The merger of Thomas Cook and Cooperative Travel is a further sign that there are too many companies chasing too little market.
This move will allow the new group to dominate a sector of the economy which analysts predict could be heading for another difficult year in 2011. Their ability to streamline operations, reduce cost and expand their collective reach on the High Street will see them dominate in a market where profit margins are still barely above zero and growth is uncertain. Sadly, there will be job cuts but on the whole its a positive move.
So how will this affect the rest of the market? There are still some excellent independent businesses in this sector. Companies like Southall Travel are a great example of companies that have performed well in recent years. However, if predictions are correct and demand remains subdued into next year how many of industry's weaker agents will be survive?
178 agents are already struggling and another bad year could see a bigger wave of consolidation. Who will be buying and who will be desperately selling?