Late holiday deals
Discussion
Colin_147 said:
Can go at probably 2 or 3 days notice for the best deal
Now admittedly it's about 6 years since I worked on pricing systems for holiday companies, but I think some of the behaviours haven't changed too much in that time, so I will say this anyway ...The "book 2 or 3 days ahead for a cheap deal" is actually something of a fallacy. People looking to go at such short notice will usually pay more than those who book 2 to 3 weeks out. The reason for this is something that our consultants called the "point of indifference". At 2 to 3 weeks out (depending on the destination, long haul vs short haul mostly) people will be flexible as to location, specific date etc., so will be prepared to shop around some more - hence prices are depressed. At 2 to 3 days out, people have set dates and feel a need to go away more strongly, hence prices are higher. Also bear in mind that so close to departure the holiday company have a very accurate cost prediction for the flights, and know that to sell below a certain level will cost more than leaving the seat empty - 2 to 3 weeks out with a lower load factor the grey area is much wider, so there is more price flexibility.
The way these things go on PH will mean that someone will come back with an anecdote about how they turned up at the airport with bags packed and got on the phone to a travel agent, then bought their holiday for £3 and had a BJ from the flight attendant as thanks for using up the last seat on the plane.
aclivity said:
Colin_147 said:
Can go at probably 2 or 3 days notice for the best deal
Now admittedly it's about 6 years since I worked on pricing systems for holiday companies, but I think some of the behaviours haven't changed too much in that time, so I will say this anyway ...The "book 2 or 3 days ahead for a cheap deal" is actually something of a fallacy. People looking to go at such short notice will usually pay more than those who book 2 to 3 weeks out. The reason for this is something that our consultants called the "point of indifference". At 2 to 3 weeks out (depending on the destination, long haul vs short haul mostly) people will be flexible as to location, specific date etc., so will be prepared to shop around some more - hence prices are depressed. At 2 to 3 days out, people have set dates and feel a need to go away more strongly, hence prices are higher. Also bear in mind that so close to departure the holiday company have a very accurate cost prediction for the flights, and know that to sell below a certain level will cost more than leaving the seat empty - 2 to 3 weeks out with a lower load factor the grey area is much wider, so there is more price flexibility.
The way these things go on PH will mean that someone will come back with an anecdote about how they turned up at the airport with bags packed and got on the phone to a travel agent, then bought their holiday for £3 and had a BJ from the flight attendant as thanks for using up the last seat on the plane.
aclivity said:
The "book 2 or 3 days ahead for a cheap deal" is actually something of a fallacy. People looking to go at such short notice will usually pay more than those who book 2 to 3 weeks out. The reason for this is something that our consultants called the "point of indifference". At 2 to 3 weeks out (depending on the destination, long haul vs short haul mostly) people will be flexible as to location, specific date etc., so will be prepared to shop around some more - hence prices are depressed. At 2 to 3 days out, people have set dates and feel a need to go away more strongly, hence prices are higher. Also bear in mind that so close to departure the holiday company have a very accurate cost prediction for the flights, and know that to sell below a certain level will cost more than leaving the seat empty - 2 to 3 weeks out with a lower load factor the grey area is much wider, so there is more price flexibility.
Interesting post thanks, but how does the bit in bold make any sense?Paddy_N_Murphy said:
Petrol Only said:
Hi Colin, If you PM me I could "recommend" you to Voyage Prive. (just need an email)
They do flash sales.
Up to 70% discount on some holidays.
I signed up to them a while back and some stonking offers do come through and it all looks top class stuff.They do flash sales.
Up to 70% discount on some holidays.
Anyone actually vouch for 'them' ? Recommend ?
Too good to be true and all that
Edited by Petrol Only on Thursday 22 July 10:52
hornetrider said:
aclivity said:
The "book 2 or 3 days ahead for a cheap deal" is actually something of a fallacy. People looking to go at such short notice will usually pay more than those who book 2 to 3 weeks out. The reason for this is something that our consultants called the "point of indifference". At 2 to 3 weeks out (depending on the destination, long haul vs short haul mostly) people will be flexible as to location, specific date etc., so will be prepared to shop around some more - hence prices are depressed. At 2 to 3 days out, people have set dates and feel a need to go away more strongly, hence prices are higher. Also bear in mind that so close to departure the holiday company have a very accurate cost prediction for the flights, and know that to sell below a certain level will cost more than leaving the seat empty - 2 to 3 weeks out with a lower load factor the grey area is much wider, so there is more price flexibility.
Interesting post thanks, but how does the bit in bold make any sense?There is a very minor cost of extra fuel for carrying extra weight, but the costs for accomodation are the ones that drive the decision. Most of the hotels contracted by the tour operator will have a set day rate, with a discount when the room is unoccupied (no need to clean sheets, no breakfast provided, that sort of thing), so selling a 7 days accomodation included package at a knock down price may actually end up costing the holiday company money. Add to that the fact that there was a direct correlation between "extremely late bookers" and "whinging sods who claim compensation when they get cold eggs for breakfast".
It's only in the last few years that these measures have been available, in the older days they thought that "the flight was the expensive bit, make sure it's full", now there are measures called "cost of not selling" and even "cost of not flying" (the latter one may be used for unpopular flights, it may actually cost less to cancel the holidays booked and refund customers than actually fly the plane.)
Hope this makes sense, it's a massively complex calculation that I can't remember from more than 6 years ago, and even at the time I found it hard going!
Again that is interesting but I have to confess I don't understand. There is obviously a 'cost' price of the holiday from the travel firm perspective - which surely they would never drop under. This cost price includes all the niggles as you say, fuel, staffing costs making the booking, hotel costs etc.
Anything on top is profit margin. Judging by discounts available on some holidays (40, 50 or 60 percent off) the profit margin at brochure price is very high. Anything over 'cost' is profit, no matter how small.
I would have thought the operator would never, ever sell below cost unless they were close to triggering some kind of target (much like with car sales) where discounting below cost enabled them to hit some kind of bonus with their supplier.
Anything on top is profit margin. Judging by discounts available on some holidays (40, 50 or 60 percent off) the profit margin at brochure price is very high. Anything over 'cost' is profit, no matter how small.
I would have thought the operator would never, ever sell below cost unless they were close to triggering some kind of target (much like with car sales) where discounting below cost enabled them to hit some kind of bonus with their supplier.
hornetrider said:
Judging by discounts available on some holidays (40, 50 or 60 percent off) the profit margin at brochure price is very high. Anything over 'cost' is profit, no matter how small.
Package holiday margins are very low. The 40-60% off deals are probably either loss leaders or overpriced to start with in the same way as Sofa Bank Holiday sales 
Holiday company margins are tiny. Any big offers are usually loss making and generally when the operator has already pre bought hotel beds and flights but now can't sell them.
There was a lot more offers in previous years due to huge over supply in the market but now with many small operators having gone bust the big companies have merged and reduced capacity massively.
There was a lot more offers in previous years due to huge over supply in the market but now with many small operators having gone bust the big companies have merged and reduced capacity massively.
aclivity said:
There is a very minor cost of extra fuel for carrying extra weight, but the costs for accomodation are the ones that drive the decision. Most of the hotels contracted by the tour operator will have a set day rate, with a discount when the room is unoccupied (no need to clean sheets, no breakfast provided, that sort of thing), so selling a 7 days accomodation included package at a knock down price may actually end up costing the holiday company money. Add to that the fact that there was a direct correlation between "extremely late bookers" and "whinging sods who claim compensation when they get cold eggs for breakfast".
It's only in the last few years that these measures have been available, in the older days they thought that "the flight was the expensive bit, make sure it's full", now there are measures called "cost of not selling" and even "cost of not flying" (the latter one may be used for unpopular flights, it may actually cost less to cancel the holidays booked and refund customers than actually fly the plane.)
Hope this makes sense, it's a massively complex calculation that I can't remember from more than 6 years ago, and even at the time I found it hard going!
hornetrider said:
Anything on top is profit margin. Judging by discounts available on some holidays (40, 50 or 60 percent off) the profit margin at brochure price is very high. Anything over 'cost' is profit, no matter how small.
Again, this is going back some years as I left that industry a while ago, but profit margins in mainstream package holidays are scarily low. In the mid 90's, I recall a managers conference at the UK's largest holiday maker talking about the previous years profits at £40 million. Someone put up thair hand and asked "£40 million profit from 4 million holidays ... is it really worth all of this work for £10 a head?"The problem with working out holiday profits was compounded by the fact that you don't buy exactly what you sell - the plane has to fly if there is one person on board, or 100. Costs were worked out by using an optimal load factor of 95% or somesuch, so a plane with 75% occupancy was making a loss before it even turned a wheel on the conveyor belt. That said, though, if ALL of those 75% were booked into high margin "Princess" hotels, overall there may actually be a profit. If they were all late deal bookers, overall it would be a loss. But then you factor in that there are already holidaymakers in the resort, so you have to fly the plane out there to bring them back, so the cost of the flight must be incurred so you only have to worry about the cost of the service on board and the incremental fuel prices. Similarly you don't necessarily buy what you sell in terms of the accomodation in resort - usually there would be more accomodation available than flight seats to take people out there. The tour operator wants to put people into high margin units as much as possible, but customers do want to spend as little as possible. We spent a lot of time trying to work out how to calculate profitability of a flight before it took off, and never quite cracked it.
I'm sorry if this has gone off track, and my explanations aren't that helpful. It's annoying as I used to know this stuff inside out (I wrote the pricing software that started off "early discounts", known as fluid pricing in the industry, and also supported the software that calculated the "late discount", so I pretty much had to know it) but working in another area has dulled my memory (by quite a lot, obviously).
Hmmm, margins are tiny. Are you sure?
We go to Mexico in August. Two adults, on child, AI 5 star. Same holiday (dates, destination, hotel, room, flights, board basis, exactly the same holiday) offered on numerous websites in April with a cost accross the board of £4600 on all major UK holiday websites.
Except for Thomas Cook, which listed the price as £2700. So thats what we paid. And our friends too.
Nearly 2 grand difference in price on the same holiday. Not similar, the same.
We go to Mexico in August. Two adults, on child, AI 5 star. Same holiday (dates, destination, hotel, room, flights, board basis, exactly the same holiday) offered on numerous websites in April with a cost accross the board of £4600 on all major UK holiday websites.
Except for Thomas Cook, which listed the price as £2700. So thats what we paid. And our friends too.
Nearly 2 grand difference in price on the same holiday. Not similar, the same.
Corsair7 said:
Hmmm, margins are tiny. Are you sure?
We go to Mexico in August. Two adults, on child, AI 5 star. Same holiday (dates, destination, hotel, room, flights, board basis, exactly the same holiday) offered on numerous websites in April with a cost accross the board of £4600 on all major UK holiday websites.
Except for Thomas Cook, which listed the price as £2700. So thats what we paid. And our friends too.
Nearly 2 grand difference in price on the same holiday. Not similar, the same.
What happens if Thomas Cook was contracted to take so many hotel rooms whether they were occupied or not. Then it may have been less of a loss to sell the holidays cheap rather than pay for the rooms and not use them.We go to Mexico in August. Two adults, on child, AI 5 star. Same holiday (dates, destination, hotel, room, flights, board basis, exactly the same holiday) offered on numerous websites in April with a cost accross the board of £4600 on all major UK holiday websites.
Except for Thomas Cook, which listed the price as £2700. So thats what we paid. And our friends too.
Nearly 2 grand difference in price on the same holiday. Not similar, the same.
voyds9 said:
Corsair7 said:
Hmmm, margins are tiny. Are you sure?
We go to Mexico in August. Two adults, on child, AI 5 star. Same holiday (dates, destination, hotel, room, flights, board basis, exactly the same holiday) offered on numerous websites in April with a cost accross the board of £4600 on all major UK holiday websites.
Except for Thomas Cook, which listed the price as £2700. So thats what we paid. And our friends too.
Nearly 2 grand difference in price on the same holiday. Not similar, the same.
What happens if Thomas Cook was contracted to take so many hotel rooms whether they were occupied or not. Then it may have been less of a loss to sell the holidays cheap rather than pay for the rooms and not use them.We go to Mexico in August. Two adults, on child, AI 5 star. Same holiday (dates, destination, hotel, room, flights, board basis, exactly the same holiday) offered on numerous websites in April with a cost accross the board of £4600 on all major UK holiday websites.
Except for Thomas Cook, which listed the price as £2700. So thats what we paid. And our friends too.
Nearly 2 grand difference in price on the same holiday. Not similar, the same.
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