How long can the traditional package holiday survive?

Today, MyTravel and Thomas Cook announced that they are to merge to create the second biggest travel company in Europe (Tui being the biggest). The deal is all about consolidation and cost savings driven by the fact that the traditional package holiday is in decline. The key question is - and this is important for all tourism businesses in Jersey - is the decline terminal?

A decade ago - package holidays accounted for more than two-thirds of all overseas holidays. In 2006 the big four tour operators sold 13.8 million package holidays whilst 18 million organised their own trips. That's quite a switch. More and more of us are booking our holidays independently - a trend driven by low-cost airlines, internet travel sites like Expedia and the desire for more, shorter breaks rather than one longer holiday.

And the same is happening in Jersey. Think about all those brands which have departed Jersey - Sunblessed, Thomas Cook, Albion to name just three. Those that remain Preston, Premier, Travelsmith etc. are finding it increasingly hard to compete through traditional off-line channels such the high street travel agent. Not only are commission rates demanded by the multiple retailers crippling, but the internet creates greater competition each year. Brand is virtually meaningless in this virtual world - it's now all about price. So margins are under pressure but costs keep on rising. Faced with this circle that cannot be squared, the only answer is to merge and consolidate infrastructure to remove costs from the business.

And yet we need these operators to survive because they still deliver a huge chunk of our existing business. Jersey Tourism are focusing on new markets and those 'Cosmopolitans' (I am really growing to dislike that word) are more likely to do their own thing than book through a tour operator. But please do not forget that for many accommodation owners, the traditional market is still key and must be supported.

The traditional package is a long way from extinction - but those remaining Jersey operators will need to think creatively, or yet more consolidation is on the cards and more brands will disappear.

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