Concerns are growing about serious turbulence in Greek tourism after warnings by Thomas Cook and easyJet that the reduced demand for travel services would have consequences on their financial results.
Brexit and the reduction of consumer confidence in key markets such as Germany are behind the current pressure on the sector, while there are also structural problems in the tour operators market. The major penetration of independent online platforms such as Airbnb and Booking.com have weighed on major operators’ profit margins from holiday package sales, turning them instead to the hotel market, i.e. hotels that they own.
Yet the 90 percent slump in the Thomas Cook stock price in the last year and the 50 percent drop in its bond value is threatening to add new problems to the market, including Greece: Analysts such as Citi estimate it is a matter of time before hoteliers that tour operators cooperate with, and suppliers in general, start pressing for speedier payments, causing serious cash flow concerns at the worst possible moment. It is noted that Thomas Cook has already turned to its crediting banks with a request for extraordinary financing of 343 million euros.
In Greece Thomas Cook cooperates with a network of 47 hotels, of which it owns four. Company sources tell Kathimerini that the visitors it projects it will bring to Greece this year will be fewer than in 2018, as it has scheduled fewer packages anyway. Even so, it has only sold 457 percent of its packages to all destinations for this year, a rate that is 12 percentage points below that at the same point of 2018. The group continues to be optimistic about Greece, despite an overall warning about a profit decline for the second half of 2019. Four days ago it announced the acquisition of a hotel on Kos and said it is considering further purchases.
EasyJet also warned of lower results for 2019, announcing pretax losses of 313 million euros from October 2018 to March 2019. It also warned that revenues per seat will decline this year, “as consumers are discouraged from the uncertainty regarding Brexit and the financial weakness in Europe.”