The Downfall of Tour Operators – The Best Thing for a Modern Ibiza


In the early 1990s when I first arrived in Ibiza, just like the previous 2 decades, the Island was totally controlled by tour operators. There was no such thing as an independent traveller. Hotels negotiated a pitiful guaranteed price with a tour operator then waited for the airport transfer buses to arrive every Saturday and Wednesday.

They weren’t hoteliers they were glorified receptionists but in the early 2000’s everything changed when the low cost carriers started to fly into the island and tourists suddenly had a choice of where to fly from and how long to come for. Short durations and long weekends became a possibility for those who couldn’t get time off work.

The traditional tour operators weren’t prepared for this sudden shift and many went out of business in quick succession. Hotels started losing their guaranteed income, some panicked and some decided to invest and make their product better. Those hoteliers who couldn’t think outside the box saw their product progressively get worse while those who grasped the nettle soon realised that new avenues were opening up without the need to go through a middle man.

As hotels raised their prices and loaded their beds on internet sites, Ibiza became accessible to all and what was once a closed shop suddenly became open all hours. The Island that was once the sole domain of the British and German package holidaymaker became a truly international destination.  Tour operators, the driving force behind bringing the Spanish Costas to the mass market, had served their purpose in Ibiza but weren’t relevant any more.

As hotels started to see the fruits of their investments the White Isle grew in strength, many wised up quickly after years of doing very little – why invest after all when tour operators paid you very little in a price-driven market and still filled your hotel week in and week out regardless?

Tour operators, faced with this changing shift had to find a relevance and did so by buying their own hotel complexes and shifting capacity to other emerging destinations while investing heavily in family all inclusive units, some focussed on long haul where long weekends and no-frill flights weren’t an option. Some gained traction and carved out new markets while the ones who didn’t diversify withered.

While Ibiza prospered the tour operators and their brightly clothed representatives became less & less visible until there remained only 2 of the traditional main players: TUI (formerly Thomson’s) & Thomas Cook then another player emerged. Jet2 Holidays picked up the baton and redefined the package holiday market by offering multiple airports, flight times and hotels all at the click of a button in your living room. This was a new type of tour operator who didn’t horde tourists around like cattle but gave them a real choice. This was the beginning of the end for Thomas Cook (you don’t see any Jet2 agents on the high street).

Ibiza’s smaller family run hotels, through Booking dotcom and Expedia, were now finding their own markets and charging 10 times what they received from tour operators, the profit now going into the hoteliers pocket and being reinvested back into the island.

The hotels sector went from strength to strength as well as the villa market as flights were more available and affordable than ever. Hotels soon learnt that weekends were of higher demand so adjusted the prices accordingly, earning as much for a long weekend as for a 7 night stay.

As Ibiza became a marquee brand investment companies from all over the world came looking for hotels, snapping up basic properties and turning them into luxury retreats. The circle was complete.

Ibiza isn’t any other destination, it’s a very special place because of what it has to offer. In the space of 15 years it went from offering bucket and spade mainstream holidays to a truly world class destination with first class hotels and a unique mix of beautiful nature and unrivalled nightlife.

It’s journey started with tour operators and as sad as the demise of Thomas Cook and others are, the relationship was always a double edged sword and it was only after it threw off those shackles that Ibiza started to realise its full potential.

Thomas Cook Demise No Surprise

Too big to fail! That’s what they’ve said about many companies over the years but the sad collapse of the travel company Thomas Cook proves that if you don’t change with the times then you are never too big to get caught in the crossfire.

Woolworths, HMV, Blockbuster, Nokia, Motorola, Pan-Am and many more have all proven that business can change almost daily especially in the 21st century and unless you have a dynamic approach and a controllable cost base then you are always at risk.

This won’t be of any comfort to the thousands of hardworking Thomas Cook staff with mortgages to pay that find themselves without a job this week and who were the backbone of a business that had been swimming against the tide in recent months.  Let’s not also forget the thousands of holidaymakers who have had their plans seriously disrupted but hopefully the majority will be covered by the much maligned ATOL scheme which is designed for moments like this. The wave of nostalgia has been immense but there’s no room for nostalgia in a dog eat dog industry where every man and his dog is now an ‘online travel agent’.

Thomas Cook’s (TC) woes have been well documented but as the dust settles over the coming days the finger pointing will start and answers will be demanded. Many other businesses will also be out of pocket and some may even face potential bankruptcy as a consequence

TC’s unwillingness to fundamentally change their business model will ultimately be seen as the reason for their failure. As others were redefining the travel industry Cooks were too bogged down with a high cost base and a structure and culture that wasn’t open to change.  As one leading industry figure told me “buying Airtours and the Co-op travel agencies were 2 deals that defined the demise of this well known institution. Buying bricks and mortar when all forward thinking travel companies were investing in cutting edge technology was always a baffling decision”.

The merger with MyTravel (previously known as Airtours) was particularly harmful to TC and obligated them to a mountain of debt and lumbered them with crippling interest payments. Why they decided to merge with MyTravel rather than let them fail then pick through the bones may well lie in old school tour operator values where market share and bragging rights in the boardroom was favoured over bottom line principles.  Hindsight is a wonderful thing but you live and die by your decisions and TC had an extended period of making the wrong ones.

Recent senior management for all their well meaning bluster (and inflated pay packets) couldn’t cut the mustard or radically change the company for the better even with their own fully functioning airline. The rise of online travel agents, no frills airlines and accommodation only websites offering great deals for direct customers married with Cooks unwillingness to streamline led the company to the precipice and when the banks asked for an extra 200 million pounds to cover potential winter losses the writing was on the wall. After the UK government refused to cover the shortfall it was game over.

For those, like myself, who have worked in the travel industry this isn’t the first time this has happened and it won’t be the last but this could be a watershed moment for short haul tour operators who don’t have a nimble structure. As a major hotelier commented to me “in a time when people can build their own holiday experiences via multiple travel websites and apps, Thomas Cook didn’t adapt and found themselves down the pecking order when people booked their holidays.”

Like all those aforementioned businesses it was the paying public who ultimately sealed TC’s fate by not buying enough of what they had to sell during changing times and tastes. Cook’s inability to be flexible costing them dearly not to mention over 500 high street stores with agents sitting around waiting for potential customers to walk through the door.

It’s a sad time but also a sobering reminder that business doesn’t stand still and although doors will open for other entrepreneurs to fill the gap other operators and carriers will be raising their prices with glee in the short term.

Thoughts are with everyone affected at this difficult time but the UK travel industry is a resilient and dynamic beast and if history has taught us anything it’s that it will bounce back stronger but this time in a leaner, more efficient way.

 

 

Never too old for Ibiza…..or are you?

A phrase that’s been said many times but what’s the reality?

A good friend of mine nearing his 60th birthday has just departed after a busy 1 week holiday and here are his thoughts on the matter…

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They say that age is just a number but that number can affect people in different ways. When visiting Ibiza age doesn’t matter if you’re spending time with friends and family by the pool, at the beach and in the restaurants but that’s not what attracted you to the White Isle in the 1st place as a spotty faced youngster!

No, it was the West End bars of San Antionio and the lure of the Super Clubs and boat parties, if it was good enough for George Michael and Freddie Mercury…

As you move through the years these places become a long lost memory rather than relevant to you. As you gather your own money progress is made to rent your own villa in the hills, dinner at Pikes, book a VIP table at Hï or Pacha or a daytime bed at a swanky beach club like Destino, all of which have sprung up as you have made it to your later years.

Everything was fine as you cruised through your 30’s and early 40’s but you now avoid the strip of Playa den Bossa and West End of San Antonio as it’s full of ‘kids’ and you start to venture to other parts of the island like Blue Marlin, Ushuaia, Pacha and more recently Lio.

Then the big 50 comes and goes and you’ve now lost at least 50% of your original group of friends so you try to find some younger mates to hang out with so you can still raise your hands in the air and sway from side to side in a hot sweaty super club (VIP of course for anyone over 35).

You’ve been coming for so many years that you eventually find a mate with a boat; not because you like him, or he’s funny, witty or engaging. It’s just so you can impress anyone you meet with the opening line ‘at our age we really only come over to meet up with our friends that live here…. only to drop into the conversation later .. oh yes he’s got a speedboat if you fancy coming out with us for the day’.

So, when are you too old to party like you did when you were 21?

If you were back in the UK then similar cool bars wouldn’t even let you in if you looked remotely over 30 let alone staring 60 in the face!

So what? Give up coming at 50?

If you attempt to go anywhere near a dance floor approaching 60 you will look like a rabid ‘dad dancer’ on ketamine but somehow you can still turn up at certain places in Ibiza and be welcomed with open arms as there is a tolerance of people of any age, creed or sexuality which just doesn’t happen in most other countries ‘party places’.

So if you choose your ‘itinerary’ carefully, you can still enjoy the party at any age. You maybe conscious of being on the outside looking in but the really great thing about Ibiza (and why us old farts keep coming back) is that no one else will care except you…

RP (a 59 year old Ibiza hipster)

‘Ibiza….it’s not what it was’

There’s no doubt that the White Isle is rapidly evolving but the one phrase I hear more than any other these days is that Ibiza ‘isn’t what it was’.

I started coming to the island in the 70’s as a small child with my family for the typical bucket, spade and sangria holiday, I missed out on the 80’s but came over in the early 90’s and never left so when it comes to Ibiza’s recent history I can happily say I had a front row seat.

It’s not easy to objectively compare different eras but this debate has been raging since I first set foot on the white Isle, in fact I clearly remember being told that ‘Ibiza isn’t what it used to be’ in my first few days here, the cycle repeats itself every year.

Ibiza constantly changes, it’s a self perpetuating micro experiment of life and always will be. One of the worlds most beautiful islands run by the offspring of farmers and fisherman who had the spotlight thrust on them. In terms of a brand it’s massive, if Ibiza was a Fortune 500 company then it would have a hot-shot CEO but it hasn’t yet it still works.

There’s no debate that the island has changed beyond recognition especially over the last 10 years however every era has its place clearly etched in history.

For those who ‘discovered’ the island in the 60’s there’s still that romantic vision of free love, living in the countryside and big lunches with friends that cost next to nothing but when you analyse it every era has its pros & cons.

When you’re young and fearless with no ties you have an attitude that is totally different to when you’re middle aged with a couple of kids but the island’s magic repeats itself for every generation in different ways. What some see today as a backward step is viewed by others as exactly the reverse.

Like those from the 60’s we all have romantic visions of a time in our lives that was special to us and Ibiza is that seminal place that makes memories for a lifetime so if you return and it’s changed beyond recognition of course it’s not what it was but it doesn’t mean it’s worse, it’s just different.

The early days when I came to Ibiza will forever be a magic time in my life but you could also only get flights for 7 or 14 nights, the roads were death traps, the hotels were basic with no air conditioning and the big clubs were inaccesible to many, mainly through lack of knowledge (no ‘influencers’ in those days!).

Those long mornings on Space terrace can never be repeated but have now been replaced by daytime concerts attended by thousands, beautiful beach clubs and world class nightclubs showcasing the biggest DJ’s as well as emerging talent, it’s different but the joy and the thrill remains the same with the hands in the air moments creating an adrenaline rush and memories to last a lifetime.

The Ibiza of today isn’t without challenges but it’s still an amazing place, making an indelible mark on every generation. The social media obsessed world we live in has created different needs and the ‘new’ Ibiza is just a reflection of that but scratch below the surface and the island still retains the charm and beauty it always has, you just have to stop being part of the herd and work a little harder to find it. Of course Ibiza isn’t what it was, it’s better.

Yoga and Ibiza: A Perfect Match

Pic: Neyu Ma

We all know that Ibiza is best known for it’s massive party scene, chic beach clubs, epic parties, world famous DJ’s and hedonistic summer holidays but recently the island has begun to attract a different kind of crowd – those seeking mindfulness, fitness, energy healing and inner balance rather than pure partying.

Over the last few years Ibiza has seen a rapid growth in the demand of what could be called ‘wellbeing-holidays’, the White Island has become a destination for all types of health and healing retreats and particularly yoga retreats which are now more popular than ever. Often it’s not just yoga that’s offered but a full package including meditation, clean eating and digital detox with the focus on feeling good, finding a balance in yourself and even following an inner journey to stillness.

So what makes Ibiza so attractive as a ‘healing destination’? First, Yoga in general is gaining awareness and popularity all around the world, being part of the global mega-trend towers health and mindfulness. Many see yoga and meditation as an effective way to manage stressful lives and taking care of yourself. Secondly, apparently there are not many places around the globe who offer all the right elements to enable these kinds of well-being experiences and this is what Ibiza has in abundance.

It may be rooted in the history of Ibiza, back in the 60’s when the hippies were conquering the island, they were seeking love, peace and happiness and this vibe still exists on the island even though it has been diluted due to the rise of the global party scene over the last 10 years.  But there’s no doubt that the island still has this magic about it that acts as a beacon calling energy-healers from all over the world, including everything from reiki to holistic massages to chakra balancing and crystal therapy. Lots of people coming to Ibiza feel that this is a place of freedom, free from social judgement, where everyone can be as they are.

Then there is Es Vedra – the stunning rock formation on the southwest coast of the island which, even though there’s no science to back up the claim, is fabled to be the 3rd most magnetic place on Earth (after the North Pole and the Bermuda Triangle) and to many it represents the tip of the sunken civilisation of Atlantis. In local folklore it’s also the birthplace and holy island of one of Ibiza’s goddesses, Tanit. The incredible aura and beauty of this mysterious place clearly make it a favourite place for meditation as well as other spiritual practices. According to a famous tale, Tanit, who stands for love, dance and healing is also one of the reasons why many females feel so connected with the island’s vibrant energy.

As an added bonus, few places on earth offer such a big contrast of a wide range of wellbeing retreats, while just around the corner you will find the world’s hottest party spots. Also dancing on a table is a form of freedom.

The party crowd will stay for sure but a new generation of Ibiza lovers are now looking at the island with a different perspective which in turn brings many new possibilities for tourism on the White Isle.

Dear Friends Who Visit in Peak Season…..

Seeing as you can only visit during the peak summer weeks (allegedly) here’s the rules…

1) You are getting a FREE holiday, if you want a lift from the airport then please don’t book a flight that arrives at 2am so you can save 20 euros.

2) I am not God, the weather is nothing to do with me.

3) If you lay in the sun without protection you will burn; if you don’t wear a bikini top someone will stare at your t*ts, get over it! 

4) There is no such thing as a self-replenishing fridge – the occasional pack-of-beers, bottle of wine or bag of prawns is most appreciated. 

5) I am not a taxi service, if you intend to explore the island then bring your licence and rent a car, even if it’s only for a day. 

6) Switch off the damn air-conditioning in your room when you’re not in it, have you seen the electricity dial spin like mad when the air-con is on? 

7) NEVER say “what are WE doing today” as you will be physically removed from the premises.

8) SuperClubs are expensive hence why they are called ‘Super’. I’m not going with you, I can’t get you guest list or free drinks and don’t wake me up at 5am when you come back in.

9) If you insist on having drinks at a frontline or sunset bar please do not complain to me that you were charged 15 euros for a gin and tonic – I really don’t care plus it’s only 5 euros in the local bars I frequent.

10) If you have enjoyed your holiday and your FREE stay with friends, why not take them out for a nice dinner? Not a pizza or a Chinese takeaway but a proper restaurant with linen tablecloths and waiters in crisp white shirts; go on, you know you can do it.

Yours sincerely

Grumpy Island Resident

Adapted from an article in the Majorca Daily Bulletin by my good friend by Frank Leavers

Don’t Mention the C Word

You have to be careful not to talk yourself into a mini-recession but 2019 is turning into one of those strange summers for Ibiza.

On the outside the Island may look busy but scratch a little below the surface and you can see that there’s a definite dip in business compared to previous summers.

No sympathy is required though as Ibiza has seen massive growth over the last decade and has income streams and a spend per capita that other holiday resorts can only dream of but it’s important to recognise and analyse trends within the tourist market.

Northern Europe’s continued hot weather isn’t helping but hotel and villa bookings are down especially during peak season so expect some last minute bargains if you haven’t already booked. There’s several reasons for this and it may signal a change of direction for some businesses.

There’s no doubt that Ibiza has many more competitors than ever before especially in the important family and mid-range segment of the market.

Turkey has made a big return to form offering spectacular prices with Greece and it’s islands such as Mykonos also proving very popular. Croatia is still knocking on the door with its natural beauty and laid back charm. Dubai is proving strong for those wanting a smart getaway although it doesn’t get the heavy summer traffic due to extreme temperatures. Egypt and Tunisia are on the way back too plus many more emerging destinations offering good value for money.

Looking inwardly Ibiza’s VIP obsession shows no sign of stopping as many 2 star hotels build a roof top pool and upgrade to 4 stars charging prices that marginalise a major segment of the market. In the space of 5 years Ibiza has morphed from mid range hotels offering good value to high end hotels with eye-watering prices. When the majority of hotels are chasing the same business there’s going to be winners and losers.

Price is the dominating factor when making decisions and Ibiza is slowly strangling itself by cutting diversity and only going for a certain affluent segment of the market. Brand loyalty is all good and well but it’s a 2-way street and many regulars are feeling hard done by when the hotels they have stayed at for many years raise their prices to levels that are difficult to justify and it’s these people who are now turning to other destinations.

It’s not all bad news though as Ibiza is still one of the most beautiful places in the world and does have an affordable side, albeit not as glamorous but highly attainable as long as you tread carefully but more concerning is that the entry level market is diminishing so less new blood is coming in, when this happens there’s a finite end to the cycle.

Not quite a crisis just yet, more of a blip, so no doom-mongering here but in the modern day Ibiza with so much investment riding on results all trends are over-analysed from bars to boardrooms. Things can change quickly but as we hurtle towards August there’s a few concerned people out there.