Thomas Cook Reaches its Final Destination
The world’s oldest travel company has reached its final destination. On Monday, Thomas Cook ceased trading, leaving far-flung holiday-makers, investors, lenders, and the rest of its sector in no man’s land.
Prior to yesterday, Thomas Cook was the UK’s biggest provider of all-in holiday packages. The company put you on one of its planes, booked you into one of its hotels, handed you the bill, and then said “bon-voyage!” Things only started going wrong when the 187-year-old firm took its eye off changing customer trends. Then, it failed to adapt to the online world, and a £1.7 billion debt pile finally put the nail in its coffin. Now, the British government, after refusing a bailout, is embarking on its biggest repatriation mission since World War 1.
Market players wasted no time ruminating, however. Within moments of the opening bell, TUI was without one of its main competitors and up almost 10%. Dart, On The Beach, and budget airlines Ryanair and EasyJet all followed suit as the news filtered through.
The travel industry used to be overcrowded. Now, with an industry goliath going belly up, companies have more wiggle room. Investors are hoping that other firms will grab market share, raise their prices, and flex greater bargaining power against hoteliers to make some more money. There’s also big business in this for KPMG, the Big Four accounting firm in-charge of disposing of Thomas Cook’s dead body.
So, short of some emerging markets exposure in your portfolio? The downfall of Thomas Cook could be a catalyst for the wider travel industry, potentially offering investors a fruitful package tour to bigger overseas profits. Dynamics are shifting!