A move towards exclusive, differentiated product by UK market leaders including Tui Travel is leaving a huge sector for online travel agents to exploit, according to the travel giant’s former boss.
Dermot Blastland, former Tui Travel managing director and now non-executive director of On The Beach, said what was the old Airtours positioning in the value end of the market is being abandoned.
Tui Travel now says 63% of what it sells is differentiated product and it wants to see this figure rise as it cuts the number of properties it sells each year by around 15%.
Blastland said: “Everyone is abandoning the old Airtours positioning.
“It’s all very well talking about differentiated exclusive and higher margin product but that’s like saying I’m only going to do Tesco finest or Waitrose because being Asda is too competitive.”
Speaking to Travolution at last night’s Hall of Fame awards where On The Beach rival Travel Republic was given a special business achievement award, Blastland praised his new employer.
He said the Manchester-based OTA was very much focused on quality and getting the customer proposition right and that volume was not being prioritised over quality.
He said the OTAs ability to move quickly to react to customer demand while keeping a tight rein on its cost base means it is able to be cheaper while maintaining customer satisfaction scores.
“Why has Dnata bought Travel Republic, why has On The Beach brought me onboard? Because like all companies they end up saying we are doing well and we want to be growing and be around for a long time to come.
“The idea that you can’t have a high quality holiday with good service, with good repeat business unless you have exclusive differentiated product is nonsense. There is terrific product out there.”
As well as agreeing its own innovative trust arrangement with the CAA to offer full financial protection, On The Beach has recently announce it is to have overseas reps working for it in resorts.
It has also started directly contracting some of its own beds, although this remains a relatively small part of the business compared to its supply from bed banks.
Blastland expects this focus on quality will develop and believes the established players in the industry are not able to work on the margins available to them in the commodity marketplace.
But he said that there were “perfectly acceptable returns to be made if you have the cost structure”.
“It’s all about the web and you have to act quickly,” he said. “There are no big long committee meetings and business cases. You have to be very quick and focused and obviously price-sensitive.
“The discipline to get amazing value-for-money solutions is the pressure of the business. If you have fat overheads you have got fat thinking.”
Blastland praised his former company’s success online saying, despite all predictions to the contrary, it has successfully established itself along with other web-only rivals.
But he said the focus on its own product and the need to fill its own aircraft could be a hinderance and, despite Thomas Cook’s recent financial woes, its more retail approach could be one to watch.
Although Cook’s London based OTA has not taken off as it expected, Blastland believes there is a need for big brands to offer more reassurance online and Cook could do that.
In the mean time Blastland said On The Beach is focused on building on what he claims to be impressive growth in the UK mainstream market.
“At the moment what they are saying is let’s make sure we have a really good mainstream beach holiday proposition in the UK that’s staggeringly brilliantly run.
“One you have got scale on the web in the travel market there is nothing stopping you saying what other markets are available and attractive for the On The Beach proposition.
“On The Beach has had to cope with a lot like the XL [Leisure Group] collapse, volcanic ash cloud, Goldtrail going bust and you have not heard of major complaints of consumer not being sorted out.
“The economic downturn has helped companies like On The Beach because they have gained a lot of expertise in coping with a lot of chaos and trouble which is a strength of bigger companies.”