I'm pleased. I returned to Saga at 89p a few months ago and am selling out today.
The Royal Mail strikes may have impacted the turn-of-year travel campaign. Brochures are stuck in the post, not arriving, and Saga is still quite dependent on brochures arriving the last week of December. It's a short-term effect, but it may have had a knock on the last month of trading.
Good luck all - you're onto a winner in the long term, which I've always said. RDH knows what he is doing and will be in it for the business's good rather than short-term returns.
I may be back but in the meantime, steady as she goes
Hello everyone,
It's been over a year since I sold my stake in Saga. I've often considered whether to come back in but stayed on the sidelines.
Knowing RDH well after working with him for many years, I know he will not be overly concerned about the SP. Indeed while he was at the helm before the VC buyout, the family took Saga to the market, didn't like having to report critical information to shareholders, and took it back into private family ownership.
What many investors don't understand is the philosophy of the organisation. Travel is the jewel in the crown, and get that right; the rest also falls into place.
In my view, as many of those long-term followers know, travel fell apart in 2015 when new management took over and didn'e.g.understand the "why Saga". Their idea was to (e) offer ten hotels in Malta, rather than just 2 , thinking that more choices meant new customers. That isn't the way Saga customers think. They want to know travelling with Saga means something, that they'll be taken care of; there will be quality, and if anything goest's fixed there and then. All that was lost, so there was no reason to travel Saga any longer - having the Saga luggage ticket was always something people would prefer not to have (hence the new ships be Spirit) because the perception was they were old. It's something we tried to move away from and did very successfully while I was there.
RDH understands the Saga customer - yes, they've changed - but make sure they're happy with their holiday, and they'll use quite often the other products, so cross-selling and increasing the number of products a customer buys from 1.8 products on average to 2.1 products, brings down the cost of acquisition massively, and retention values stay much higher.
Mess up someone's holiday, and they cancel not only their allegiance to the holiday business, but all our research showed they moved their insurance policies away too.
What RDH took over was an s!-storm. Not only was the travel business haemorrhaging customers, Covid then took over, and a fair number of remaining customers have not travelled since, and probably won't, although that's just a presumption.
RDH has invested 140 million; he has another 800 million available - all of it came from the business he's now trying to resurrect. .. He's not going to let it go under. As everyone can read into the numbers, everything they can control is in the right direction. It's taking longer than expected; it's more choppy than anticipated, but this isn't a sinking ship. He left the business with no debt, with retention rates in their high 60s; he's returned to an organisation with vast debt, significantly decreased retention numbers, and morale was rock bottom.
I'm still of the opinion that they'll sell Titan when there's a decent offer, and that will pay down a big chunk of debt, and so this morning, I've bought back in
The other option could possibly be BooHoo group- they bought so many brands that they've taken online. They are probably still embedding the others (Think they have Karen Millen, Dorothy Perkins, Warehouse maybe?) but could be something they'd at least have a chat about in the lift?
ALways feels to me that they are predominantly female fashion-led, so Ted could be a nice addition?
Hi Banbury
I think that this time you're slightly off.
ABTA is for the consumers (general public) who bought through a travel agent. If a travel agent goes bankrupt then ABTA insurance will refund the consumer. It's there to help with disputes and doesn't really have many teeth. It's done a great job at making consumers feel they are protected, but in essence, it's ATOL which is much more important, and without ATOL, companies that use flights cannot trade. They can trade without ABTA, and many do
ABTA doesn't refund clients if the tour operation goes bankrupt - that's the CAA (ATOL) - even if the customer bought the holiday through a travel agent, the CAA is responsible, as it was when Thomas Cook went under in September 2019.
The ring-fencing is a new system brought in by the CAA, purely because of the Thomas Cook - it cost them millions to repatriate and refund. Saga put in place the ring-fencing before it will be made mandatory. All other tour operators will require deposits to be ring-fenced in the coming years. It has been delayed because of covid, but you'll see it happening more and more, meaning more and more tour operators will cease trading (a large number I suspect on the 31st March) because they use customers' deposits for their trading operations of paying salaries etc. (not what the deposit is for, which is to all intents and purposes not the tour operator, but the owner of the product, whether that is a hotel, airline, transportation, cruise-ship).
It has always been the rule that tour operators need to have all monies paid to them, available to refund customers within 14 days (Package Tour Regulations) of cancellation.
Many would use the 'profit' from any holiday for trading purposes, meaning that there was enough to pay hotels, cruise lines and airlines etc.
As Saga is regulated by the FCA, as a whole group, it would be impossible for Saga to use holiday customers' deposits and payments for their own cash flow. I don't know if you've ever noticed the small print on all Saga travel ads. If not, please do. Then have a look at any other travel ad. You'll see a huge difference.
When Covid struck, the payments that needed to be refunded were astronomical. Saga Holidays (not their own ships, river or ocean) would have paid hotels and airlines (normally 56 days prior to travel) but needed to repay all customers within 14 days.
Airlines, hotels were not paying that money back, hence the huge hole. It was a cash flow issue. At the same time, Saga also needed to pay out huge amounts of money to keep the business going. That's why we had the RI; that's why Roger came back in.
The last bit is just my view.
HI Banbury
Travel businesses aren't legally allowed to spend any customers' money on running the business until the customer has returned. Saga didn't spend their money, however, they moved to a ringfenced operation which is the CAA preferred option. This is something that all travel businesses will need to do over the year ahead. Saga is ahead of many competitors.
On the 31st of March, many travel businesses need to have their CAA licence renewed (ATOL); there is a number who won't make it. Both Saga and Titan don't renew until September (they have difference ATOL licences).
If, as I've been told, the travel division is closing, this won't be announced until some date around the results as it will need a 28-day redundancy consultation. From my understanding staff were told on the 23rd of February, and holidays already booked will continue to take place, as will hotel stays, but there will be no further marketing - and that was a significant cost - It also makes more sense why Saga pulled away from travel agents. This does NOT include cruises or river cruises.
8 days ago I would have said that Titan that its value remained at 100mil, but travel has taken yet another hit over the last week, this is the only reason I see why Saga's share price has decreased so much more than its peers. But if you take into account that the final results will be on the 27th March, reporting until the 28th Feb (prior to the invasion), the results will look good, the forward-looking will indicate that holidays and tours have struggled, but that the business is moving the business to Titan, and that option s are being investigated to divest the business.
Again, this is my speculation but it's from very good sources (who are on redundancy consultation) about what will be announced.
So, if we look at end of year results, and forward planning, i think it will say that the business transformation is on track; insurance 3year plans continue to improve; costs reduced; cruising is doing well, river cruising has been moved to cruise department; Saga travel will be wond down and moved across to Titan Travel over the coming year.
It may or may not say that Titan will be sold. I still value it as 100-140mil
Hope that helps
Pokerchips, the trading update talked merging of operations, not closing of Sag travel business. That's a different proposition. This would be dispensing with marketing and sales, customer service and operations.
That's potentially a lot of redundancies.
River cruising was moved from the holidays division to the cruising division recently. With more ships planned, this allows saga to own all its products, and that I think will be why they've pulled the majority of their travel agent business. Own product, own sales team, own database - obviously Saga can't market to customers who went through a travel agent.
There has been a great deal of movement with Titan and its in a very strong position. Add existing Saga customer database (when you sign up you agree to marketing, and that is the whole group, so it remains within gdpr rules), and you have a high end, profitable travel business with perhaps 80, 000 passengers a year with no debt
Valuation... 12-15 times earnings.
It's a very attractive proposition.
From Saga, I would also expect there to be something in a potential contract about share of future earnings from the original Saga database, and also for Titan to sell Saga cruises per annum
On the grapevine that the holidays and hotels side of Saga is being dispensed with.
Assume they'll move customers and database onto titan, before finally selling that off.
Speculation only
Nothing that hasn't already been written about I don't think. Going extremely well; cruising back on track; tours and holidays still needs more work; insurance 3-year take-up continues to improve and I read you view that insurance was a let-down. Perhaps consider that they had been losing customers, and that drop has now not only been stemmed, but on the trajectory up. Perhaps not to the level you wanted it to, but remember these results are only until the end of July; RDH only bought in September. That's less than a year!
I said that Saga will rebrand six months ago - being released in November
I said that investors should sell and then rebuy back 3 weeks later - anyone who did that would have increased their holding substantially on the same money (I was ridiculed for saying this - but I was right)
I said that Titan will be sold - it's now ready after new management was installed and the travel industry is back on track
I said that I think we will reach 700p by end of the year - I think on this one, I'm too quick off the mark, and it will take longer, but I continue to hold rather than increase and will sell at 700.
The market isn't yet a fan of the business and needs to see more firm results. The end of the financial year is 31st Jan; trading update should reaffirm that things are improving and so if at the end of December the shares continue around the 400 mark, I'll dip in again.
There's a reason cruise lines do RTW and long trips in January. The South America trip is similar to one they did in 2014 - which was rushed when Saga Ruby RTW had to be cancelled due to engine failure. It was very successful, however with most of South America being on the red list, it will be putting off some customers - the relevance of being on the red list and isolating is irrelevant as the ship will have left South America at least fourteen days prior to arriving back in the UK.
Older people like to travel south during the colder months, and this requires longer trips. Only needing to get 800 people onboard for three months is much easier than trying to get 8,000 onboard for one week/10 day trips. Additionally, repeat customers won't want to travel to the Canary islands (as far as you can go in 10 days and get some sun) more than once in a year, so you're cancelling out some of your future business opportunities to repeat sell.
As many odler people also don't want to fly, even more now, getting to far flung places on a cruise is the only way they can do it, and to do it, to escape the UK winter is the best option.
I suspect they'll change the cruise destinations - perhaps include West Africa and or West Africa - but expect the 83 night cruise to stay as a single cruise, or possibly be divided into two cruises; however that means they've only got 300 passengers (or however many are currently booked) to fill the ship twice.
From my understanding, that's not quite correct.
Ships will be allowed a maximum of 50% for UK cruising from 17th May, upto a maximum of 1,000....whichever is the lowest.
Saga however won't be cruising before the end of June when the rules will be different.
The 80% rule seems to have been discarded as I can no longer find anything about it.
I've been out of the loop over the last few weeks with a fairly large strategy project, meaning I could well be wrong
Three things are prominent for me here.
The three year plan seems to be totally on track.
I've previously said that holidays was in a mess and needs the most work while cruises appear to have a very large number of first time buyers. This is very very positive. Retaining existing customers was never much of a problem, but finding new customers is expensive and was always a challenge. Guys this is very positive indeed
Third... I think they have a new logo and branding. Another thing I wanted them to change and think I mentioned previously.
This is a very good update.
Nothing spectacular but in the middle of a pandemic, I'm not sure it could ever be spectacular.
There's a comms from Blanksy (MD of Cruising) reiterating the start as of July and for Saga passengers on cruises pre that date to be a little patient.
What this suggests to me, and it's by no means accurate, but an instinct is that there are a lot of passengers who are contacting Saga to move their May and June cruises to another summer/autumn cruises so as not to miss out.
By doing it in date order the business is rewarding cruisers who are affected first, but that means they may not be contacting their best customers who are later date cruisers - and it could cause them so CS problems. "I've cruised with you for 20 years and I should have been given the option to move to a cruise I wanted at the end of July - I won't forget this" that sort of comment.
It's a tricky situation, and I hope that Saga is contacting the Britannia Club members who will be affected by the late start of cruising and offering them the alternatives at the same time as passengers who were due to cruise in May.
I think I've said on a number of occasions that the road will be a little bumpy (or seas a little rough) before we come out the other side. The price has taken a dip and I think this is less to do with travel, but more to do with insurance. While the UK begins to unlock, the chance for insurance claims to rise is increasing. Have a look at other insurance companies and you can see a similar pattern recently.
It puts Saga in a unique position - when the lockdown ends, the travel side will improve and insurance could have more claims; when lockdown is in place, travel falls and insurance improves.
When we need to look at are the fundamentals, and despite Millionaire's £15 hope (If only), I still maintain £7 by end of the year.
I also retain the thought that the price will increase by the end of the third week in March and then fall somewhat until the middle of April, when it should begin to have a steady (if not bumpy) increase - that is unless something untoward happens and that my friends is what the gamble is on.
And to add to fjg, I very much doubt Middleburg Sq would come in at £20m. I question whether or was bought in 2013 either. I'm sure it was pre 2000, although I'm not sure whether that was outright purchase.
It's on a roundabout in the commercial area of Folkestone that isn't easy to get to for potential new residents unless the whole traffic flow was changed.
As RDH owns the redevelopment of Folkestone seafront (www.folkestoneseafront.com) I think he'll want this to go to someone who's going to develop it with a mixture of residential, commercial and retail.... This would benefit him. It's a dump of a building that needs ripping down. What wouldn't surprise me would be that it's not a straightforward purchase either, and the sale price could well be supplemented in the future with a form of profit share or something??
Cheriton Park will be known to many of you as the original eurotunnel building on the northbound M20. It's purely an industrial building, next to a motorway that isn't particularly convenient to anything. If we consider that Folkestone, or Kent doesn't particularly have large businesses that need MORE office space, I think this building is now and always has been a white elephant, and could be difficult to sell.
No one wants Thanet in any format. To live, to work, to even pass through. The building is like an aircraft hanger. The only reason I could see it working would be if saga brought their mailing house business there (currently in Newcastle) , or it was used for something similar.
So, I think in total the buildings could be valued at £20m.
Hope that helps, if not giving great news
If I had enough spare cash hanging around I would be doing the same. My monthly investment at the moment is going into AZN. Not because I think it's better than Saga but because they're so damn expensive, every couple of grand only gives me 30 shares and I think I'm overweight already on Saga.
Other than that, I keep looking at my portfolio and thinking 'sell something' and reinvest, but they all seem so solid now, even with some of them being in negative territory.
Thanks to Pianista a few months I've loaded up on another newish share too.
So I'm very happy you're loading up. It's going to return well.
UK cruises being able to begin at the earliest on May 17th is another piece of positive news.
Coming just a few days after Nigel Blanks sent the letter to say cruising will stay in July or sets an interesting dilemma.
My view, for what it's worth, is that they won't begin any earlier cruising, but what I think they may do are a series of UK overnight stays, i. e. Arrive onboard for lunch or afternoon tea, stay onboard overnight, explore the ship, enjoy some ship (with a p) entertainment, spend time with some of the fabulous crew, and if you make a booking for a future cruise receive a discount similar to the cost of the overnight stay.
It could be done in many ports, no actual cruising, but gets the crew back onboard with some real customer training and gives the company insight into how the new world of customers being onboard, social interactions getting 600 people on and off board without it affecting departures.
If this was done twice a week in places like Southampton, Dover, Cardiff, Liverpool, Greenock, Newcastle etc, with the majority being in the southern half of the UK, you'll have a lot of customers who may be nervous have the opportunity to experience without too much concern, and revenue generating too.
But i don't think they'll start cruising early. Trying to fill a ship with 600 or more passengers and organise a cruise with ports, excursions is very difficult and full of risk I think they'll be adverse to
Not saying "I told you so" but ....there was never a chance they'd start in May and I had predicted end of June a few days ago. But no one likes a smart arse, so I'll not say anything ;)
They'll remain at 80% capacity; by moving the cruises later into the summer and with retention of cruise passengers remaining very high, it means their concentration can now be on the river cruising (going great guns) and get"holidays" right which was left in a real mess a couple of years ago before Chris Simmonds was brought back in. This is a much more challenging job for the business - their differentiated product had lost its way, and I think it will take another two years until they've got the holiday programme into a good place and customers returning or trying for the first time.
Still a long road ahead for travel, but really is excellent news today on both counts of financing and cruising finally having a proper start date and one I don't think will move again.
There's someone on this board who brilliantly keeps an eye on the yield and occupancy of the ships. We'll see over the coming weeks lots of cabins being filled, which will increase the rate charged per night and much more emphasis on 2022 and river cruising. I think they'll continue to quietly turn holidays around and not make much of a thing about it - of course, they still have the UK holidays which will also be doing very well - but not a sufficiently big enough market that it will make much difference to the bottom line for this FY.
GLA - still on target and absolutely getting back to its roots of brilliant customer experience and products.
Banbury, that's very generous - thank you. There are others who deserve a very large and more enthusiastic shout-out
I've often thought this is the best board around (although I'm absolutely sure there are others) and there are a number of posters on here who view their portfolio in a different way and bring a new perspective to Saga that I could never bring, and I'm really impressed with the insight.
It wouldn't surprise me if, on occasion, senior people including shareholders within Saga glance through what we write and no doubt raise their bushy eyebrows at some of the topics and guffaw at some of the speculations.
@FJG - you're totally right and I'm wrong. Sorry - it was someone else.
@joe - yep I've a strong feeling. albeit I wouldn't bet your yacht on it, and I do zero day trading (maybe on occasion a month or so, but that's about as short as it gets.
There is some reasoning behind it - however @FJGooner did say I waffle and bluster so I won't go into the whys...
Icecool, Gooner - been away for a few days working (hotels are empty)
Following on from the conversation last week, anyone who thinks the inaugural cruise will take place on the 4th May, I still think you're wrong and it isn't going to happen.
Again today, the government has said that international travel will not start before the 17th May.
https://www.independent.co.uk/travel/news-and-advice/summer-holiday-travel-abroad-delay-may-b1811708.html
I know I'm frustrating in saying this, but in my honest view, do not expect travel and holidays to begin until the end of June.
And if you personally have booked any form of travel while we are in lockdown for any date into the future - unless it's a package, under the Package Regulations - you are not insured if it doesn't take place. Sadly I found this out personally.
What I THINK will happen is that Saga will re-engineer their summer cruising programme to less contentious destinations, beyond Europe - and interesting to see Denmark has broken away from buying the vaccine through the Commission - I think they'll open up for cruise travel as it's big business for the summer months.
So look out for summer sailings around Britain, to Iceland and Greenland, Baltic (excluding some of the EU states), but include Denmark; then there'll be Norway and Russia (Midnight Sun - where you should buy an inside cabin otherwise you get no sleep). By September, when the summer season is ended, we'll be back to Europe and further south to the Canaries and North Africa.
Maintaining £7 by end of the year, still think RDH may take it private. He only needs another 3.1% (wouldn't be surprised if that's already in the back pocket through family trust, employees, bankers) so can launch a takeover bid at any time he wants.
Short-term traders (and I'm not one of them) - I'd wait until the third week of March to sell, then buy again the second week of April. You can top slice any profits, keep them and reinvest at a lower price. That's no insider knowledge, just a gut feeling that's quite strong, but obviously do your own research.