It's peak season pricing that eradicates trust
Thomas Cook is warning that its profits have been hit by the weather and it expects annual earnings to be at the lower end of market expectations.
A fabulous World Cup and an extraordinary run of sunshine doesn’t make any difference to people who have planned ahead, but it does significantly impact last minute bookings.
Consequently there are peak season discounts around for those who have been prepared to wait.
If the hot summers continue, as meteorologists are predicting, it could lead to a general drop in peak season pricing, which would be music to the ears of just about every holidaymaker.
Nobody likes paying top dollar during July and August. I don’t even like travelling during that period and sharing a beach with a million others, let alone paying for the privilege.
Cosmos chief executive Giles Hawke makes some good points about trust in his travel trade column this week, but the main reason for distrust is the issue of holiday pricing.
The public seem to reluctantly accept the rules of supply and demand in other areas. They know they’ll have to pay £1,200 for a new iphone because so many want them. They accept that waistcoasts cost much more on the day of England’s World Cup semi-final than the following day.
But there are some unique reasons for their angst over holiday prices.
Firstly, they don’t feel they have a choice – they have to ‘demand’ during school holidays if they have kids at school and want to go abroad.
Secondly, there have been outrageous profiteering by some travel companies. Every year, it’s easy for the media to find examples of huge disrepancies in price between the the first week of the holidays and the last week at school. That’s fine in a free market. Charge what you can get away with it. But don’t expect the public to trust or like you.
Thirdly, and perhaps most importantly, the industry has been simply awful at communicating their messages. We rarely hear about how the travel industry works, that hoteliers hike their prices to operators or that many are surviving on small margins. Of course, that looks a little thin when you see that Thomas Cook is still expected to make full year profits of £352m, but we know that many travel companies have a precarious existence. Communication has to improve.
If we can do something about the second and third points, it might help the industry to build more trust with the public.
Sales Operations Manager - Feefo
6ySome good points, however, is the perception of "rip off" peak pricing brought about by the fact that "off peak" prices are too cheap?c Charging £199 for a package in June to the Greek islands (or anywhere for that matter) on a contracted seat cost of c. £220+ tax and empty legs then factor in cost of accommodation, transfers, reps cost and other overheads etc. the buying public are not seeing this as cheap they see it as an expected price as we have conditioned them to this type of pricing, therefore when charging £799 for the same holiday in July / August they see it as a rip off! but in reality there is probably only 20-30% margin in the peak when all costs are factored in.
Principal Sales Engineer at Salesforce
6yJust like the "introductory offer" and then adding 30% to next years cost. Turns all consumers into cynics.
Chief Executive Officer at Ice Travel Group - TravelSupermarket and Icelolly.com
6yGood article. The fall back defence of ‘supply and demand’, as valid as it may be, is lost on consumers.