Tourists are holding back on a summer destination decision this year, says Thomas Cook, reporting a slow start to bookings
Travel company Thomas Cook says that customers are delaying a decision on summer holiday bookings. They report that only around 40% of the summer season has been booked so far, but the trend is away from potential troublespots towards the Western Mediterranean, the USA and Cuba.
Thomas Cook Group reported yesterday: “We are also seeing a marked shift in demand, with significantly lower bookings than last year to Turkey, and higher bookings to Spain, other European and major long haul destinations (including the USA and Cuba).”
After terrorist attacks against tourists in Tunisia and Egypt last year the company moved bookings to other destinations in the Eurozone, particularly the Canary Islands, Balearics and mainland Spain. Fortunately for clients this was just when the value of sterling was rising against the euro and making for cheaper vacation costs. Greece, against many expectations in a difficult year with capital controls, had a record year, with 25 million tourists compared to a usual average below 20 million. Part of that would have been down to the more favourable EUR-GBP exchange rate last year. Tourists may have a rude awakening if heading for an Easter break this year. The week before Easter 2015 there were EUR 1.38 to one pound compared to EUR 1.26 this year.
Thomas Cook say that Cuba and the USA are particularly popular destinations for 2016, and here the currency news is little better, with the one pound being worth USD 1.48 last Easter and USD 1.41 this year.
The Cuban currency is pegged to the US dollar, but is complicated by Cuba’s dual currency system. Tourists use the Cuban Convertible Peso (CUC) and locals use the Cuban Peso (CUP), which is worth considerably less. Although the Cuban government has promised to switch solely to the CUP for some time, nothing has happened yet, which is a problem for any businesses trying to work with Cuba . They cannot pay their staff in CUC but instead pay the salary to the relevant government agency, who pay the workers in CUP, less a percentage.
Both tourists and businesses exporting or importing to Cuba have to pay almost entirely in cash, and in CUC. But while Americans have to pay 10% to swap their USD to CUC there is no charge for most other currencies.
Charles Purdy, Chief Executive of Smart Currency Exchange says: “With the Brexit vote coming just a month before the summer holiday season, rates could change dramatically between now and then. This makes planning difficult for tourists, but even more so for travel companies. Any businesses likely to be affected need to be talking to Smart Currency Business both for advice and to lock in a currency via a forward contract. For many, that is the only way to be sure of being profitable in these volatile times.”