The fall of Thomas Cook reflects our waning love affair with package holidays

Initially reluctant to get into what was seen as a risky part of the travel industry, the company has suffered from declining interest in all-inclusive trips.

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The demise of Thomas Cook has raised questions about the viability of the organised travel business and, in particular, package holiday operators who put together flights, accommodation, resort transfers and sometimes other services, and sell them as a bundle. Thomas Cook had weathered many storms in its 178-year existence, but arguably none more serious than the challenges of the 21st century.

Considering that travel is a customer-focused business, it is perhaps ironic that the problem should be customers themselves. In the UK, Germany, Scandinavia and other countries where Thomas Cook sold holidays, they were often seasoned travellers with the savvy to find their own deals online, through low-cost airlines including Easyjet and Ryanair, and any number of accommodation booking portals such as Airbnb, Booking.com, Expedia and Lastminute. Why pay extra to a package holiday operator, unless you are cash-rich, time-poor?

The last two decades have brought challenges that couldn’t have been foreseen, such as terrorist attacks in Egypt, Tunisia and Turkey, a weakening of the pound, and more predictable problems such as the rising cost of jet fuel. Add to this a debt burden that had grown to £1.7bn by the time of its collapse, and Thomas Cook was a corporate failure waiting to happen, having come very close to the edge in 2011. Consumer uncertainty over Brexit, and good summer weather discouraging people from going abroad, were the final blows.

Ever since package holidays started growing rapidly in the 1960s, company failures have been a regular occurrence – as recognised by Thomas Cook management for many years, when it stayed out of this most risky side of the travel business.

Mr Cook himself started by organising excursions on a new form of transport, trains, in 1841 – his first ever trip being from Leicester to Loughborough for a temperance rally. What Thomas would have thought over 150 years later, when the company with his name bought party holiday operator Club 18-30 and started selling holidays to all-inclusive hotels awash with alcohol, can only be imagined.

He soon gained expertise in organising excursions for profit, and as the railways expanded so did his company – operating trips to the Great Exhibition in London (1851), and his first tours to Europe (1855) and the USA (1865), with the first round-the-world tours in 1872. It was the first company in the world to run a programme of tours on a commercial basis, and also pioneered tourist guide books and an early version of travellers’ cheques.

Despite ever-increasing competition, Thomas Cook & Son (John Mason Cook was very commercially minded) began to open offices in London and other cities and countries, while selling tickets for trains, ships, and eventually motor coaches and flights, and organising an increasing number of escorted group tours. But in 1928 family control ended, when Thomas’s grandsons sold out to Wagons-Lits, a Belgian company running luxury trains and sleepers.

After the chaos of war Thomas Cook was nationalised, alongside British Railways, in 1948. It remained under state control until Midland Bank led a buy-out in 1972, and during this period it became re-established as a much trusted brand. “Ask the man at Cooks… he knows!” was a famous advertisement that first appeared in 1962, as the company kept to its original business of selling tickets, foreign currency, hotel accommodation and escorted tours.

As a state-owned company it was highly conservative and risk averse, and while it sold the new-fangled package holidays of Clarksons, Cosmos and Thomson, it didn’t want any major involvement in the high-risk business of chartering flights and block booking hotel rooms. Package holidays soon became synonymous with high-profile failures, the biggest at that time being Clarksons in 1974.

Some regarded Thomas Cook as the sleeping giant of travel – big on the retail side and with tours all over the world, but not big in package holidays, which expanded rapidly in the 1970s and 1980s. Yet company failures came regularly, with International Leisure Group (including Intasun), then second-biggest behind Thomson, collapsing in 1991.

A company called Airtours expanded rapidly to challenge Thomson and, like Thomson, it had its own network of travel agencies with sales being driven aggressively through them. Thomas Cook felt it needed its own mass-market package holiday operation to compete, and under German bank WestLB, its new owner from 1992, it had that opportunity. By the end of that decade it had re-invented itself as a package holiday operator with its own travel agencies and airline, one of four giant companies with the same model – Thomson (still the biggest), Thomas Cook, Airtours and First Choice. By 2007 the big four had become the big two as Thomson merged with First Choice (it’s now known by the name of its German parent, TUI) and Thomas Cook merged with MyTravel, the holding company of Airtours.

And now there is just the big one – TUI – unchallenged as the package holiday market leader and also largest operator of high street travel agencies. In 1974 (Clarksons) and 1991 (International Leisure Group), when a major player disappeared, another name grew rapidly to take its place. It’s difficult to see that happening now as the market is so fragmented, but low-cost airlines may increase package sales. TUI is well out in front, with other major names including Jet2holidays (part of a low-cost airline), and online brands such as Loveholidays, On the Beach and Expedia.

But it isn’t all doom and gloom in the travel business – far from it. Cruising is booming, and so are small, specialist tour operators with expertise in particular countries or types of holiday. “Soft” adventure travel is also growing rapidly, and so are escorted tours for people with time and money to spare, mainly the 50-plus – the same type of customers on those first tours.

Thomas Cook has been synonymous with travel for nearly 200 years and is probably too big a brand to disappear, but if and when it does come back under new ownership it will be for a smaller, and probably more up-market operation. There are still good reasons to buy a package rather than book a holiday yourself, including better financial protection and customer service. Thomas Cook himself would probably agree – but not with the booze.

Dave Richardson is the author of Let’s Go, a History of Package Holidays and Escorted Tours.

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