Fallout from Thomas Cook Collapse Ripples Through the Industry
by Jessica Montevago
Photo: Electric Egg/Shutterstock.com
The collapse of British travel giant Thomas Cook is having a ripple effect on the travel industry across the world, as destinations dependent on the group’s business are left high and dry.
The world’s oldest travel agency closed last week after banks and the British government refused its request for a bailout, leaving more than half a million travelers stranded.
Hundreds of hotels in Spain that are dependent on its business are now facing imminent closure if the government doesn’t intervene.
“There are 500 hotels which are going to close immediately due to the collapse of Thomas Cook, and the situation could get worse if the government doesn’t take immediate action,” Juan Molas, head of Spain’s Confederation of Hotels and Tourist Accommodation, told business daily Cinco Dias.
Of those hotels facing immediate closure, 100 were exclusively dependent on Thomas Cook, he said, while the rest counted on the firm for between 30% and 70% of their clients. Worst hit are those in the Canaries and the Balearic Islands, where 40% of hotels are affected.
The association will urge Tourism Minister Reyes Maroto to take immediate action at the next Spanish tourism board meeting on Oct. 7.
“The busy season is starting and Thomas Cook had 30% of air capacity,” Molas said, indicating the disappearance of the package holidaymaker could affect some 1.3 million airline seats, with Tenerife and Lanzarote particularly hard hit.
Other sunny destinations, including the 13 Greek getaways from Corfu to Crete, will have to grapple with the financial loss. The Greek Tourism Confederation (SETE) estimated that the economic impact on Greek businesses may be anywhere between €250 million and €500 million (US$273.295 million-US$546.590 million).
The “situation is not simple; Thomas Cook’s bankruptcy will have a negative impact on Greek tourism in terms of revenue for 2019. The data will be finalized by the Bank of Greece at the end of the year,” Greece’s Deputy Tourism Minister Manos Konsolas said in a statement.
To ensure that tourism performance in 2020 is not impacted, the ministry is preparing new promotional and advertising campaigns.
Turkey’s Tourism Advisory Council said it estimates that Thomas Cook owes the local sector more than €350 million (US$381.08 million), adding that it was impossible for the amount to be repaid in the short- and medium-term.
Egypt’s struggling tourism sector is also assessing the impact of Thomas Cook’s folding, which brought 250,000 tourists to the country every year.
Minister of Tourism Rania al-Mashat told Bloomberg that Thomas Cook’s bankruptcy will affect Egypt, referring to the canceling of 25,000 reservations for April 2020, according to Blue Sky Group. However, the country has worked hard to diversify its tourism markets.
In the aviation market, Thomas Cook’s subsidiaries known as Thomas Cook Airlines UK, Thomas Cook Scandinavia, and Thomas Cook Spain operated dozens of flights a day. As travelers look to rebook flights served by Thomas Cook Group, they have accused rival airlines — including Ryanair, British Airways, and TUI — of inflating flight prices by as much as 400%.
The UK’s The Sun newspaper reported that one passenger found a flight with British Airways from London to Orlando, Florida, was £1,978 after the collapse, up from £437 before.
A spokesperson for British Airways told Sky News that the flight prices are based on supply and demand, and denied targeting Thomas Cook routes specifically.
