That’s the verdict of industry analysts Plimsoll Publishing, which surveyed the financial performance of the UK’s top 845 travel agency firms.
It says its findings suggest that the recession is hitting a fifth of the companies in the market.
But it added: ‘Surprisingly, almost half of those surveyed have been largely unaffected, maintaining their financial strength, margins and some managing to even increase sales.’
Overall the market is stagnant, compared to growth of almost 5% this time last year. However, there are ‘huge gaps’ in the performance of different travel agencies, noted the report.
It said 283 firms have seen sales decline, some by as much as 20%, yet 400 firms have seen sales increase, some by as much as 15%.
David Pattison, senior analyst at Plimsoll, said: ‘Some companies have clearly been affected by those that have swapped to low cost alternatives or by the loss of a key client. Others are clearly benefiting from this move.’
Overall profitability is slim, with most companies reporting margins of less than 1%, but, again, there are widening gaps between the best and worst performers.
The study showed 567 firms have seen profits fall, with one in four currently losing money.
However, 278 firms have increased profitability, some reporting margins of over 5%.
Pattison added: ‘The recession has been a good thing for a number of companies: it has sharpened their management and improved the accountability of the directors, so much so that these reorganisations are already leading to an increase in profitability.
‘However for those that have yet to come to terms with this changing market, times are tough and they risk falling further behind the successful competition unless they respond to this changing market.’
See also:
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)