Compensation fears in Africa after Thomas Cook collapse

PETER LESHAN and HARRIET JAMES

Tour operators operating in Africa who had been contracted by the collapsed Thomas Cook might be compensated after those from Europe and US, says Mohamed Hersi, the CEO of Sun Africa Group of Hotels has said.

He termed the winding up of the largest travel firm in the world as unfortunate, saying operators who had no idea of the firm’s financial crises have lost billions of dollars in business and opportunities.

“The company and its insurers will be forced to compensate travel firms and individuals in Europe and US before those from Africa. The collapse will have a major impact on destination bookings,” he told BBC. 

The collapse of one of the oldest and travel groups and its network of airlines has resulted in hundreds of travellers stranded and loss of jobs in 16 countries. Nearly 600,000 people had booked to travel with the tour company.

Hersi says in Africa, Thomas Cook had close business ties with major tour companies in South Africa, Gambia and some countries in West Africa.

“Tourists with insurance cover and who travelled on the company arrangements will not find it difficult to return to their countries,” he says. 

Experts say the failure was brought by diverse factors such as online competition and crushing debts.

Since its inception, the 178-year-old travel agency was key in pioneering package tours. Its failure has rippled across the tourism industry, especially in the Mediterranean.  

Catherine Postler, a Kenyan travel agent in Germany, says the firm was too slow in adapting to the changed market environment.

It has more than 500 retail stores on UK main streets, which made it difficult to stand against its rivals who operate on lower costs. 

“The biggest challenge was too much debt. It ran out of cash and so tumbled down,” she says.   

In addition, a rise in last-minute holiday bookings had consequently resulted in a greater discounting, which made it challenging for Thomas Cook to recover it’s financing as well as operating costs. 

A  Kenyan travel agent who sought anonymous  attributes Thomas Cook’ws precarious position to poor cost control. 

“There was uncertain consumer environment during last six months across all its markets,” she says.