s CEO recently put it “today’s generation are wired completely differently to us, having been brought up in a different world. Why therefore do we assume they want the same overseas holidays we always enjoyed?

"The internet has turned the beach holiday into a price lead commodity for most of the beach market and its never been easier to wait until the last minute to pick up a bargain.

"These are being supplied in their millions by either traditional operator’s locked into excess guaranteed seats and beds, or from the new age dynamic packaging specialists who have massively broadened customers access to distressed bed stock in the 4 to 5 Star bracket. The customer has never has it so good, with high class holidays at knock down prices.

"The low cost model has traditionally protected itself from the last minute discounting market by launching with low prices, which in turn generate good load factors and allow them to manage prices in the “lates’” period.

"However, this year many have failed to achieve the right balance and for the first time we have seen thousands of seats dumped into the “lates’” market at 1p fairs or via 50% off sales. Yet more options for the average customer to consider and given the low cost carriers aggressive growth strategies these are unlikely to go away.

"Hence, the Vortex is spinning faster and the rate of evolution required is accelerating by the day. Nobody is safe in the new world and we all have to constantly look at our models, with the aim of reducing overheads per passenger and increasing flexibility, so that we can ride the later booking tidal wave and not get left high and dry on a beach that used to be called Holiday Heaven."

1 comment:

Matt Cheevers said...

Mr Endacott is right again! The market has changed and is unpredictable to say the least. The UK market is a very good example. Demand from customers for UK holidays over the past 3 months has been increasing and therefore we decided to put more effort into this area. Then two weeks before we are due to launch a new UK only website the demand for UK product drops by 20% week on week. Demand for overseas holidays have increased by 30%+ week on week!

This is just one example of why all businesses must spread risk and have a flexible development/product plan.

We are continuing to adapt our model and are close to completing the full restructure our business and activities