Thomas Cook's bankruptcy, what impact for European destinations? Part Two

8 min reading time

Published on 15/10/19 - Updated on 17/03/22


Thomas Cook's closure on September 23rd had a major impact on destinations previously serviced and supplied with tourists by the Tour Operator year-round. The question today is to what extent they are affected. Part Two: Turkey, Italy and two Balkan countries (Croatia and Bulgaria).

Turkey wants to limit package travel in the future

Following the collapse of the tour operator, Tourism Minister Mehmet Nuri Ersoy said that Turkey would refocus on individual travel to avoid difficult and costly situations in the future such as the one caused by Thomas Cook's departure. Indeed, losses for the Turkish Republic are estimated at €350 million. Added to this, the British tour operator owes €150 million to Turkish hotels. To help small and medium-sized businesses to recover, the Turkish government has earmarked €50 million, which it will redistribute through a series of low-interest loans over three years.

About 21,033 Thomas Cook customers were staying in Turkey at the time of the TO's bankruptcy on 23 September, including 8,000 British nationals. Amid a national repatriation operation (Operation Matterhorn, now over), the British Embassy in Turkey declared on 25 September:

Our teams have been present in Antalya, Dalaman, Bodrum and İzmir airports since Monday, working closely with the Turkish airport and tourism authorities to ensure the return of all Thomas Cook passengers to the United Kingdom. As of this morning, nearly 8,000 people out of 31 flights have been repatriated.

Since the beginning of 2019, 1.43 million British tourists have spent their holidays on Turkish soil, and the number of tourists of all nationalities combined has increased by +14.1% over the same period; in 2018, they were 1.9 million. Most British people staying in Turkey come through a tour operator for a trip purchased as a package.

The Minister of Tourism said on Monday 23 September that the government will focus on promoting individual travel through the Tourism Promotion and Development Agency in Turkey:

More tourists will come to our country through the wider promotion of our World Heritage, cultural heritage and religious centres. It will make a significant contribution to our national income from tourism.

He also added that package travel was “a problem for a very long time”, especially because of the low income per tourist that this type of travel induces. The country's tourism strategy will refocus on individual travelers in order to “conduct a more regular policy that is more in line with Turkey's interests”, by increasing average spending per tourist and diversifying customer profiles. As a result, the destination will reduce the presence and impact of tour operators on its territory, while targeting more than 75 million tourists and $65 billion in tourism revenues by 2023, while 40 million tourists (representing $29.5 billion in revenues) came to the country in 2018.

In the meantime, airlines such as easyJet, Lufthansa, Sunexpress, Jet2, British Airways or Turkish Airlines have or will increase their capacity or number of flights to Turkey to compensate for Thomas Cook's departure. As a result, easyJet has added 350,000 places throughout the year to transport more holidaymakers to tourist destinations in Turkey. Turkish Airlines has increased the number of seats available on its daily London Gatwick-Antalya route by 20% in October. In addition, the company offers the transport of diving equipment to holidaymakers who travel to Antalya, the seaside city being famous for its diving activity. More recently, the German tour operator TUI announced an increase of 2 million seats to Thomas Cook's former destinations, including Turkey.


Italy hit hard, hoteliers ask the government for help

Federalberghi, the association of hoteliers in Italy, estimated that one out of ten hotels has been affected by the bankruptcy of Thomas Cook. More precisely, 10.3% of hotel companies were affected according to a survey conducted by the association. Half of the hotels (47.2%) that did business with the British tour operator were upscale, one-third (36.6%) midscale and less than one-fifth (18.4%) were budget and economy.

The survey also indicated that the fall of the tour operator has affected all of Italy, but more particularly Lombardy, Sardinia, Sicily, Tuscany, Trentino Alto Adige and Veneto (administrative region around Venice). Also, Thomas Cook apparently has an average debt of 118,000 euros to each hotel in these regions according to Federalberghi's estimates, “but in many cases[it] exceeds one million euros”, the association also says.

Faced with such a large scale, the Federation of Hoteliers asked the Italian government to take emergency measureswith the British authorities and other countries in which the companies of the Thomas Cook group operate in order to protect the position of Italian companies”. There is talk of making temporary tax credits to prevent Italian companies from running out of cash, in particular by reducing VAT for those companies that could not collect it from Thomas Cook (as they were not paid), so that they do not have to give back what they did not receive.


Bulgaria fears for its future

The bill is also high in Bulgaria. The hotels in the Sunny Beach resort have estimated Thomas Cook's debt at €36 million. Indeed, the British travel company is currently indebted to fifty hotels located on the Black Sea coast. They even think that the next summer season might be compromised, since between 350,000 and 450,000 tourists were travelling with Thomas Cook to Bulgaria every year so far. The tour operator represents about 10% of the resorts' clientele on the Bulgarian Riviera.

The losses generated by Thomas Cook for Bulgarian tourism amount to €50.79 million (100 million leva). Tourism Minister Nikolina Angelkova confirmed the government's concern about the impact of the Tour Operator on current and future tourism activity in Bulgaria. Indeed, she said that “the situation is extremely difficult and would affect not only the summer season that is ending, but also 2020 with certainty, as negotiations for the summer of 2020 are ongoing”.

To deal with the crisis, Nikolina Angelkova convened an emergency meeting with hoteliers, tourism stakeholders in the country, and the British Embassy in Bulgaria. She explained that the government was doing everything possible “to help those affected by the declared bankruptcy of British tour operator Thomas Cook”.

Despite this, the Bourgas Regional Chamber of Tourism, as a coastal city in the south-east of the country, already forecasts a significant decline in tourism over the next three to four years. Part of the problem is the government's inaction, according to the head of the House, Ivan Ivan Ivanov:

Currently, the Ministry of Tourism of the Republic of Bulgaria and the Ministry of Finance do nothing. First of all, the Ministry of Tourism must develop a programme to help Bulgarian hoteliers, by eliminating VAT - where the tourist service is invoiced and nothing is paid.

He also added:

The second point comes from the government: interest-free loans must be granted to pay hoteliers and suppliers. Otherwise, there will be massive bankruptcies, both of suppliers and hoteliers.

About 6,000 tourists were stranded in Bulgaria when Thomas Cook's bankruptcy was announced, including 2,500 British tourists. The next day, Tuesday, September 24, 900 people had already been repatriated to their countries of origin. In addition, Thomas Cook's Croatian subsidiary, Astral Holidays, also went bankrupt on October 7.


Croatia not much affected, confident in the future

Thomas Cook's departure had little effect on tourism in Croatia. Besides, the slight impact should not be felt in the long term. 800,000 British nationals stayed in the country from January to August 2019, making a total of 4.1 million nights mainly at resorts on the Adriatic Sea. A little minority of these tourists travelled with the tour operator.

At the time of the bankruptcy announcement, only 438 tourists were blocked with Thomas Cook in the seaside city of Split, and not even 200 people (190 passengers) were blocked in Dubrovnik. The tour operator has also fulfilled all its obligations towards Croatian hoteliers. Finally, the Croatian Ministry of Foreign Affairs and Ministry of Tourism promised Thomas Cook's holidaymakers staying in the country at the time of bankruptcy that none of them would “suffer any damage or be left unattended” since the “British Government will organize flights for all tourists to return home” ; also “the British Government's insurance agency will cover the costs of their accommodation”.

An official statement also confirmed that the Croatian government is very much confidence in the future, despite Thomas Cook's departure:

The Ministry of Tourism and the Croatian National Tourism Office will continue, as before, to intensively promote Croatia in the British market, which is one of our most important markets, and to carry out activities related to strengthening air links. That is why we believe that in the coming years Croatia will be one of the most popular destinations for visitors to the United Kingdom.

In Dubrovnik, only a few hotels and various types of accommodation will suffer from the fall of the Tour Operator. Frano Luetic, Director of Dubrovnik Airport, confirms the low impact of Thomas Cook’s leave on Dubrovnik, given that “Thomas Cook's passengers represented only a small percentage of the total number of guests on arrival, given the many other flights and companies arriving in Dubrovnik”.

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