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Archive Category: Tour Operator

UK’s CAA seeks advise on Thomas Cook’s financial problems: report

The UK’s Civil Aviation Authority has reportedly hired US turnaround and restructuring firm Alvarez & Marsal to advise it over Thomas Cook.

According to a report filed by the Sunday Telegraph, the Authority has taken this decision over concerns surrounding the tour operator’s ability to pay a customer- protection bond and fulfill its obligations on aircraft safety should the financial strength of the company worsen.

Late last month Thomas Cook Group reached agreement with its banking group to provide it with a new facility that significantly improves the “robustness” of the group’s financial position. The group’s banks, led by Barclays, HSBC, RBS and UniCredit, agreed to provide a new £200m facility available until 30 April 2013, which replaces the £100m short-term facility finalised in October. In addition, they agreed on a further relaxation of the financial covenants under the existing facilities.

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Thomas Cook Signature targets youth/budget traveller market

Thomas Cook Signature has partnered with YHA Australia to offer budget accommodation throughout its UK’s high street travel retail network.

With this move, the company is targeting youth/budget traveller market for the first time.

The pact allow Thomas Cook, Co-op and Going Places agents to tap into this growing market, which was previously only the realm of youth/budget travel specialists, highlighted the companies. It was also mentioned that over 128,000 British backpackers visit Australia each year, each staying an average 68 nights and spending $7,660 AUD per trip making this the highest yielding segment, spending nearly twice as much as the average international traveller.

Mandy Monk, YHA Australia’s marketing manager for Europe, said the budget and backpacker segment is continuing to grow and despite common misconceptions these travellers have disposable income, a strong propensity to travel and are generally less effected by issues such as the Global financial crisis, making them an ideal target group in these more difficult times.

“We welcome the foresight shown by Thomas Cook Signature to tap into this lucrative segment through its independent agent partners,” said Monk.

Thomas Cook Signature’s 2012 brochure launches on 15 December.

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Thomas Cook signs new £200m bank facility

Thomas Cook Group has stated that it has reached agreement with its banking group to provide it with a new facility that significantly improves the “robustness” of the group’s financial position.

The group’s banks, led by Barclays, HSBC, RBS and UniCredit, have agreed to provide a new £200m facility available until 30 April 2013, which replaces the £100m short-term facility finalised last month. In addition, they have agreed a further relaxation of the financial covenants under the existing facilities.

For its part, the Board is taking steps to reduce the group’s debt and reach a more appropriate capital structure over time.

The new £200m revolving credit facility recognises the group’s seasonal working capital patterns.

The group also shared details:

The facility has the benefit of a limited security package over shares. It will be available to the Group until 30 April 2013. The initial interest margin over LIBOR payable on the new facility will be 5 percent per annum, increasing by 0.50 percent per annum each quarter. In addition, a commitment fee and, in certain circumstances, a utilisation fee is payable. The existing credit facilities comprise a £150m amortising term loan and a £850m revolving credit facility which mature in May 2014. The interest margin on these facilities remains unchanged.

The banks will be issued warrants to subscribe 42,914,640 new ordinary shares of the company (representing 4.9 percent of the issued share capital of the company) exercisable at a strike equal to the average closing price for Friday 25 November 2011 and Monday 28 November 2011, at any time until 22 May 2015.

In addition, the covenant levels on the existing and new facilities have been further relaxed as follows:

· Leverage covenant: the ratio of consolidated adjusted net debt to leverage EBITDAR must be less than or equal to 5.0x for the testing period ending in December 2011, 4.75x for the testing period ending in March 2012 and 4.5x in respect of all subsequent testing periods

· Fixed charge cover covenant: the ratio of fixed charges to fixed charge EBITDAR must be greater than 1.5x.

The arrangement and participation fees with respect to the new arrangements will cost circa £10m.

In addition to the existing term and revolving facilities, the Group has £200m of committed bilateral bonding and guarantee facilities provided by seven banks that are covered by the new amended agreement, which is unsecured and principally for consumer protection.

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Thomas Cook in discussions with its principal lending banks

Thomas Cook Group says it is in discussions with its principal lending banks with regard to its facilities during the seasonal low period of cash in the business.

The company is in discussions as a result of deterioration of trading in some areas of the business in the current quarter, and of its cash and liquidity position since its year end.

“While the company currently remains in compliance with its financing covenants, it also intends to seek agreement from its lending banks to adjustments that will improve its resilience if trading conditions remain difficult,” stated the company.

As a result, the company will delay its announcement of its full year results until these discussions are concluded.

The company also mentioned that it expects to report a headline operating profit for the year ended 30 September 2011 broadly in line with previous guidance.

The company would not be issuing its full-year results as planned on Thursday. The company’s shares plummeted 75 percent yesterday.

Thomas Cook Group also reassured holidaymakers that it is business as usual as it announced fresh discussions with its banks on £100 million in extra loan facilities.

Last month, the group reached agreement with its banking group to amend the terms of its existing bank facilities to increase financial flexibility for the group. In addition, it signed a new short-term committed bank facility to provide an additional £100m of headroom around the seasonal cash low point at the end of December this year. The group that time shared that the existing credit facilities comprise a £150m amortising term loan and a £850m revolving credit facility which mature in May 2014.

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Tui UK starts high street retail rebranding of Thomson and First Choice

Tui UK will re-brand its retail branding proposition by introducing “Thomson….. featuring First Choice” stores. The company will be investing £8 million in changing the look of all its high street retail stores over the course of the next two years.

The rebrand forms part of Tui UK’s long term distribution strategy and will see Thomson become the leading TUI brand on the high street.

The initiative, which starts this month in the Exeter region, is being taken to increase brand presence and further strengthen Tui’s position on the high street.

The project is being spearheaded by Kathryn Ward, Retail Director; and Nick Longman, Distribution Director, who has also recently been appointed Online Director for the Mainstream Sector.

The next two years will see Tui UK’s entire retail estate go through the rebranding process, taking the look and feel of a Thomson shop and introducing clear and prominent First Choice branding, emphasising the company’s investment in the high street. The refurbishment and rebranding of the entire Tui UK retail estate is due to be completed by October 2013.

Since Thomson and First Choice merged in 2007, the British high street has seen both brands standing separately, but offering the same holiday options in more than 700 locations. The project will triple the presence of the First Choice brand around the country.

Longman said: “We have two major, distinctive brands, and have a strong presence across the country. We want to make the biggest, clearest impact we can, for our customers. Thomson is a hugely recognised brand and will therefore take the lead on all shops, but First Choice will also feature because it has a clear proposition and strong appeal in its own right.

“There is certainly room for both brands, and customers will benefit from the breadth and clarity of what we have to offer. To ensure we remain market leaders on the high street we need to give our customers unrivalled accessibility to the best choice of our wide range of products. That’s why we are bringing both our market leading brands to all of the towns we operate in.”

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Thomson creates Family Charter to put quality time at the heart of the family

Thomson is creating a first ever Family Charter to put quality time back at the heart of the family – both at home and on holiday.

The company is calling on parents and kids to identify the promises they should make to each other about spending time together. A national vote will then create the top five rules for the official Family Charter.

The creation of the Charter comes alongside news that families are healthier and happier when they holiday together. Giving Britain a Break, a parliamentary report published this week, supported by the Family Holiday Association, reveals that when it comes to the overall wellbeing of British families, quality time spent on holiday makes all the difference and could have a positive impact on Britain’s economy. As stated in the report, if social tourism initiatives in the UK could ultimately mirror the success of schemes in neighbouring Europe they could deliver up to £5 billion to the tourism sector.

For its part, Thomson’s new research shows 1 in 5 parents can’t take a enough time off work to have a holiday. Almost half of British workers have not used their holiday allowance in the last year.

The research shows that each member of the average British household, whether parent or child, truly values family time on holiday as the most precious and memorable time spent together each year. And when asked what parents would ideally like to do with their children if they had some time off work, more than half would go on holiday.

Work is taking its toll so much these days, that over two thirds are home late so they can’t spend time with their kids and for those that do get home, more than 1 in 8 are working on their Blackberry’s, mobiles or laptops. Over a quarter of parents stated that in an average week they spend less than an hour a day together with their children – despite almost half saying they wanted to spend more time together.

The Charter will be developed with leading children’s champion Nicky Cox MBE, editor of children’s newspaper First News, which is read by more than a million UK children every week and their families.

The Thomson research was undertaken on a randomly selected sample of 471 families (over 1000 respondents) in the UK with children aged 8-12 years. The research was conducted by Kids Industries in October 2011.

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TUI Travel appoints Johan Lundgren as its deputy chief executive

Johan Lundgren is taking up the newly created position of deputy chief executive, TUI Travel with immediate effect.

Lundgren is currently managing director of TUI Travel’s Northern Region within its Mainstream Sector and a PLC Board Director.

Responsibility

Following Lundgren’s promotion to deputy chief executive he will have overall responsibility for the Mainstream Sector of the Group.

Volker Bőttcher, managing director, Central Europe and Bart Brackx, managing director, Western Europe, will now report into him.

David Burling, commercial director, TUI UK & Ireland is being promoted to managing director, TUI UK & Ireland and will continue to report into Lundgren.

Focus

TUI Travel highlighted that it is developing its business model to focus on modern mainstream and the importance of online across the entire Group.

For the Group to operate with maximum efficiency and drive through necessary change more quickly, it will be taking a unified approach across its mainstream businesses. This means that, where it makes business sense, processes, core activities and best practice will be aligned. It will also help to ensure effective leveraging of scale across the Mainstream Sector.

“As TUI Travel enters the next phase of its development it is important that our Mainstream Sector has common goals and focus,” said Peter Long, chief executive, TUI Travel.

Lundgren said, “Much good work has been done in the Mainstream Sector since the merger of First Choice and the tourism division of TUI AG. We do, however, need to capitalise on our strengths, for example in differentiated and exclusive product which is a critical part of our ongoing success and ensure that we continue to increase our controlled distribution particularly through online. Over the coming months, I will be reviewing all the Mainstream Sector businesses to determine how best we can achieve our strategic goals.”

Thomson plans early £5m ad campaign

Thomson Holidays is launching a £5 million advertising campaign. The move is an aberration from its traditional strategy of a post-Christmas ad campaign.

The company’s biggest-ever branding campaign goes live on October 22, with its first 90 second advertisement during ITV1’s X Factor. The TV campaign is to be supported by cinema, outdoor, online and press activity, running until May next year. Direct marketing, CRM and digital activity will focus on the specific benefits, activities and facilities that the operator’s holidays offer.

According to a report filed by marketingmagazine.co.uk, the £5m campaign, will focus on Thomson’s offer of delivering ‘quality time’, coupled with a quality service to consumers.

The ad shows a boy talking about the importance of people sharing time together. He says: ‘Those close to you: share with them a week or two and they’ll cherish it forever.’ The execution ends with an orchestral arrangement of The Pixies’ song Where is my Mind?

Jeremy Ellis, marketing director for TUI UK & Ireland, reportedly said that the rationale behind launching the campaign this month is to ‘get people to listen to the brand message’ at a time when few other travel companies are advertising.

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High street travel agents prove most popular amongst women and Internet generation: Survey

Over half of consumers, 53 percent, who have taken a foreign holiday in the last 12 months booked through a travel agent or tour operator, according to the 2011 ABTA Consumer Trends survey.

The survey indicated that high street travel agents rule for the young with a third of 16-24 year olds, 32 percent, using them with 45-54 year olds, 15 percent, being the least likely to do so. It also shows that women are significantly more likely to book with a high street travel agent than men with nearly a third, 31 percent, booking through this route in the last 12 months compared to 19 percent of men. Similarly, 32 percent of 16-24 year olds booked through this route, more than any other age group.

Also, 53 percent booked through either a high street travel agent, 25 percent, or a tour operator, 28 percent. There is a gender difference with over half of women, 57 percent, preferring this route compared with men, 49 percent, who are less keen. Women are particularly keen on high street travel agents with 31 percent using them as opposed to 19 percent of men.

One in four had also booked through a holiday booking website. 43 percent had booked direct with airlines and accommodation providers with 25-34 year olds being the least likely to do so at 28 percent and the over 65s the keenest at 50 percent. Foreign package holidays remain a popular option at 42 percent, most popular with women and 15-24 year olds, level pegging with travel and accommodation booked separately also at 42 percent.

Over one in five customers, 23 percent, had also booked a domestic holiday using a travel agent or tour operator.

ABTA Chief Executive Mark Tanzer said: “There is a wealth of booking options available to holidaymakers and I am pleased to see that over half are looking for the reassurance and professionalism offered by travel agents and tour operators when going overseas. It is also encouraging that so many of the internet generation choose to book through high street travel agents and that so many people use their services when holidaying in the UK. Many ABTA Members also provide bespoke booking options on the internet which is an important booking option with one in four customers doing so. ”

The ABTA Consumer Trends survey generated response from a nationally representative sample of 2018 consumers using an online research methodology and related to holiday booking habits in the 12 months to September 2011. Fieldwork was conducted in September 2011. Consumer research was conducted by Arkenford.

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Understanding the significance of price intelligence tools in the travel sector

IN-DEPTH: Travel companies can be proactive by having systems in place to consistently watch out for competitiveness and make use of advanced business intelligence tools that are capable of feeding rates into RMS or provide the ability to fire reports on demand, says Vishal Jain, Head, Product Management, RateGain.

By Ritesh Gupta

Retail travel businesses are increasingly looking at incorporating data mined from the web in order to optimise pricing decisions.

The web-based price intelligence tools facilitate real-time monitoring of product rates for businesses like online travel agents, tour operators, wholesalers, airlines, cruise lines and car rentals across various competitor websites.

With the ever decreasing brand loyalty in the online world and where rates are constantly changing, travel companies need to be consistently updated about their competition’s future pricing strategies.

“Travel companies (whether suppliers or intermediaries) by and large fall under oligopolistic competition category or monopolistic competitiveness and under both it is important to know what the rest of the market is up to. The pricing is hardly relevant if you choose a cost based or ROI based pricing model. Pricing has to be referenced and benchmarked against the competition and that is where a BI tool providing most updated transient rates/fares can help you fine tune your pricing and rate structure,” says Vishal Jain, Head, Product Management, RateGain told EyeforTravel’s Ritesh Gupta in an interview.

Jain, who is scheduled to speak at the forthcoming Product Development Strategies For The Travel Industry Conference in London (November 3-4) this year, spoke about competitive price intelligence, the maturity level of data-as-a-service in the travel sector and lot more. Excerpts:

The number of options available for travel planning and booking, and also the number of screens/ gadgets to access content continue to rise. The online travel sector, especially both OTAs and travel meta-search engines, continues to witness newer challenges. In this context, how do you see the need to remain competitive for businesses in the online travel sector? How are various stakeholders trying to be proactive?

Vishal Jain:

Back to basics, there are two things to be addressed here, staying competitive in terms of price, value as well as contractual obligations. Travel companies (whether suppliers or intermediaries) by and large fall under oligopolistic competition category or monopolistic competitiveness and under both it is important to know what the rest of the market is up to. The pricing is hardly relevant if you choose a cost based or ROI based pricing model. Pricing has to be referenced and benchmarked against the competition and that is where a BI tool providing most updated transient rates/fares can help you fine tune your pricing and rate structure.

To create differentiation audit of your own BRG and staying competitive in eyes of your consumers or online partners like OTAs, it is imperative to check if your rates are being distributed in the desired manner. For the OTA, it is important to stay credit worthy in terms of offering the most competitive rates combined with easy UX and excellent customer support team.

You can be proactive by having systems in place to consistently watch out for competitiveness and make use of advanced BI tools that are capable of feeding rates into RMS or provide the ability to fire reports on demand.

Some of the companies have integrated the whole workflow into a seamless way of ensuring the right data extraction from multiple sources, correct mapping rules for apple to apple comparison of the data, applying business rules to finally driving actionables as job/ticket assignments to various stakeholders (like Market Managers) within the company. This form of end to end automation and logical workflow helps them drive the right ROI from their BI initiatives.

The industry has witnessed the emergence of web-based services that make it easy to acquire, organise, manage, and analyse large volumes of complex, interrelated data. How do you assess the maturity level of data-as-a-service in the travel sector?

Vishal Jain:

The maturity of the data from the technical point of view is only as good as the technology that is involved in culling it out for you. It is important for you to know that the data they are referring to is fresh and not aged; it has to be consistent and accurate from source and unit level point of view (not just the cheapest). Such data sets when culled, can be organised in easy to analyse formats that can be further used by revenue and pricing professionals to analyse at the granular level (apple to apple) and arrive at the most relevant pricing decisions. This effectiveness reflects the maturity offered by the data vendor.

Although data extraction for business decision making has matured in the sense that a lot of the suppliers and intermediaries get this internally or externally. But from a perspective of being able to use that data to its fullest and take action on it is something that is limited to very few companies. Resources, both in terms of numbers and skills, are something that becomes a bottle neck in most cases. This presents an opportunity for data providers today to move up the value chain and actually provide not just data but professional services that help with the right and full consumption of that data for their customers.

What do you recommend to travel businesses in order to become nimble and make the most by measuring their competitiveness? What sort of benchmarks can they set to assess their competitiveness/ or be proactive?

Vishal Jain:

There are two issues:

1) a soft approach in terms of using the right reports, data vendors and frequency and

2) the hard approach of training your team to check the sites competitiveness on an ongoing basis. Speaking to suppliers or member hotels (in case of Hotel Chains) who breach the contractual agreements from a consultative point of view is an important aspect and will benefit the industry a lot.

The need is to educate the industry people to understand the criticality of contractual agreements and how it can positively or negatively impact not just the future reservations/bookings but also their brand integrity in the longer run.

OTAs should show flexibility in providing a choice or pricing options to match the rate merchandising capability of a booking engine in terms of restrictions, dynamic packaging and promotional derivatives of standard rates/fares. For example, majority of the OTAs loose out when they are not supporting the FPLOS (full pattern length of stay) pricing strategy of a growing number of Hotel Brands, they start appearing more expensive than the brand sites and unwittingly contribute to the “billboard effect” more than they should.

Corporations are capitalising on the techniques of business analytics to achieve new breakthroughs in process performance. Which according to have been critical breakthroughs in data mining over the past few months? How do you assess the maturity level of these offerings as of today?

Vishal Jain:

The capability of data mining on a consistent basis is worth mentioning. The ability to hedge around the risk of IPs being blocked or rates getting reflected as an image / Captcha reader, which your data provider cannot read are important breakthroughs. Also to add the ability to present the data in terms of calculating tax and charges incl. or excl, good product/rate mapping (with advances in NLP technology this has significantly improved matches) is important for a true apple to apple comparison. Additionally, the data representation tech on the web is also evolving and this presents an on-going challenge to the data mining business.

Lots of CRM and Enterprise solutions (CRS/PMS/RMS) are exposing their APIs for 3rd party systems, it has led to ease of automating the BI driven action items. However a lot of this is secondary. The primary focus is to have audits and checks in place to even know if you are facing the issues mentioned earlier.

As a specialist in this arena, can you elaborate on what factors should one take into consideration when it comes to data aggregation and implementation strategy?

Vishal Jain:

It is important to maintain consistency in terms of access to fresh and consistent data, ability to customise, to present insights by using the data mash ups, to co-relate two separate kinds of data e.g. competitive fare to own yield, customer satisfaction to ADR, and more.

Implementation to the desired level of format and data presentation is important as it will ease out the consumption process at the RM’s desk.

What do you think is critical when it comes to relying on data management for new product launches?

Vishal Jain:

Measure, Measure and Measure ….the age, the accuracy, the source, the conversion, the entire data scope of what was shopped and presented.

Only when you have audited that something works correctly, you can rely on it for something as important as your pricing decisions for new products.

Consumer interactions are taking across new web platforms such ones related to social media and also mobile platforms. As both suppliers and intermediaries are vying aggressively for the online customer, can you reflect upon what is being done by the BI solution providers to monitor and measure brand perception and respond on a real-time basis?

Vishal Jain:

The BI around reviews and guest commentary is also provided on similar data extraction principles as rates are extracted. However, we must consider that consumer interactions are happening all over the place and not necessarily in a structured display format for any vendor to extract. The tools available out there are of all sorts. One must try and work with partners offering a sound sentiment engine behind the tool so that the first round of analysis of all consumer commentary can be done and categorised for the business user in an easy to relate format. These tools should have high precision in terms of retrieving relevant data so that the aggregate is a qualified one and not just a sentiment from select sites or sources.

The commentary is the voice of the customer, it is important to use this to hear the guest feedback and make necessary changes in service and product standards. If done well you can even tie it to the value proposition and charge a premium and hence get a breather from the never ending pricing battle with the competition.

There is a growing demand from industry players to integrate business intelligence with their existing or new revenue management systems. These companies are looking for an integrated solution through which they can control their pricing as well as execute an analytics based competitive pricing strategy. How is this arena shaping up?

Vishal Jain:

Previously RMS would just look at your own historical data but the scenario has changed now. Now by taking feed from price intelligence tools they are able to calculate more accurate hurdle rates. This area has a lot of opportunities as the consistency of data gets defined better and the data consumption becomes more structured. It is however important to know that the RMS and data feed provider are tightly integrated and can identify the data feed in the right manner. In hospitality industry, specially the smaller hotels that do not use RMS’s still are continuously looking for data feeds in their CRS or channel management solutions.

There is a need though for RMS players to start thinking beyond rate BI and move towards evolving their models to take into consideration BI data around self as well as competitive customer satisfaction, online reputation, social recommendations (tied to consumer influence index) and its impact on rate recommendations that they churn out.

 

Product Development Strategies For The Travel Industry Conference   Vishal Jain, Head, Product Management, RateGain is scheduled to speak at the forthcoming Product Development Strategies For The Travel Industry Conference in London (November 3-4) this year.   For more info, click here   Or   Contact: Marco Saio Global Events Director +44 (0) 207 375 7219 marco@eyefortravel.com   or   Tim Gunstone Managing Director +44 (0) 207 375 7557 tim@eyefortravel.com

 

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