Family fortunes

The crisis in the travel industry was revealed last week by the third profit warning within a year from Thomas Cook, one of the two largest operators, which sent its share price crashing as chief executive Manny Fontenla-Novoa admitted: “We are facing a couple of headwinds unique to us.”

One of those is the collapse in demand for holidays in the Middle East and North Africa – notably Tunisia, Morocco and Egypt – in the wake of the Arab Spring. The other is the failure to hedge against rising oil prices, which has seen the cost to operators of many short-haul flights to Europe soar by 40 per cent since July 2010.

But Noel Josephides, who runs Sunvil Holidays, specialising in Greece, fears that problems actually go far deeper.

“This summer, British families are so fearful of high living costs in the eurozone that they simply have not booked,” he says.

At Inghams, another leading travel group, chief executive Andy Perrin says: “The British travel market has been hit harder than most because of the squeeze on incomes caused by rising prices, low rates of interest hitting savers, and a sharp reduction in willingness to spend.”

TUI, the other of “the big two” tour operators, is not being hit so hard because more of its business comes from Germany, where bookings have held up due to the strong economy.

Perrin says Austria, part of Ingham’s Lakes and Mountains programme, offers exceptional value this summer.

The cost of holidays in France has plunged too, following P&O Ferries’ decision to cut the price of some long-haul Dover-Calais returns for car and passengers to just £60, for travel until September 1 if booked by July 24.

A decade ago, the fare for the same journey at this time of year started at around £300.

With bookings badly hit by TV pictures of rioting in Athens, Josephides says the best holiday bargains in Greece will be on two week breaks at the end of August, when most passengers are desperate to get their children back to school.

“Every tour operator will be stuck with two week holidays around that time when many people have to come back, so prices are bound to be weak.”