Thomas Cook Group, the British travel conglomerate which has been in business since 1841 announced yesterday that it was ceasing all of its operations and trading on the stock exchange.
This was a rather tumultuous shock for the whole industry as Thomas Cook is literally the company that invented the `package holiday` concept. Canceling of its hundreds of flights with immediate effect withstanding, the company has been a staple within the Turkish tourism industry as it was solely bringing over approximately 5 million tourists to Turkey annually.
While tourism experts in Turkey expect other tour agencies such as TUI to take over Thomas Cook’s Turkey business they are warning that it may take up to three years for business to return to normal. Add to that, the outstanding debt that Thomas Cook has to hotels and agencies in Turkey amounting to at least a few million pounds, and you have something of a crisis in the industry.
Thomas Cook’s worsening financial situation has been in the news recently, particularly its need for 200 million pounds of new credit to resume its operations. The company had undergone a similar scenario back in 2011 when it was able to refinance its towering 1.1 billion pounds. However, with nightmarish Brexit outcomes looming in the near future, the British government declined to lend a helping hand to the almost two centuries old company. With 600,000 of its customers stranded at airports and hotels around the world, its rivals such as TUI and J2 will definitely step up and scoop the business.
There were nearly 1000 tourists stranded in Mugla district of Turkey who was flown over back to the UK by 12 airplanes sent by the British Civil Aviation Authority. According to reports, Turkey has been one of the most efficient in repatriating tourists affected by the news. Furthermore, Turkey’s Tourism Ministry declared that they were working on a loan package to aid local businesses that may suffer from Thomas Coo’s downfall. They further warned the hotels in Turkey to not charge the customers who are in Turkey as part of a Thomas Cook vacation, and that they would be prosecuted if they do.
Either way, this will be a testing time for Turkey’s tourism industry. Experts say that even other companies such as TUI takes over Thomas Cook’s Turkey business, there may still be a decline of 600 to 700 thousand tourists coming over to Turkey per year. Furthermore, the majority of the hotels that Thomas Cook dealt with were small hospitality ventures with 40 rooms or less and they may not be able to shoulder the financial strain. Major cities such as Istanbul, Ankara, and Izmir are not expected to be affected as much as the tourism destinations in the south since Thomas Cook mostly took its customers to Turkish Mediterranean region.
The German TUI Group who incorporated Thomas Holidays under their flag a few years ago is the apparent benefactor from the collapse. They both serve a similar European demographic, but TUI has better financials as well as a cruise line separate from their holiday and air travel outfits.