Cook results see story move on from European OTA ambitions

Cook results see story move on from European OTA ambitions

While much of the focus on Thomas Cook’s annual results announcement has centred around how it will shore up its eye-watering multi-million pound losses, from an online perspective it was notable for what was not said.

Before the travel giant’s financial woes became apparent last year leading to the departure of former chief executive Manny Fontenla-Novoa, the firm had been painting an interesting and ambitious story about online OTA growth.

Indeed, speaking to Travolution in 2010, Fontenla-Novoa spoke of Cook’s desire to become Europe’s top online travel agent within three years, exploiting its reputation as a trusted travel retailer and overtaking the likes of Expedia and Priceline (booking.com) in a fragmented market.

A new unit was established in Fleet Street, central London, and an experienced – and no doubt expensively put together – team of top online executives drawn from both within and outside of travel set about making this ambition a reality.

No lesser light than former Expedia managing director Simon Breakwell was brought in to mastermind the operation as a consultant. He told the City at the time that Cook was targeting £3-£3.5 billion of incremental sales in the medium term and “significant profit” from OTA growth.

New source markets including Spain and Italy were being eyed up and Cook claims, with 2.6 million unique users in the January of 2010, it had a “significant platform to build on”. “Work is well underway, with Thomascook.com UK sales already up 30% year on year,” it said.

It’s probably fair to say that before his spectacular fall from grace last year it was Fontenla-Novoa’s story about online growth and future plans that kept the doubters in the City at bay, given what it is clear now were huge legacy issues at the travel giant.

But Breakwell’s association with Cook ended and amid talk of internal wrangling over the more traditional tour operating side of the business and the Fleet Street OTA, many of the original team also departed for pastures new.

If Cook’s pre-crisis plans sounded strangely familiar, that’s because they were; its great rival Tui Travel talked a very similar game during the time of Graham Donoghue as its new media director, when again Expedia was said to be in the crosshairs.

Since Donoghue’s departure to Travelsupermarket and the merger of Thomson and First Choice, Tui has ploughed a much narrower furrow online, with the web seen as a powerful and efficient channel to push its own exclusive and differentiated product, rather than as a full-service OTA.

Today, Fontenla-Novoa’s successor Harriet Green, someone steeped in technology having been plucked from electronics parts distributor Premier Farnell last year, was asked about Cook’s online retail strategy.

She gave little away but there were a few hints at what we might expect, although much more detail is expected next spring when the results of a strategic review are announced.

Green said: “The web represents a phenomenal opportunity for Thomas Cook.” She pointed to the 310 million customers in Europe who start their travel adventures online. “Imagine a world in which we convert just 5% of those to billing customers. We have an amazing opportunity.”

Green also mentioned how 73% of customers in northern Europe transact via the web compared to 28% in the UK. “We have a strong business to build upon and you can bet your bottom dollar we will,” she said.

In terms of focus, Green spoke about being “omni-channel” – an evolution of multi-channel according to Wikipedia – although after Cook’s retail estate was swelled to over 1,100 stores by the merger with The Co-operative Travel before Green’s arrival a rebalancing looks likely.

Asked about the potential for future job losses after 147 stores were closed in the last year, Green said: “Because we have so many duplicated activities, so many silos across the group, we will have a more streamlined business, but I do not know what these numbers will look like or where that impact will be.

“We employ 31,000 people, 17,000 in the UK. As we reshape we may have a greater need for certain skills, whether it’s around the web or technology, and less in other areas, as we continue to enhance the customer experience.”

Green has already talked about Cook getting closer to its customer and that in this endeavour “all roads lead to technology”, and today she talked about simplifying systems to eradicate layers that exist between her, at the top of the organisation, and the customer.

She said she would be looking to strip out operational costs by building on “one platform for the web” while “taking out plumbing that does not benefit customers directly” across the whole organisation.

With the City now seemingly sold on Tui’s differentiated product story, talk among the UK’s big two of dominating the European online travel agency space appears to have abated for good.

But that does not lessen the technology challenges ahead for what Green stressed remains one of the most iconic and trusted travel brands.

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