Andrew Xu, executive president of Fosun Tourism Group, dismissed speculation that it was planning to sell the brand and set out plans for growth and differentiation
Thomas Cook Chinese owner Fosun confirms commitment to the brand
The Chinese owner of Thomas Cook has made a firm commitment to the brand dismissing speculation of a possible sell off.
Speaking to Travolution last week on a visit to the UK, Andrew Xu, executive president of Fosun Tourism Group, said its international travel brands are seen as “core assets”.
Speculation of a potential sell-off followed holding group Fosun International making a 2% to 3% reduction in its majority shareholding of Fosun Tourism Group. Fosun remains a 79% shareholder in the group.
The tourism group, which is publicly listed in Hong Kong, acquired the Thomas Cook brand in November 2019 following the collapse of the iconic travel firm.
It also owns the Club Med operator of all-inclusive winter sports and summer sun resorts, and Atlantis Sanya, a tourism and entertainment resort on the South China Sea.
Xu said: “Fosun International has identified Fosun Tourism Group as one of its core assets. Fosun will keep its commitment to us and will absolutely control their holding position in the group. That is clear.
“We are trying to optimise the business model of Thomas Cook and Thomas Cook China and we will keep our commitment to this brand and we will not sell. Fosun Tourism Group, including Thomas Cook and Club Med, is a core asset.”
Xu said Fosun was “open-minded” with regards to potential strategic partners interested in taking coming in as a minority stakeholder that have synergies to drive the tourism group forward.
Fosun’s vison for Thomas Cook is not as a pure-play online competitor to the likes of booking.com or China’s dominant OTAs Ctrip, parent of trip.com and Skyscanner, and Fliggy, the travel arm of Alibaba.
It wants to differentiate the brand through the product it offers to drive higher margins, “so we can be more sustainable in the future, so when tourism faces another period of uncertainty we can survive,” Xu said.
Xu said following the COVID pandemic, and a succession of other crises that preceded it, uncertainty in global tourism is a “normal thing” and the question is “how to develop sustainably in such uncertainty”.
Fosun’s global presence will allow it to mitigate its risks by being present in various markets, added Xu, and this will require a different brand strategy in the UK for Cook than in China, where it is relatively unknown.
In the UK Fosun wants to maintain the high levels of brand awareness Thomas Cook still enjoys but alter the perception of it as being primarily a mass-market mainstream retailer, operator and airline.
Cook says, supported by its partnership with Club Med, it wants to tap into its heritage as a travel pioneer for people who are looking for adventure and to discover more far-flung places.
“Thomas Cook had not been present in China since the end of World War Two to our investment and joint venture in 2017, so brand awareness is quite limited,” Xu said.
“On one side that’s a shortcoming but on the other it makes it easier to apply a different business model.
“In Europe it’s easier to apply our marketing strategy; everyone knows Thomas Cook because we have a fundamental brand awareness here.
“But because of the heritage of the old Thomas Cook people will think it’s a mass market mainstream brand with thousands of stores and its own airline. We need to work hard to change this.”
Xu believes the advantage the firm has in China is that it owns its own product and so represents both sides of the supply distribution marketplace making it different from its pureplay online rivals.
“We are discussing with our executives here and in Shanghai how to optimise our model in the future to make it more differentiated.
“We need to seek a balance because we want to do that in a differentiated way to educate the market about the new positioning of Thomas Cook product. We need to position ourselves a bit more at the higher end than mass market.”
Xu added Fosun was not in a rush and does not plan to expand aggressively in Europe until it has properly defined its business model.
He also expects the volume of travel between China and Europe to rebound significantly once the COVID restrictions are finally relaxed for Chinese outbound travellers.
Currently China is seeing high levels of bookings and high levels of cancellation, which Xu said indicates pent-up demand remains ready to book when borders do reopen.
Although the economic outlook in the UK is challenging with inflation weak sterling, Club Med bookings are running at around 30% ahead of pre-pandemic levels. Half of UK Club Med sales come direct, compared to 70% globally.
Xu said ski is “booming” and long-haul summer sales to destinations like the Indian Ocean ad the Caribbean are driving growth.
Thomas Cook is seeing sales up by around 21% consistently on last year and the brand says average selling prices are up and it is not seeing a drop off due to the cost-of-living crisis and potential recession.
All-inclusive is on the rise as people look to lock in prices for next year and Cook expects long-haul to return strongly so more indirect flight options will be added, particularly for customers travelling east.
“We are hoping 2023 will be reasonably stable and an opportunity to really trade the platform we have built,” said Xu.
“So much of our agents’ time has been spent on amending and cancelling hopefully the administration will become easier and they will be able to use that time to find more long-haul holidays and make appointments with customers.
“Once we are through that initial burst hopefully we can then start to shift the customer service team to be a much more proactive sales team