Why Your Beach Holiday Is A Jolly Good Business, eh!

The Brits have a penchant for ferrying cold Canucks to the sun every winter. With the recent amalgamation of Sunwing and Signature Vacations, a division of TUI Travel plc, another in a venerable line of UK based travel conglomerates shares interest in a Canadian mass market travel company. The merger also marks the end of the last family-owned major Canadian tour operator.

Years ago, there were many more Canadian head offices running sun charters. There were big names like Canada 3000 Holidays, Sun Flight, World of Vacations, Conquest Vacations and Regent Holidays. Of these, only Regent and Conquest were independently owned. Canada 3000 and Conquest fell victim, as many before, to the pressures of this difficult Canadian travel market. The others have long gone or been absorbed and rebranded within larger public businesses.

In marked contrast to most Canadian industries which tend to get swallowed south of the border, large UK travel companies have been, and continue to be, an integral part of the Canadian travel landscape. Leading beach package company, Sunquest Vacations, caught the eye of British suitors in the early 90’s, and is now a small division of the worldwide UK listed company Thomas Cook plc, who also owns a number of other Canadian wholesalers, including ALBA Tours, Encore CruiseEscapes, Holiday House, Fun Sun and Intair.

Why do the Brits love our travel companies? Because Canadians prefer to vacation in winter and the English in summer. So while the demand for aircraft is high during the summer months in the UK, it drops off significantly in the winter. Whereas on this side of the Atlantic, we need those planes in winter.

And because many UK companies own or long-term lease their aircraft, it is very expensive to park them for half a year. Historically, as the UK summer business grew, so did the Canadian “snow bird” market, and UK companies established Canadian tour operators as a means of selling air seats for winter sun packages. The reverse demands of each market are a perfect fit.

For instance, recent Sunwing investor, TUI Travel plc, regularly leases aircraft in the winter to CanJet, and to Skyservice – who in turn operate them for Signature Vacations. Thomas Cook also leases aircraft to Skyservice who operate them on behalf of Sunquest Vacations and Transat. In addition to this cross-branding of aircraft, Sunwing has its own airline, which will no doubt be shared by Signature in the near future. Ultimately, it’s a plane game.

There are of course Canadian based operations, most notably, Transat AT, Air Canada Vacations and WestJet Vacations, all of which are publicly traded. The latter two evolved due to the parent airline’s need to maximize aircraft use over weekends, their traditional lower demand days. Adding vacation packages onto already existing routes was also a logical next step.

The upside is that with the distribution of all those aircraft, Canadians enjoy vacation options from more Canadian cities, to more destinations and more hotels, with better prices and quality than ever before. Unlike our U.S. counterparts who often have to connect via hub airports to get their share of sun, we can fly non-stop from Thunder Bay to Cancun or Kelowna to Vegas. It’s also made us rather addicted to pre-packaged travel, as opposed to our U.S. neighbours who tend to buy the air and the hotel independently.

For a small independent operator to survive in this dispersed country, with such a highly crowded sun market, seems almost impossible. And with the prospect of having to compete with backing from the British pound, rather unlikely.

By: Sarah Dawson

Photo Credits: nickfree, Deejpilot