Thomas Cook bankruptcy: could hotels have minimized its impact?

Yesterday was a sad day for the world of tourism and especially worrying about the hotel ecosystem. Many of us learned, still with the first morning coffee in hand, of the bankruptcy of the historic British tour operator Thomas Cook, announced at dawn by its CEO Peter Fankhauser.

Even being able to guess the answer, we have not been able to stop wondering if it could have been avoided. We have the feeling that yes, but that the economic interests of certain investment groups have not caused, precisely, the intervention of the British government for the rescue. On the other hand, the reasons that have led the British company to reach this situation are many and of diverse consideration, and we are aware of both its frustrated attempts to establish recapitalization agreements until the last moment, and the implementation of particular initiatives, like the one promoted by national hotel groups, trying to convert the debt of the giant of the tour operation with them into actions. Would they have dropped a company of this size in our country for just over 200 million euros?

Thus, in view of the need to digest the panorama just described, we must reflect on the dramatic consequences of a story that has transcended worldwide in a matter of hours. An unprecedented avalanche, which stands as the greatest repatriation in times of peace, and in its devastating path is dragging victims of the most disparate: more than 22,000 possible direct dismissals, at least 600,000 tourists pending return home ( 150,000 Britons), 960,000 places lost scheduled for 2019 only in the Canary Islands and the Balearic Islands (the most affected communities), etc. A real shame.

The truth is that an unexpected phenomenon like this (or it may not be so unpredictable, in view of requests for advance payment dates or bank guarantees requested by certain establishments), and seeing the way in which it has been primed With the destinations and hotels most dependent on tour operation, it brings back such important issues as the need to find this healthy distribution mix that we have referred to so many times:

• That suppresses or minimizes intermediaries
• That reduces the dependence of third parties
• To bet on direct sales
• That distributes its beds in a balanced and coherent way

Not doing so is very risky. On the one hand, for hotels it means losing complete control over their own product. On the other, betting on the alleged security of the guarantees that “promise” the great tour operators become a double-edged sword in situations like the one at hand, favoring, for example, that hotels that yesterday were complete for the season winter, today barely reach 30% occupancy. It is true that the case of the Canary Islands, the national destination most dependent on tour operation, with 70% tour operator (of which a quarter was in the hands of Thomas Cook), is very special because of its geographical location and its own idiosyncrasy. But other eminently holiday destinations, such as the Balearic Islands, the Costa Brava, the Costa Dorada, the Costa Blanca or the Costa del Almeria have also been greatly affected.

It seems that the time has come for a new cycle to open in which the collection of reservations is made in advance. Is it so crazy, considering that the customer pays 100% before traveling? Why should the hotelier not receive his money the same way? Shouldn’t at least a platform be created that functions as a guarantee fund for payments, collecting money that has already left the client’s pocket?

To this future loss of the planned programming until the end of the year, there are other problems of the present, such as the complex and renewed context of air connections, the demands of those clients who have already moved, but have not yet stayed or are in the equator of your getaway, or that of those who have been forced to cancel a vacation that they have already paid, but will not be able to enjoy.

Neither the support of the British government nor the ATOL license, nor the insurance of the bank or the credit card used to make the purchase will free the hotels from an avalanche of claims. And although the clients do not belong to them or are their direct responsibility, will mean a hard deterioration of their image. The hotels will not be able to position themselves on the client’s side, since they won’t meet the costs involved in ensuring that the clients will enjoy the vacation they hired, and the hotel knows they will never get paid . Certain hotels and hotel groups have already stated that they will do everything in their power to ensure that their customers enjoy their vacations without restrictions. Unfortunately, this position is not available to everyone.

Have you been affected by the bankruptcy of Thomas Cook? At Paraty Tech we have launched our own rescue plan. Please, do let us know if you need help.