 Poster: A snowHead
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Some people have the option of going skiing outside the high season dates, but most don’t.
Just looking at the state of the Euro/pound (1.0253 at the moment).
It may pickup back to its historic level, but what if it doesn’t.
There is a basic problem of selling something in one currency when you had to buy the raw material in another. It all works fine until the valuation of one against the other changes.
(all figures rounded up and down to a very inaccurate amount) 
This time last year (30/12/07) the rate was 1.3518
Assuming a hypothetical half term holiday sale cost of £800 (flight, lift pass, ski hire, hotel, transfers, etc)
£200 UK costs paid in Pounds
€650 overseas costs paid in Euros (£480)
£120profit
This year it’s @ 1.0253 (assuming a 5% increase in sale price and costs)
£840 Sales cost
£210 UK costs paid in Pounds
€682 overseas costs paid in Euros (£665)
£35 loss
So, sooner or later the TO’s is going to run out of money?
If the rate hovers around the same numbers until around mid 09 the cost of trips “are” going to increase for futures years "even if" the rate then improves nearer to the departure date.
How much would you pay for a fully inclusive holiday ?
£900, £950, £1,000, £1,000, £1,200, ->
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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Wayne, true but all the major TOs and any company in a similar situation receiving money in one currency and paying in another are likely to have put currency hedges in place before the winter which will guarantee them a certain exchange rate with their bank above that of the current 1.025 (but less than the 1.35 of this time last year). I assume these hedges will last over the whole season thus allowing them to avoid large losses. However their profits aren't going to be as large as they were last season. Come next season, if the pound is as weak as it is now, the increased costs will be passed on to us as the TO won't be able to get hold of as generous a hedge from its bank. TOs in trouble are likely to be the smaller ones who didn't enter into a currency hedge. Obviously hedge or no hedge, all TOs are in trouble when people stop buying holidays.
I guess the best thing to do for anyone in the UK receiving some form of income in euros this year would be to avoid converting it into sterling and instead put it into a euro account. Next year avoid UK TOs charging in pounds and go straight to a eurozone TO, paying for your ski hols from the euro account.
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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| Tommy4681 wrote: |
| TOs in trouble are likely to be the smaller ones who didn't enter into a currency hedge. Obviously hedge or no hedge, all TOs are in trouble when people stop buying holidays. |
You're right. But for smaller companies, in some cases, it's just not possible.
If you don't have around 50% of the forward contract in place for around 6 months prior to the start of the hedge most banks (in fact I think all of them) will not contract.
So, I think there are going to be a lot of VERY unhappy tourists around by the end of this season ?? TO's going bust causes a lots of problems.
Last edited by Well, the person's real but it's just a made up name, see? on Tue 30-12-08 12:01; edited 1 time in total
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You need to Login to know who's really who.
You need to Login to know who's really who.
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Wayne, I don't (won't) go in high season, that way I can afford several holidays & avoid the melee. I've just paid £1000 each for me and Mr HL to got to Big White, room only, in March. I hope to fit in a cheeky week in early Feb and will pay pretty much whatever the prices are but would hope it to be less than £500 to include flights, transfer & catered - I don't include lift passes in my calculations as they are what they are.
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Anyway, snowHeads is much more fun if you do.
Anyway, snowHeads is much more fun if you do.
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What, are you mad. You'll miss all the fun of the lift scrum.
A big problem with going outside of high season is all that space 
Agoraphobia is a big problem that we can all help to cure by skiing only at half term
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You'll need to Register first of course.
You'll need to Register first of course.
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Wayne, completely agree. Hedges are not possible for all TOs and can be very expensive to put in place initially. I suppose this season will be the hardest of all as at least by next season TOs will be able to estimate demand depending on the state of the economy and also account better for the weak pound in their pricing.
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There is another reason for "some" TO's problems. Greed.
We hedged at a rate that we thought was a good return for the amount of work we put in.
"Some" TO's just waited until the pound went back up (which it never did) assuming they could make more.
They would have been better off just settling for an amount that would have kept them going.
Now they have a problem - unless it goes back up in the next few weeks. Not going to happen I think.
Another thing is people (tourists) are booking now to hold the price. Most TO's under their T and C's can only increase their cost by around 5 to 10% so even if the pound drops even more their next season holiday has a guaranteed price. Our bookings for 09/10 season are up over 60% against this time last year.
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You'll get to see more forums and be part of the best ski club on the net.
You'll get to see more forums and be part of the best ski club on the net.
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I avoid peak weeks and school holidays. One because I'm not crazy keen on kids everywhere and two 'cos it costs too much and three 'cos being childless I can't get those weeks off work. However, I normally end up paying somewhere in the region of £800 for my annual ski trip. That's fully inclusive of flights, transfers, catered accomodation (including single supplement), ski hire and lift pass. The only additional costs are cattery, airport parking and beer money...
If costs go up significantly next season due to all this recession humbug, I'll just have to give it a miss. I certainly will have to if I lose my job/house...
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Wayne, I'm not sure it was greed even by the biggest boys in the ski market. None of them have massive margins and were more likely to be holding back through hope!
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FAQ
that's right, you all carry on helping by skiing only at half term 
