Working In Uncertainty
The rise of Harry Goodman, travel tycoon
Harry Goodman founded International Leisure Group, which rose from almost nothing to be one of the largest holiday operators in the UK at its collapse in March 1991. Ironically, it was the collapse of an earlier travel giant, Clarksons, in 1974 that helped Goodman to grow his business very rapidly in its early years.
Having sold a tour operator called Sunair at a useful profit in 1971, Goodman spent two years travelling and rethinking the tour operator business. He decided that next time he would do things in a different way. He wanted to reduce his exposure to uncertain sales levels and so decided to stop paying hotels a forward deposit and instead contract with hotels and airline operators without making commitments.
To save time he bought an existing chain of travel agencies and tour operator, complete with licences, and sold the travel agencies.
Normally it would have taken some years to build up trade, but in August 1974 Clarksons, the biggest tour operator in the business by far, with almost half the market, collapsed. This surprised the public but rumours of possible problems had been around in the industry for a while.
Goodman was ready for it. He had hired and put on standby three private jets and a buying team. Within 45 minutes of the announcement that Clarksons was in trouble, the team was in the air. Hoteliers were panicking and Goodman's team got discounts of 40% on room rates by promising to fill rooms. He quickly brought out a new brochure that was virtually the same as Clarksons'. Thanks to this preparation, even though it was August and late in the season, Goodman's company sold 50,000 extra holidays and made £300,000 in the last 8 weeks of the season, doubling its profit.
Although this seems like an unusual thing to do, he did it again some years later. In 1982 Goodman was contacted, told that Laker Airways was on the verge of collapse, and asked if he would like to buy it. The negotiations were not successful but during them Goodman learned all he needed to know about Laker's holiday bookings and once again sent his buying teams off in two Intasun jets to visit the hotels in Spain. Again he picked up 50,000 holidays.
In the Clarksons case, Goodman realised that something that was only a possibility could be of major importance to him if he was prepared. Sadly his decision making in the face of uncertainty was not always so good and when he invested in a fleet of very expensive aeroplanes his company could not withstand the impact of the Gulf War of 1990 - 1991, which caused a drop in air travel.
(Source of information: ‘Tycoons’ by William Kay, published 1985 by Judy Piatkus (Publishers) Limited.)
Hundreds of people receive notification of new publications every month. They include company directors, heads of finance, of internal audit, of risk management, and of internal control, professors, and other influential authors and researchers.
Made in England
Company: The Ridgeway Expertise Company Ltd, registered in England, no. 04931400.
Registered office: 29 Ridgeway, KT19 8LD, United Kingdom.
Words © 2011 Matthew Leitch