The future looks sunny for holiday firm Hays Travel following a successful year for its new tour operating business, helping to grow turnover by 22%.
The Sunderland-headquartered business, which operates 101 retail outlets and five call centres, launched Hays Faraway in 2012 to capitalise on the rising number of sunseekers looking to escape to far flung places, a division which brought in £40m in sales in its first year.
The firm’s tour operating business has expanded its products, marketing and technology within the tour operating business, which now encompasses Hays Cruise and Hays Travel Tour Operating, as customers continue to explore exotic locations outside Europe, where the pound stretches further.
And in the year ended October 2013 the firm has grown to become the fourth largest tour operator supplier, behind TUI, Thomas Cook and Jet2 Holidays, helping to grow sales by 22% to £172.7m.
The country’s biggest independent travel agent said the gross value of sales grew to £557.7m from £526.7m, yet operating profit dropped significantly from £986,656 to £171,710. Pre-tax profit also dropped from £2.18m to £928,220.
During the period the firm acquired Bath Travel, a retail travel agency based in the south of England, for £7.6m, a buyout which doubled its portfolio of retail outlets.
The October deal added 58 retail outlets and two call centres to its existing North stable of 53 outlets and three call centres, but Hays said the short time between the acquisition in October and the firm’s year end means it will be next year before Bath Travel makes a significant contribution.
In a report accompanying the accounts, chairman John Hays said: “Bath Travel was acquired on October 7 and their results are included with these financial statements.
“However, with only 24 days of post-acquisition trading there has been no material impact on the group profit and loss account.
“The directors feel thus acquisition represents an excellent fit, both in terms of geographical and market presence, and provides strategic opportunities for the enlarged business.”
Looking ahead, the firm has almost doubled the amount of commissions earned for bookings within a year, from £8.4m to £16.1m.
Mr Hays added: “The year reflects a period of considerable operational change within the group in order to position itself within a recovering market as economic indicators recover strongly.
“The new tour operating product is trading well ahead of budgeted projections and is now the fourth largest tour operator supplier to our retail division.
“Very positively we ended the financial year with £16.1m of commissions earned for bookings departing in 2014, against £8.4m at the previous year end, which will be brought into profit in 2014.
“The board has confidence in the market opportunity of its core businesses and is supported by the significant growth from the group’s tour operating business in 2013.
“Prospects for the forthcoming year are encouraging with a strong performance in the first four months from the group’s core businesses and Bath Travel, which augurs well for the financial year ended October 31 2014.”