WHEN many people think of tour operators in Europe, an ailing industry selling tacky package holidays comes to mind. The number of European tourists buying deals bundling accommodation and transport has fallen by a quarter since demand peaked in the early 2000s. But the past year has looked particularly bad. Since last summer, shares in TUI, Europe’s largest tour operator, have fallen by a third, and at Thomas Cook, its rival in second place, in half. Terror attacks and military coups in Tunisia, Egypt and Turkey dented bookings in these once-profitable places, while a sudden fall in bookings after Brexit forced Thomas Cook to issue a profit warning last month. Cashflow problems abound at smaller outfits. One Spanish firm, lowcostholidays, went bust last month stranding 27,000 holidaymakers abroad.

Yet the woes of the industry, often portrayed as dinosaurs limping to extinction, conceal an industry that is much more resilient than it is often thought. On August 12th, TUI announced better than expected results for the three months to the end of June, sending its shares up by around 5%. Although a tenth of its customers changed their travel plans...Continue reading