Speaking at Abta’s Travel Convention in Marrakech, Giles Hawke, chief executive of Cosmos and Avalon Waterways, said he “didn’t not know why” agents were still selling cheap beach packages.
“Agents should be focused on complicated, high-value products. What’s the point in making £15 commission on a £400 beach holiday?” he said.
“We’re still selling river cruises way too cheap. Americans haven’t been travelling to Europe this year – but we’re not going to do that again. Our average selling price for next year is £4,000 per person and this year it was around £1,800. If that means we’re carrying fewer passengers, then big deal.”
Ben Bouldin, vice-president EMEA at Royal Caribbean International, said his line had seen average selling prices rise in 2022 but warned fellow cruise lines not to “race to the bottom” over concerns around filling ship capacity in the coming months.
“The travel industry has to remain profitable. The only way we do this is selling for the right price. We all need to hold our nerve,” he said.
Chris Wright, managing director of Sunvil Group, agreed, stressing the need for companies to “stop selling at distressed prices” in order to allow firms to boost staff salaries to tackle the sector’s current recruitment challenge.
“We’ve had to increase salaries and we’ve got to keep up with other industries,” he said.
Bouldin said he was “doubtful” Royal would invest as much in traditional advertising for the turn-of-year wave booking period due to “nervousness building in the country”.
“I have no idea how the consumer is going to feel in January,” he said, adding how the travel sector would likely see more digital advertising, which was easier to roll out at short notice.
Wright said some Sunvil customers were “hunkering down to see what happens” describing how the operator’s challenge was to remain flexible and to be able to service demand when needed.
Assessing the UK’s political outlook, Hawke said he believed turbulence would continue for the economy and businesses.
“We’re screwed from a political situation. There’s no trust in our government from travel leaders. We are going to have to continue to fight for business through this constant turbulence.”
Bouldin expressed his concern in rising UK mortgage rates and how financial burdens could dull consumer spending as increased costs mounted.
“The UK is doing quite well at the moment but we’re not escaping the challenges,” he said. “The mortgage situation really worries me. For someone with a £300,000 mortgage, that’s a £600 per month increase, which adds up to a pretty decent family holiday. We’re facing a real problem.”
