Thomas Cook collapse will deal a new blow to Tunisian economy

On Tuesday afternoon, it was business as usual at the Le Sultan hotel in the laid-back resort town of Hammamet, south of Tunis. A few guests crossed the hotel hall, others stopped by and chatted in a rather tranquil setting. 

That is except for a group of Belgian tourists gathering beside the reception. Talking quietly among themselves, some of them looked worried, some were unsure while others were seeking information. They didn't seem to know whether they would be able to fly home at the end of their stay following news of the failure of Thomas Cook, one of the world's oldest tour operators.

They knew they were affected by the travel chaos soon after the UK business announced it had gone bust on Monday with immediate effect causing flights to be cancelled. Le Sultan, where they are lodged, is one of Thomas Cook’s own brand SENTIDO resorts in Hammamet.

One woman, Simone, in the small crowd of Belgians stopped the hotel manager asking him to tell them whatever he might know of any possible disruption to their travel plans.

“We can’t carry on enjoying our holidays,” she complained. “We want to know if we’ll be able to return home as normal.”

While acknowledging the unpleasant inconvenience, the director said that they did not hold specific information about what may be the plans for Belgian Thomas Cook customers in Tunisia in the coming days.

Dozens of their compatriots were stranded after Brussels Airlines called off its scheduled flights on Tuesday. The next day, the airline brought back those 350 passengers from the Tunisian cities of Enfidha and Djerba.

Martine was among the Belgians who were due to leave that day. She and her daughter had a note slipped under their door the night before informing them that their flight had been cancelled. They booked their own flight home after finding availability for the day after.

“It’s not a big issue, we sorted it ourselves,” she commented, weighing up their one-day travel disruption against the knock-on effect on the country’s tourism sector. “It’s a disaster for hotels and hotel staff here.”

Mehdi Allani, CEO of Le Sultan, estimated unpaid bills at his own hotel as a result of Thomas Cook’s demise at just below one million euros, which date back to the July-September period that is the tourist high season.

“The summer months are crucial in helping our hotels to survive the rest of the year,” he pointed out. “In this period, we’ve spent massively for these customers by providing accommodation, food and other regular services without seeing a single payment”.

Despite the British travel company’s declared bankruptcy, the CEO stressed, the hotel decided to continue to offer the same service provision to its guests – who are not liable for the firm’s collapse- even though “their holiday stays will never be paid for”.

The Tunisian Tourism Minister Rene Trabelsi held an emergency meeting with the British ambassador in Tunisia and hotel owners on Tuesday. The UK government pledged to create a fund to regulate the tour operator's debts with Tunisian hotels. UK authorities will ensure the return of all British tourists once their stay is over. For Thomas Cook customers who have booked as part of a package, the cost of their accommodation will be covered by the government through an insurance scheme (Atol). Coverage will however only apply to the period starting from September 23, the date of the announced closure of the British company.

Some 4,500 British tourists out of 10,000 customers residing in Tunisia have been concerned by the bankruptcy.

Since Monday, Britain’s Civil Aviation Authority (CAA) has repatriated around 1,200 tourists. The remainder will return after their holidays.

Overall, Thomas Cook owes to about 40 Tunisian hotels at least 60 million euros for stays in July and August, based on early estimates by the Tunisian Federation of Hotels (FTH).

Mouna Ben Halima, FTH’s Communication Attaché, anticipated that recovering the total debts will take years, and the federation initially hopes to take back 25 percent of the money owed.

Quoting figures provided by the tourism ministry, she said that Tunisia this year received 220,000 tourists via the British tour operator, coming from several European countries, half of them from England.

With the travel group making up eight percent of visitors coming every year, she continued, Tunisia will be deprived of a “large portion of foreign currency” normally brought into the country.

In her view, the losses incurred by the affected hotels in the high season due to the unpaid bills represent a significant part of their revenues.

“Some of these hotels will have great difficulty surviving, especially since they were so badly hit after the 2015 terrorist attacks,” Ben Halima observed. “Tourism recovery only started last year. It will be very hard to put up with a second devastating blow.”

The Ministry of Tourism called for an exceptional cabinet meeting to discuss ways to help Tunisian hotels hit by the bankruptcy of the tour operator, including the possibility of setting up a credit line for them, awaiting their repayment by the UK.

Allani, who is also FTH’s vice president, described the economic repercussions for Tunisian hotels that deal with Thomas Cook as “markedly more serious” than the effects of the Bardo and Sousse attacks.

He explained that as the 2015 attacks took place before the start of the high season, waves of cancellations followed however hotels did not face expenses and, in some cases, rooms left vacant were re-booked by other tourists. “With this sudden crisis happening by the end of the tourist season, instead, customers were already in the country filling up hotel rooms with bills not paid for,” he maintained. “Which has created a worse scenario.”

Le Sultan’s owner believes though that Tunisian tourism will survive as a whole since only one part of its tourism industry is concerned by the crisis. One critical issue, he mentioned, will be finding an emergency plan for the affected hotels since many risk closure.

The other pressing matter for the FTH is the activation of Tunisia-EU “open skies” agreement which would open Tunisia’s airspace to low-cost flights from European airlines, yet it has not been ratified by either side.

Allani thinks that with the agreement activated, tourists would be able to book flights and hotels independently without using an intermediary company, and hotel businesses would deal with customers directly avoiding to bear the cost of the tour operator’s financial problems.

Tunisian tourism professionals touched by Thomas Cook’s insolvency are located in the two regions of Hammamet and Djerba, a dozen of which cooperate exclusively with the travel giant.

At the Phoenicia hotel, another SENTIDO resort in Hammamet, three Britons sitting on the café’s terrace appeared untroubled by the events. They just needed to find out about their flight on Sunday, whether there will be any change to the schedule or they will depart as planned.

“We’re trying to continue to enjoy our holiday. It’s just the uncertainty. We just have to check if we can get some update about what’s happening,” a man named Chris said, raising a problem of lack of information with the CAA's Thomas Cook website being un-accessible, and the CAA number permanently engaged

“We’re on holiday, we’ll manage. We’ll go back to jobs and our lives. But people here? They need tourists, they’re just coming back from the experience in Sousse,” his wife Rita said. “I think it’s going to affect tourism. I really do.”

She added that within a few hours of Thomas Cook’s announcement on Monday she noticed other airlines had started hiking their prices, sometimes even doubling or tripling.

“If it’s going to end up costing a lot more, it will affect people coming,” her daughter Mel said. “If the country won’t be getting as much tourism, obviously that’s going to affect not just hotels but small businesses.”

After a two-year ban following the bloody terror attack on the beach resort of Sousse in 2015, the UK government lifted the travel warning for Tunisia, and Thomas Cook was the first major operator to be back in the country offering good-value packages that made the North African hotspot so popular.