But research by industry analysts Plimsoll Publishing also reveals 100 agencies – 12% of those surveyed – are in the ‘danger’ category, with their survival in question.
Plimosoll has rated each of the UK’s largest 845 travel agent companies in one of five categories - strong, good, mediocre, caution and danger - based on their overall financial performance [see table below].
David Pattison, senior analyst at Plimsoll, said: ‘It was no real surprise to see the high number of companies on the danger list, given the current economic crisis.
‘However, we were very surprised to see the high number of excellent businesses making it on to the strong list.
‘I think these firms have really upped their game in these difficult times and they are concrete proof that necessity is the mother of invention.’
The 303 ‘strong’ firms boast average sales growth of 2.9% in the past financial year, described as ‘an impressive statistic in a market which is generally flat’.
‘Strong’ agencies also have average profit margins of 1.8%, as they have cut costs and used competitive buying to increase their bottom line.
Most are operating completely debt free, reducing their reliance on banks and other lenders.
Efficiency improvements means these firms are delivering over £245,000 sales per employee compared to others in the industry that struggle to deliver £126,000.
Pattison added: ‘Obviously there are real concerns over the 186 firms rated as caution and danger, their futures look extremely uncertain.
‘Many of these firms seem likely to be sold off; they are at an extremely high risk of failure unless they turn their performance around fast.’
Rating Agencies % of firms Definition
Strong 303 36% Delivering excellent performance
Good 187 22% Holding a respectable position
Medium 169 20% Needing improvement
Caution 86 10% In a weakened financial position
Danger 100 12% Their survival is now in question
See also:
Downturn forces agents to sharpen up (22/05/2009)
More doom and gloom from Plimsoll (22/01/2009)
Backlash puts Plimsoll on the defensive (13/08/2008)
7,000 travel jobs could go (15/07/2008)