‘Credit Crunch’? Pull The Other One! – (‘or why it’s no fun for us, either’).
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This year has been one of mixed fortunes for us at The Chain Gang.
We started in 1997, and grew steadily until 2003. It’s interesting to me to reflect that there are very good early warning signs all around us, if you know where to look. Back in early 2003, lots of us were wondering whether there would actually be war in Iraq. There had been a lot of noise, and it seemed to me that Britain and the US were acting very poorly at the United Nations. But was war really going to happen?
I remember that my views changed gradually, from thinking we’d find a way to avoid war to thinking it was inevitable. In fact, there was a simpler way. Just ask any tour operator.
By the beginning of March it was obvious what the majority thought in Britain, the US, Canada, Ireland, Australia, etc. That’s where our customers come from, and following a record-breaking 2002, and strong bookings in January, the phone just stopped ringing. Nobody was booking holidays because they thought we were going to war.
You can stick your opinion polls and your Government statements – I remember talking to some other tour operators at the time, notably friends at Winetrails and Irish Cycling Safaris. In February 2003, everyone had decided.
Which brings me to our current ‘credit crunch’. Last year we broke records again, having grown steadily for the last 4 years. Bookings during the first quarter were astonishing – more than twice as high as we had ever experienced. I thought that after 11 years we had finally caught the wave just right – that’s surfer talk, dude. This came with problems, of course. If you’re going to sell 150% of your capacity, there are decisions to be made. We’d need extra guides, more people in the office, more redundancy built into our logistical infrastructure in France and Italy.
Lucky for me Gordon Brown and his fellow financial engineers around the world solved all those little problems for us by careering into this ‘credit crunch’. Fortunately we already had so many bookings that 2008 will still be a good year for the Chain Gang, but not based on activity in April, May, June and July – usually our biggest months for bookings. Each month, as I’ve heard the mildly pessimistic forecasts from Government ministers, building societies and the Bank of England I’ve thought “You need to get out more, it’s much, much worse than that”. And a month later, it turns out things were worse than they had predicted, but their new forecasts are still only modestly pessimistic.
A great example was the prediction in March that UK house prices would fall by just over 1% over the following 12 months. I read this morning that they fell by four times that in the last 4 weeks!
As I did in 2003, I’ve discretely canvassed opinion among other tour operators. This got me to asking around in other sectors, and of course in the hotel & tourism sectors in France and Italy. Anybody who has visited France or Italy this year won’t need telling that their inflation is even worse than ours. And if you cycled around France in July, or visited hotspots like Provence or the Loire Valley, you might have wondered where all the tourists were. French hotels were wondering too, and tourism is their biggest industry – more than twice as big as their 2nd biggest industry.
And the story is the same everywhere – 2008 started off where 2007 left off, magnificently. But sometime just before the end of Marc h our economy ran into a brick wall.
We’ll be OK at The Chain Gang. Partly because we have such strong bookings from earlier in the year, but mostly because Gilles’ wife gave me a 4-leafed clover just a few weeks ago. Here’s a picture of our main survival tool for this year.
Financial control? Marketing? What you need is a 4-leafed clover. I’d never seen one before, and I reckon that is a seriously cool gift.
But as the monthly figures for the economy start going south, just reflect on how much money we could all save if the Government sacked all its economists and just phoned me every month to ask how bookings were going? This year, so far, we’ve got it more right than they have.
