As George Osborne prepared to deliver his Autumn Statement, it’s likely he wished he could turn the clock back a couple of years and reiterate his warning regarding the economy in even stronger terms.
In 2010, the Chancellor resembled an avuncular headmaster as he warned a chastened electorate that following a decade of reckless government expenditure, the British economy was in for a very tough ride if it was to recover.
He probably should have adopted a much fiercer, angrier tone, emphasising just how long it would take for Britain to extract itself from the deep hole the previous administration had buried us all in.
However, because he didn’t, he was forced during his Autumn Statement to merely make his point again, telling a now increasingly cynical (and forgetful) electorate that there was no miracle cure for Britain’s economic woes.
If it’s any consolation, Mr Osborne is not the only one who could do with turning the clock back.
Last week, Thomas Cook reported the worst 12 months in the company’s 171-year history which ended with an ‘unacceptable’ loss of £485.3 million.
Go back even further and the company’s alarming deterioration becomes even more evident. Five years ago, its share price was above 300p – as I write it sits at 29p.
An investment of £10,000 in Thomas Cook shares made in 2008 would now be worth £965.
Thomas Cook has already embarked upon a two-year programme of closing 200 of its high street travel agencies. Few analysts believe this represents the end of the company’s retail culling.
The travel market has shifted markedly over the past five years. Consumers are much more savvy when booking their accommodation online while airline and travel websites have become considerably easier to use.
It means that the convenience of booking holidays online has superseded the need to head off to a travel agency and receive a friendly, face-to-face service.
Cook’s new chief executive, Harriet Green, plans to strip further ‘back office’ costs and overheads en route to implementing a plausible recovery policy.
Yet while the company has announced it will sell part of its aircraft fleet (and block-book tens of thousands of seats on EasyJet instead) and more branch closures cannot be ruled out, there is a sense that Thomas Cook’s longer-term high street presence appears increasingly superfluous.
One of the most disappointing aspects of the company’s results was the revelation that the marketing and licensing costs associated with selling ticket and accommodation packages for the 2012 Olympic and Paralympic games resulted in an overall net loss of £17.2 million.
Prior to the release of these truly awful results, it was announced that Danny Talbot, the managing director of Thomas Cook Sport, widely credited with building the business into Europe’s largest sports travel agency, was to leave the company after eight years.
His departure appears odd at a time when sports travel has become a powerful driver for traditional ‘bricks-and-mortar’ businesses such as Thomas Cook.
In 2008, the global value of travel and tourism was approximately $5.9 billion. By 2018, tourism revenues are set to exceed $10 billion. At the very centre of this astonishing growth, considering performance in other areas of the economy, is sports tourism.
Not surprisingly, tourists engaged in travel-for-sport are typically high spending, stay longer than other tourist categories and often stimulate other tourism sectors.
Their direct benefit to a destination hosting a sporting event is cash.
Their indirect benefit can be years of return visits by other tourists. The Olympic Games and World Cups have most economic impact. According to a study commissioned by the Brazilian government, the 2016 Olympic Games in Rio will provide a direct boost worth more than $24 billion to the economy between 2010 and 2027.
Add in the positive effects of the 2014 World Cup and Brazil will be presented with the perfect platform via which it is expected to attract enormous foreign investment.
Brazil’s economy is currently the tenth largest in the world. It’s predicted to be fifth largest by 2016.
Sports tourism already accounts for an impressive 14% of aggregate travel and tourism receipts, a figure set to grow markedly over the next decade, so encouraging a significant shift in tourist patterns.
Although the global economic slowdown is a concern, worldwide sports revenues are forecast to increase by 3.7% to $145.3 billion by 2015, according to a report called Changing the Game published by accountants PricewaterhouseCoopers.
It pointed out that while Europe remains increasingly volatile, as Mr Osborne confirmed on Wednesday, the burgeoning middle classes across Asia, Brazil, India, China and India will be just as important to sports tourism growth as consumers in the West.
Mindful of this, in March, Thomas Cook Sport agreed a deal to sell Manchester United ‘Match Break’ packages to football fans based in the UAE.
Ironically, it was Mr Talbot who said at the time that the partnership was, “the first of a number of global agreements…as we look at international expansion of our successful Match Break proposition.”
Larger-scale sports tourism has become a means of generating significant revenues, creating thousands of new jobs, regenerating urban infrastructure and for developing entire destinations, according to Sophie Ruddick, managing partner of London-based SJJR Sport, a sports travel agency.
“It’s fair to say that although millions of Britons are cash-strapped, a sizeable number of them are still prepared to spend money on travelling to iconic sporting events,” she comments.
“This could be anything from renting a motor home in order to travel around France during the Tour de France to buying all-inclusive flight and accommodation packages for the 2014 World Cup in Brazil.
"People want to be there, to experience the sport, the atmosphere, first-hand.”
It would appear that we’re witnessing a marked shift in our travel habits, away from sun and sea vacations, once the tourist industry’s bread-and-butter.
Increasingly, these holidays are being replaced by sport-related vacations, demanded by a new breed of tourist keen to attend an ever increasing calendar of readily-accessible mega sporting events.
One suspects that Thomas Cook can capitalise upon this trend, though whether its shares will head north of £3 in the near future looks about as uncertain as George Osborne’s forecasts.