4 ms·

Is this brexit related?

asdf333 7y ago
not completely...booking.com, tripadvisor, trivago, expedia and all these online hotel booking sites are what really did this company in. i suppose it didn't help that folks were probably less interested in travelling due to financial uncertainties around brexit but it definitely isn't the main reason
- arcticbull 7y ago
  That’s a very good point. Travelers have shifted over the years from an all-inclusive package booking process to a DIY piecemeal approach and it’s hard for package sellers to compete against the OTAs.
  - switch007 7y ago
    Except the 600,000 customers currently abroad
    - arcticbull 7y ago
      Indeed :) those folks have a problem.
    - Scoundreller 7y ago
      But the pricing power TC had over them had been eroded. When there’s less demand, but the same supply, price has to give.
Lazare 7y ago
Not really. As noted in the article, Thomas Cook merged with MyTravel Group in 2007, which almost collapsed in 2011 and left them with a lot of debt. Brexit came years later. Possible causes would be long term trends in the types of holidays people want, increased competition, mismanagement, etc. But the problems started long before Brexit.
Waterluvian 7y ago
Yes. What other people are saying is also true. Many nails in the coffin. Brexit apparently caused Britons to hang on to their money more and vacation abroad less. So if you're a travel company on the ropes, Brexit could seal your fate.
- craz8 7y ago
  It probably doesn’t help that their revenue is in pounds and their biggest costs are in Euros and Dollars when your local currency crashes due to Brexit For a business with small margins, just this currency swing is a disaster
  - craz8 7y ago
    It’s possible to hedge some of this risk, but eventually you’d have to raise your prices in Pounds, which will decrease demand and if you’re already on the edge with debt payments, it all falls apart
stupendousyappi 7y ago
The exchange rate decline was likely the biggest Brexit-related factor.
- greglindahl 7y ago
  ... they should have hedged it for the packages people had actually purchased. That's what currency hedges are for. Prices going up do decrease sales, of course.
  - tomatocracy 7y ago
    They may well have hedged, I don’t think it’s clear. But I would point out the limits of hedging here - they’d have needed either collateral or someone to offer them credit terms on hedging to do that, neither of which were easily available to them.
  - billpg 7y ago
    A company with margins cut to the bone in the internet era should have spent money they don't have, just in case the UK government does something stupid that causes the currency to tank?
  - M2Ys4U 7y ago
    When you're almost £2 billion in the hole, how feasible is it to hedge currency?
Scoundreller 7y ago
I’ll also add a lot of people’s reluctance to travel around the time period of each hard Brexit date. Nobody wanted to risk getting stranded at any changeover, and a lot of industries are probably reluctant to grant time off during it.
futhey 7y ago
Exchange rates and access to credit may be in some part Brexit related, but not enough to have on its own altered the outcome.
- tomatocracy 7y ago
  Exchange rates I don’t disagree with but access to credit in general is as good or better now for UK companies than in 2016.
billpg 7y ago
It hasn't helped. The fall in the value of the pound caused by Brexit has made their service significantly more expensive. Thomas Cook might have been able to position itself, in the internet era, as a local trustworthy service that takes away the uncertainty of buying from unknown overseas services. The increased costs caused by Brexit only made a difficult market more difficult.

not completely...booking.com, tripadvisor, trivago, expedia and all these online hotel booking sites are what really did this company in. i suppose it didn't help that folks were probably less interested in travelling due to financial uncertainties around brexit but it definitely isn't the main reason

arcticbull 7y ago
That’s a very good point. Travelers have shifted over the years from an all-inclusive package booking process to a DIY piecemeal approach and it’s hard for package sellers to compete against the OTAs.
- switch007 7y ago
  Except the 600,000 customers currently abroad
  - arcticbull 7y ago
    Indeed :) those folks have a problem.
  - Scoundreller 7y ago
    But the pricing power TC had over them had been eroded. When there’s less demand, but the same supply, price has to give.

Lazare 7y ago

Not really. As noted in the article, Thomas Cook merged with MyTravel Group in 2007, which almost collapsed in 2011 and left them with a lot of debt. Brexit came years later. Possible causes would be long term trends in the types of holidays people want, increased competition, mismanagement, etc. But the problems started long before Brexit.

Waterluvian 7y ago

Yes. What other people are saying is also true. Many nails in the coffin. Brexit apparently caused Britons to hang on to their money more and vacation abroad less. So if you're a travel company on the ropes, Brexit could seal your fate.

craz8 7y ago
It probably doesn’t help that their revenue is in pounds and their biggest costs are in Euros and Dollars when your local currency crashes due to Brexit For a business with small margins, just this currency swing is a disaster
- craz8 7y ago
  It’s possible to hedge some of this risk, but eventually you’d have to raise your prices in Pounds, which will decrease demand and if you’re already on the edge with debt payments, it all falls apart

stupendousyappi 7y ago

The exchange rate decline was likely the biggest Brexit-related factor.

greglindahl 7y ago
... they should have hedged it for the packages people had actually purchased. That's what currency hedges are for. Prices going up do decrease sales, of course.
- tomatocracy 7y ago
  They may well have hedged, I don’t think it’s clear. But I would point out the limits of hedging here - they’d have needed either collateral or someone to offer them credit terms on hedging to do that, neither of which were easily available to them.
- billpg 7y ago
  A company with margins cut to the bone in the internet era should have spent money they don't have, just in case the UK government does something stupid that causes the currency to tank?
- M2Ys4U 7y ago
  When you're almost £2 billion in the hole, how feasible is it to hedge currency?

Scoundreller 7y ago

I’ll also add a lot of people’s reluctance to travel around the time period of each hard Brexit date. Nobody wanted to risk getting stranded at any changeover, and a lot of industries are probably reluctant to grant time off during it.

futhey 7y ago

Exchange rates and access to credit may be in some part Brexit related, but not enough to have on its own altered the outcome.

tomatocracy 7y ago
Exchange rates I don’t disagree with but access to credit in general is as good or better now for UK companies than in 2016.

billpg 7y ago

It hasn't helped. The fall in the value of the pound caused by Brexit has made their service significantly more expensive. Thomas Cook might have been able to position itself, in the internet era, as a local trustworthy service that takes away the uncertainty of buying from unknown overseas services. The increased costs caused by Brexit only made a difficult market more difficult.