According to the latest research undertaken by Plimsoll, there are now 177 companies in the UK Tour Operators industry that exist as 'zombie' businesses - companies that have seen their performance deteriorate to such as extent that they now exist merely to pay off their debts and survive.

Author of the analysis, David Pattison, said: “These companies are in a state, posting growing losses and, despite the obvious freeze in the credit markets, increasing their debts. They are zombie businesses with debts at an average of 70% of turnover – they exist to service their out-of-control liabilities. Many are also using their suppliers to finance their growing losses, taking twice as long as to pay their bills as the industry average of 26 days.


“Their productivity is well below the industry average. It’s hard for them to compete as their cost base is just too high. As a result, investment plans have been mothballed meaning their aging assets are further restricting their ability to remain competitive.” Pattison says that not all will survive and those that do have a lot of pain ahead.

He said: “The first thing they need to do is sort out their immediate finances. They have to convince their banks and suppliers to keep supporting them or not pull the plug. If they can pull that off then the hard work really starts. They urgently need to stem their losses and control costs. The longer it takes them to address these issues, the harder and less likely it is they will ever fix them”

However, Pattison points to some attractive takeover targets hidden among the zombies.

He said: “Canny investors are seeing an opportunity to pick up a bargain. Some of these companies, stuck in a zombie state because of their balance sheet, have lots of potential for new owners to turn it around. We picked 109 companies that we feel have the most potential.”

Travel Bulletin readers can receive £50 discount off the special edition of the industry analysis.

Call 01642-626400 and quote reference PR/HP70.

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