Thomas Cook hit by the summer getaway that never took off as Britons enjoy the heatwave at home
Thomas Cook issued a profits warning as holidaymakers put off overseas getaways to enjoy the heatwave at home.
The holiday operator said record temperatures during June and July had affected bookings made by customers hunting for last-minute deals.
It has been forced to slash prices on package holidays as rivals such as Tui offer cheaper deals.
Summer slump: Thomas Cook said record temperatures during June and July had affected bookings made by customers hunting for last-minute deals
Peter Fankhauser, chief executive, said customers had ‘delayed decisions about their summer holidays as they enjoy the record temperatures at home’.
Full-year profits are likely to be toward the lower end of expectations at around £323million, the group said.
Pressure to sell holidays on the cheap squeezed profits during the three months to June 30, dropping 3 per cent to £443million.
Revenues were up 10 per cent to £2.5bilion, boosted by soaring demand for holidays to Turkey and Egypt.
Holidays booked by British tourists to Turkey leapt by 63 per cent compared with a year earlier, with Antalya overtaking Mallorca as the most popular airport to fly to this year.
But the increasing popularity of Turkey and Egypt failed to offset demand for low-cost getaways to Spain, where Thomas Cook is facing ‘aggressive’ competition.
Neil Wilson, chief market analyst at trading platform Markets, said: ‘The popularity of Spain is a problem as it’s far more competitive and margins are tighter.
‘Thomas Cook would prefer it if we were heading back to Turkey and Egypt in greater numbers than we are.’
The firm denied reports earlier this week it was selling its airline, and said the division was growing strongly.
Weekend reports of a sale raised investor hopes as shares jumped 7 per cent on Monday. However, the price fell last night by 1 per cent, or 0.95p, to 95.9p.
Analysts continued to back Thomas Cook with both Shore Capital and Jefferies maintaining their ‘buy’ rating.
The operator said it remained positive about for the year ahead, with its brand for younger travellers, Cook’s Club, proving a hit since launching earlier this year.
Cook’s Club will replace the Club 18-30 package holiday business which was popular with young party animals in the 1980s and 90s.
Demand for the boozy and raucous holidays to destinations such as Magaluf, Kavos and Ayia Napa has waned in recent years as millennials look for more photogenic holiday opportunities.
Instead, Cook’s Club offers younger travellers boutique-style hotels serving local street food and offering yoga lessons.
The firm said it has received interest from a number of potential buyers for Club 18-30 but will stop taking bookings from next summer.
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