Accumulated debts of $2.1 billion, online competition, shifting tastes and global geopolitical events led Thomas Cook, the British tour operator with 178 years of history in travel operations behind it, to liquidate its assets, file for bankruptcy, and close up shop last week.
Thomas Cook’s collapse followed the failure of negotiations between the company and its largest shareholder Chinese conglomerate Fosun International, also owner of the Club Med resorts chain, about plans to rescue the tour operator, the US financial news agency Bloomberg said.
Fosun had earlier suggested pumping $1.1 billion into Thomas Cook in return for its acquisition of other activities and a share in Thomas Cook Airlines.
Hossam Al-Shaer, chair of the Egyptian Chamber of Tourism Companies and head of Thomas Cook operators in Egypt, released a statement saying that the British Civil Aviation Authority (CAA), a UK government body, would take charge of the departure of tourists from Egypt.
The CAA would pay any remaining amounts due to Egyptian operators and hotels, he said.
Thomas Cook has cancelled the reservations of 25,000 tourists coming to Egypt until April 2020, Al-Shaer said, adding that the number of travellers arriving in Egypt via Thomas Cook throughout next year had been estimated at 100,000.
There are 1,600 Thomas Cook holiday-makers in the Red Sea resort of Hurghada at present. The CAA would take them home after their holidays ended, Al-Shaer added.
He said that it was only Thomas Cook in Britain that had filed for bankruptcy and that companies affiliated to the operator in Germany, Belgium, the Netherlands, Poland and the Scandinavian countries were functioning normally. Those other companies are expected to send 25,000 tourists to Egypt throughout 2020, Al-Shaer added.
“The British Thomas Cook represented 20 per cent of tourism flows to Egypt from the UK, and its closing up shop will not affect Egyptian tourism on a major scale,” said Elhamy Al-Zayat, a tourism expert.
“The biggest damage will be incurred by the hotels that had arranged with Thomas Cook to receive tourists. In addition, vacationers who have contracted Thomas Cook to travel to Egypt will not be able to do so for at least a month until they receive their money back from the tour operator,” he added.
Thomas Cook Airlines used to operate 22 weekly flights to Hurghada and a weekly flight to Marsa Alam in Egypt. Egyptian tour operators are now promoting Egyptian destinations in the markets where Thomas Cook had operated, said Nora Ali, chair of the Master Travels tour agency.
Ali Okda, head of a tour operator in Egypt, said the closing of Thomas Cook was bad news for many in Egypt. “The danger resides in the fact that there is no other low-cost airline company to transport travellers from Germany who had depended on Thomas Cook after the bankruptcy of Air Germania and Air Berlin. The only remaining airline is Condor, and if this goes bankrupt as well many German travellers will not be able to travel to Egypt.”
Ali and Okda called on flag carrier EgyptAir to operate low-cost flights to Egypt’s tourist destinations.
Tourism expert Atef Abdel-Latif said the Thomas Cook bankruptcy would not affect the Egyptian market greatly since the tour operator had banned travel to Egypt in 2015 and was even today not flying to Sharm El-Sheikh.
Thomas Cook is not only a tour operator in Egypt, it also has investments in the country in cooperation with Orascom Development Holdings. The Egyptian company said after Thomas Cook had closed up shop that it did not expect significant effects in the short run as a result of the bankruptcy.
Investor Relations Manager at Orascom Sara Al-Gohary said the company had had a successful relationship with Thomas Cook through Orascom’s hotels at home and abroad. She added that Orascom had signed an agreement with Thomas Cook in December 2018 to renovate the 144-room Arena Inn El Gouna Hotel, change its name to Cooks Club, and build a new hotel, the Casa Cook, with 100 rooms.
Cooks Club opened in mid-August, and Casa Cook is scheduled to open in late October, according to Al-Gohary. Orascom had collected payments in advance from Thomas Cook for the two projects, she added.
The bankruptcy of Thomas Cook would not affect Orascom’s travel operations greatly, she said, and it had the capacity to bring in other tourists via different tour operators.
Of the total of Orascom’s 7,082 hotel rooms in El Gouna, Thomas Cook’s quota stood at 244 while revenues from the British tour operator represented 1.4 per cent of Orascom’s revenues in the resort. These represent 1.2 of Orascom’s revenues from its hotels in Egypt, Al-Gohary added.
*A version of this article appears in print in the 3 October, 2019 edition of Al-Ahram Weekly.