The collapse of Thomas Cook marks the passing of arguably the most famous brand name in travel. One that had been in continuous use since 1841.
Though seeing thousands of holidays cut short, thousands of jobs lost, and a repatriation effort on a Dunkirk-like scale is a tragedy, it should also be a wake-up call to all of us in the travel industry. And while rushing to find someone or something to blame, from greedy bosses to Brexit, is perhaps understandable, we are in danger of missing an important point.
A company with a travel business model that was truly pioneering in the 19th century, failed to prepare properly for the 21st.
In recognising the desire of a growing affluent society to journey beyond their shores, Thomas Cook senior was a bold visionary. The first escorted round-the-world Cook’s tour sounds quite a trip: departing from London in September 1872, it included a steamship across the Atlantic, a stagecoach across America, a paddle steamer to Japan, and an overland journey across China and India. Thomas Cook was also an innovator. Their business model was refined by the introduction of the 'hotel coupon' in 1868. Detachable coupons in a counterfoil book were issued to the traveller. These were valid for either a restaurant meal or an overnight hotel stay, provided they were on Cook's list. Thomas Cook ancillary sales then included guide books, maps, walking boots, and telescopes!
Fast forward to 2019 and the travel market has shifted to a very different place. As horizons broaden, far fewer travellers, especially generation Z, want or need to be ‘escorted’ on their journey. Many still often desire a packaged holiday but now design and aggregate their own for a unique and individual experience. We are all travel agents now. But with the advent of mass search, travellers don’t need to pay an agent premium for hotels, flights or guides. Buyers and sellers of travel products no longer meet on the high street; they connect online.
Fundamentally, Thomas Cook went from pioneer to laggard in its preparation for the 21st century. In chasing the mass market, going for turnover rather than profit, Thomas Cook was left with customers buying purely on price when they had inbuilt costs that meant they were rarely the cheapest. In an effort to retain loyal but elderly customers face-to-face Thomas Cook ended up giving a high touch for low-value sales. Sometimes it took all morning to sell a holiday with a low margin, and by lunchtime, that margin had been eaten up.
The brand is important, and Thomas Cook had one of the most iconic. But the brand alone will not save a company that fails to adapt and relies on a diminishing and ageing customer base. There is a sad irony in a company that began and thrived by adapting to a changing world, being unable to keep up when that world changes again.
For over 20 years Coforge has been combining industry understanding with technology smarts to make sure our travel customers are ready for the next big shift. Is your travel business really ready?