Uncertainty as Tunisian hotels await payouts from Thomas Cook bust

As tourists begin to return home, Tunisia's tourism industry faces a mixed future

epa07865300 British tourists, flying with Thomas Cook,  queue at the Enfidha International airport, Tunisia, 24 September 2019. More than 600,000 vacation reservations were canceled on 23 September, after Thomas Cook ceased to operate. According to media reports, the company's collapse will see Britain's largest peace time repatriation take place to get stranded customers home.  EPA/MOHAMED MESSARA
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The fallout from the collapse of the UK travel giant Thomas Cook continues to roil the tourism industries of the 16 different countries in which the company operated.

More than 150,000 Britons have been left stranded around the world, with approximately 1,000 dedicated flights now chartered by the UK government to bring them home.

In Tunisia, though spirits among the 4,500 holidaymakers within the country remained high, the 40 to45 hotels themselves are still coming to terms with the approximate €60 million hole the travel giant’s collapse has left in this year’s budget. However, while the collapse of the holiday giant may threaten the futures of the individual hotels with which they traded, the business model on which many are based remains sound, analysts have said.

Reaction to Thomas Cook’s insolvency across Tunisia’s sprawling coastal Zone Touristiques (tourist villages) varied wildly. While one hotel initially barricaded guests within its grounds until payment was made, others nervously awaited the payment guarantees media reports had promised them.

At a press conference on Tuesday night, British Ambassador Louise de Sousa sat in relative silence as Tunisia’s Tourism Minister, Rene Trabelsi put on as brave a face as he could manage. Revenue from Thomas Cook only made up some 3.5 per cent of the country’s total tourism industry, he explained, with guarantees from ATOL - the financial protection scheme which covers most air package holidays provided by UK companies - covering the stays of tourists in the country from the time of Thomas Cook’s bankruptcy on September 23 to October 6.

Soft loans, he explained, would be made available to help those hotels struggling to survive while administrators appointed in London determined the distribution of a fund established by the British government to help repay Thomas Cook's debts.

However, with margins in the fiercely competitive market trimmed to the bone and hotels frequently reliant upon full occupancy to turn a profit, the €60 million loss may prove critical. In addition to the hotels are ancillary services, such as food and service providers, who may now struggle to recoup some of the debts accrued by Tunisia’s hotels.

Tourism has played a key role in Tunisia’s recovery from the economic damage wrought by its 2011 revolution. In 2010, tourism made up around 11 per cent of the economy, providing thousands of jobs in a country where employment was at a premium. However, after two devastating terrorist attacks in 2015, visitor numbers plummeted, a drop compounded by a British government warning against travel to the country which remained in place until July 2017.

Debt, as has been reported, proved critical in hastening the demise of the travel giant, built largely upon a model reliant upon its high profile high street presence. However, with the inevitable rise in customers choosing to book online rather than through the high street, the structural problems that beset Thomas Cook’s low cost model were compounded. Nevertheless, those challenges do not automatically transfer to the holiday locations Thomas Cook serviced, with the package holiday market predicted to expand at around 2 per cent per annum in the coming years.

For many, package holidays such as those offered by Tunisia remain an attractive option, not least for the legal protections that have now proven so critical. In addition to the guarantees, is the opportunity to manage the expense. One of the “key reasons for the package market’s strength is the rise in popularity of particular segments like all inclusive; which enables holidaymakers to control costs,” Emma Coulthurst, travel commentator at holiday price comparison site, TravelSupermarket said.

“Around two-thirds of package holiday makers now choose an all-inclusive one. Package holiday makers also see buying a package in advance as a sensible hedge against the kind of currency fluctuations which have been seen with sterling in the last few years.”

How Tunisia will respond to this latest challenge remains uncertain. However, that its giant Zone Touristiques will continue to provide attractive low cost locations to the package holiday market looks set to continue.