Why Hays Travel is confidently pinning its hopes on 'a year of two peaks'
Sarah DennisHays Travel is "fairly confident 2024 is going to be a year of two peaks", head of Hays Travel’s Independence Group (IG) Harriet Thompson told the group’s recent conference – in a nod to its overarching theme.
She characterised this as: "Our traditional peaks of January and February, as well as a lates market due to the opportunities and additional capacity our supplier partners have to offer."
Thompson went on to congratulate the audience at the conference, held in Leeds, for “smashing it out of the park” in January, revealing Hays IG had been hesitant about performance during January 2024.
“We didn’t need to be,” she said, pointing to a "peak" of the group’s own – the best trading day in its 29-year history on 31 January. Hays IG also welcomed 12 new members to its now 109-strong roster during its latest financial year – due to end in April 2024 – with the newest joining last month.
With more than three-quarters of the membership represented in the room, Hays senior figures and member representatives took to the stage to address opportunities ahead, but were mindful not to shy away from the challenges. So what did they have to say?
What might a second peaks look like?
Dame Irene Hays told delegates January spending patterns were in line with previous years, but stressed what was different was "the consideration period for booking a holiday" and the patterns the group was seeing, alluding to a potential second peak.
"We’re seeing the consideration period coming right back to four to eight weeks," said Dame Irene. “The anecdotal evidence we’re seeing from our shops is that people are uncertain about their financial position; they want to hold on to their money for longer. They intend to go on holiday but make that decision later”.
However, Not Just Travel non-executive director Derek Jones, who spoke during an IG member panel at the event, argued every year typically had something that could be considered a second peak, and said the question was more how big the second one would be.
"If the first peak is Everest, is the second peak going to be another Everest? Is it going to be a Kilimanjaro or a Ben Nevis? You’ve got to understand where that demand is coming from and what’s going to drive it,” he said.
Jones urged delegates to consider this year’s early Easter break as a factor driving a strong second peak. “The longer that run is from Easter to the May departure point, the more bored people get.
"If the weather happens to be rubbish between Easter and June, you get a stronger second peaks because people just get fed up,” he noted.
’Don’t discount unnecessarily’
Hays Travel chief operating officer Jonathon Woodall-Johnston told delegates to “value your worth” and to dial back on "driving the market down with unnecessary discounting".
Woodall-Johnston said IG members had shown "incredibly strong performance”, hailing some of the biggest successes among the group’s retail businesses and “phenomenal” success across its homeworking operation.
“Overall, IG going in the right direction, but we’re mindful of the contact centre models,” he said, adding discounting had become “fierce” in contact centre environments.
He continued: “We know we have to remain competitive, but we have seen discount messaging. We’ve got to be mindful from a margin point of view. We’ve been asking ourselves – do we need to price match?
"We’re very good at service – why wouldn’t customers want to buy from someone they trust? Your service is what other people can’t deliver.”
He added all "rounding" discounts has been stamped out across point-of-sale and social media marketing. "You won’t see £399 – it’ll be £405," he said.
John Ferguson, Thorne Travel's cruise director, told delegates the agency tries hard not to discount, adding it looks instead to incentivise passengers to book with added value options.
"Rather than discount a holiday down, we offer them something else to make them come with us for the good service we do give them,” he said.
Helen Doyle, managing director of Perfect Weddings Abroad, said that while wedding packages were largely immune to discounting, the agency could struggle with booking guests as part of the wedding party.
"Guests often want that online price," she said. "So to achieve the capacity for the wedding group, we do end up compromising on margin. We incentivise brides and grooms to encourage their guests to book with us.”
Uncertainty 'fantastic' for agents
Dame Irene asked the audience to “give some thought to what we’ve had to put up with” as an industry over the last 12 months from a geopolitical and economic perspective, plus ongoing issues still plaguing airlines.
"Why IG has got such loyal customers and why so many new customers are coming to IG members and Hays Travel is, in my opinion, because we deal with volatility, uncertainty, complexity and ambiguity better than anybody else. Travel is one of the top industries in the world impacted by this.”
She added: “What we have is a situation of constant unpredictable change. We’ve never had as many scheduled changes for airlines, as many changes of destinations or as many issues to deal with at the same time.
However, Dame Irene insisted this was all “fantastic news for travel agents”. “In these situations, people making significant purchases want to know who they’re working with,” she said.
“At the highest point [last year], 57% of our customers were new to either Hays Travel or the Independence Group. That’s because we look after our customers. It’s not rocket science, but it needs attention.”
Woodall-Johnston said Hays IG's share of business was currently around one-third long-haul, bookings that typically are more susceptible to disruption.
"From a long-haul and cruise point of view, customers more likely need a travel expert to help them than going online, so this is a key area we’re all focusing on."
'Endless' opportunities in cruse
Hays Travel head of cruise Catriona Parsons was enthusiastic about the group’s performance, highlighting the 16.87% of share cruise made up across Hays IG businesses between May 2023 and February 2024, with Woodall-Johnston pointing to this being “staggering” growth from just 5% two years ago.
Referencing the target and strategic priority of cruise for Hays Travel, he said: “We want a third of our business to be cruise overall – and we’re on track to do that.”
Parsons highlighted the “explosion" in river cruising and growth in luxury as significant opportunities for agents, while noting 65% of the group’s cruise business involved departing from a UK port. “People want to drive to a port and get on the ship and their holiday starts there,” she said.
Parsons pointed to the 26 new ships cruise lines that will be launching over the next two years, along with the importance of new programme launches for introducing new cruises to the sector.
"Cruise lines are investing in the future, commissions earnings are fantastic and the opportunities coming your way are endless,” Parsons stressed.
Bottom line challenges
Dame Irene highlighted the impact of a near 10% rise in the National Living Wage to £11.44 an hour from April 2024 for all staff aged 21 or over as a core challenge for Hays.
"That is going to be a huge impact," she said, adding: "It’s important at this time of year not to put your head in the sand," pointing not just to wage rises themselves, but the pay differentials across levels of seniority in teams needing attention as a result.
She also stressed the strong performance of Hays Travel’s last financial year as a whole, during which profit tripled to £52 million on total transactional value of £2.19 billion – double the previous year, although "flattered said Dame Irene by pent-up demand for travel post-Covid.
“We know the situation surrounding our last financial year was flattering in that it was the first year we had some sense of stability. To triple the profit [again] isn’t going to be happening in this room anytime soon.”
But Dame Irene promised the audience: “We really do believe it’s going to be a fantastic year ahead. We are only interested in making you successful – it’s all about partnership for profit."
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