What Is the Future of Packaged Vacations After Thomas Cook's Collapse?
Skift Take
Package holidays are changing and under pressure, but in markets such as the UK, Germany, China, and Canada, these offline options still have their place. Failure to adapt was a contributing factor in Thomas Cook's demise, but there were a whole bunch of other things going on as well.
In the wake of Thomas Cook's demise, if you think that the package holiday business is "screwed, it's over," as Ryanair boss Michael O'Leary believes, then you'd be wrong.
At least, that's the case in two very important European outbound markets, the UK and Germany, where package holidays still have a solid foothold. In Asia, package holidays still have a substantial grip in China, as well, for example.
Sure, traditional tour operator package holidays, mostly sold offline and featuring set combinations of flights and hotels, are facing pressure from the growth of online travel agencies and their dynamic packages, where travelers have more flexibility to choose from a variety of flights and hotels.
The propensity by consumers to book online and directly with low-cost carriers or hotels is altering both models.
But offline vacation packages, if not the dominant way to book vacations, are holding their own in certain markets. Although Thomas Cook acknowledged that it had weakness in its business model in terms of the risk it took in pre-buying room blocks and airline seats to create packages when it didn't own the hotels and planes, its failure to adapt to the digital economy was one among a host of factors that led to its closure.
A Morgan Stanley research note last month about the shuttering of Thomas Cook found that both UK and German "package holiday volumes have been increasing for a decade and maintaining market share of total volume." That means that other ways to book travel, such as through online travel agencies or directly with airlines and hotels, are dominant.
Still, as shown below, the market share of UK and German outbound package hol
