The collapse of travel firm Sun 4 U has raised questions for thousands of British holidayers. With over one-thousand travellers facing extra fees and accommodation expenses due to the company’s closure, an industry-wide drop in confidence could soon happen. It would be the first of many hits to Britain’s travel industry throughout the year, but it may not hurt all operators.
The high-end travel industry is fairly small in its visibility, but has remained highly profitable even throughout the financial crisis. Luxury holidays targeting those with a high net worth and unlimited holiday time have sold consistently over the last three years, keeping occupancy steady in some of the world’s most expensive and luxurious hotels.
It’s expected that the collapse of mid-range travel operators will do little to hurt the reputation of those that cater to the higher end, instead reinforcing their brands as icons of quality and customer support. Private luxury travel operators tend to operate with higher margins than other companies, targeting their operations to those with disposable income and the desire to relax overseas.
With the Intercontinental Hotels Group announcing an increase in occupancy, it appears that high-end travel is alive and well. The hotel chain has pointed to an increase in business travel and luxury personal travel as the primary reasons for its recovery, claiming that occupancy is up in most of its hotel network. Growth remains highest in the chain’s East Asian hotel and apartment properties.
The bankruptcy of Britain’s leading travel agents certainly won’t be a welcome sight to the country’s thousands of middle class holidayers, particularly those with package tours booked through a travel firm. While the ongoing cash flow struggle is unlikely to hit those at the top of the spending chain, a downturn in mid-range travel sales can and will push many travel agents towards insolvency.