The Board rooms and meeting rooms of travel businesses across the country will be filled this month by anxious CEOs, together with their sales and yield teams worrying about “Peaks” sales, wondering what they can do to speed the rate of sale, or, less commonly, wondering by how much they can increase prices to slow the rate of sale so they still have something left to sell for the rest of the year.
the period after Christmas, from Boxing day through until mid February, has always been a critical sales period for the travel industry, despite many changes in the market over the last 20 or so years.
When I first came into the industry, more than 25 years ago, many tour operators used to put their brochures on sale for the following summer at the end of August or early September, and there was a massive surge of early sales for families in particular. The historic low season of November and December, when most people are more interested in buying Christmas presents than buying holidays has always been with us, but the TV campaigns to encourage customers to start thinking about, and more particularly, booking their summer breaks then hit the screens for Christmas night peak programming – and cost a small fortune!
Back in the 1980s and through to the very early 1990s, some tour operators actually used the post Christmas period as a means of attempting to sell most, if not all of their summer programme, and some operators had the luxury of going into the summer season having already sold more than 90% of their whole programme. It was partly for this reason that the regulators were concerned about the length of time that tour operators had the benefit and use of customer money, and this was also a great temptation for less scrupulous business owners to disappear with large sums of customer money in their back pockets.
Sadly those days have long since disappeared, but it remains true that the “Peaks” period is critical for determining how many holidays have to be sold late, and therefore how much profit or loss most travel businesses will make in a holiday season. A slow January can result in serious problems for operators and agents alike in the coming financial year, and every year, senior executives in the industry spend their time sleeping badly, and worrying about whether any external shocks could disrupt their sales plans. I can remember, not so long ago, that there was an outbreak of bird flu in Eastern Turkey shortly after Christmas. Whilst this occurred around 1000 miles from the nearest holiday resort, it was enough to damage sales to Turkey for the whole of the following summer.
In one respect, the Peaks period has changed slightly in the last 25 years. Way back then, brochures were collected in the week after Christmas – the family would read them before everyone went back to work at the beginning of January, and the sales rush would start the following week. However, the act of collecting brochures meant that travel agents had a large footfall immediately after Christmas. Nowadays, far more customers undertake their research online, and this has impacted on that immediate post Christmas footfall, irrespective of whether it has ultimately affected sales for the following Summer.
Generally however, customers don’t really start booking in earnest until about the second or third weekend in January. The industry does sometimes have collective amnesia on this point, and if sales are not booming by the 5th January, there can sometimes be a mass panic, with all sorts of unnecessary “special offers” to entice customers to book immediately.
In practice, if the market still seems sluggish by the second full Saturday in January, it is likely to mean that the peak period, and probably the rest of the coming summer is going to be difficult.
The other trend which seems to be commonplace at this time of year is that of travel businesses trying to talk the market up – which is an inevitable corollary of the need to maximise sales in this relatively short window. You can guarantee that by the end of the first week of January that a number of travel businesses will have announced that they have experienced record sales in the post Christmas period, or that sales have been x hundred percent up year on year. Half the time, the businesses making these claims have only been trading for a couple of years anyway, so significant year on year increases are not that surprising – if you only sold 50 holidays last year, but sold 300 this year in the same period, that’s a like for like increase of 500% – which sounds much more impressive!
So, what will the 2016 Peaks period bring? We have already seen some of the “market is booming” comments, which gives me a little degree of cynicism. The worrying factors are that Egypt and Tunisia are still out of bounds, and there must be some twitchiness about Turkey, whether or not this is justified. As I write, the Chancellor of the Exchequer is warning of a “dangerous cocktail” of economic risks, which could unsettle customers, and discourage them from booking.
However, on the positive side, 2015 appears to have been a good year for most of the travel market, and quite often positive sentiment is infectious. Customers appear to want to go on holiday, and after a few years of negative sentiment, there remains an unfulfilled demand which should benefit the travel industry.
We probably won’t know for sure for another month or more, but as with so many features of the travel industry, there is a difficult balancing act – panic too early, and you could end up slashing prices, getting big volumes in and making very little money from your key selling period; stay too mellow, the sale fail to materialise, and you spend the rest of the summer playing catch up.
So, it’s definitely a case of “Good Luck” to all those people whose livelihoods depend on their January and February sales.