The saga of Thomas Cook is sad and miserable – and annoying to the hundreds of thousands of customers who may have been stranded far from their homes. Regardless of the outcome of the rescue talks that began yesterday, our altered habits and technologies will cause the Thomas Cook brand to never be the same again.
What happened? Thomas Cook saw at the beginning of the railway age that people needed help to organize their journey. It was in 1841 when he got 500 people together for a rail journey from Leicester to Loughborough to attend a moderate temper rally. Other excursions, including one to Scotland, followed, but it was his son, John, who came up with the idea of a package holiday through continental Europe that included everything ̵
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This business model has survived to this day, although the largest market for overseas travel is now the emerging Chinese middle class seeking a tour of the rest of the world, not Northern Europeans spending a favorable week in the Sun want.
The fact that the basic model survived enabled Thomas Cook to survive as an entrepreneur despite two world wars and multiple ownership and management changes. It was nationalized for a while between 1948 and 1972 and was owned, among other things, by the Midland Bank. It was merged with other travel groups and no longer merged. Bits were sold, bits were added. In 2001, the remaining company was sold to the German company C & N Touristic, which was merged in 2007 with the MyTravel Group. This merged company, Thomas Cook Group, is currently looking for another way forward.
This is a short version of the twists and turns of the property. It is probably fair, if unkind, to say that this is being studied at business schools as a classic example of managerial misconduct: how to ruin a globally recognized brand and one that operates in a huge and growing market. Travel and tourism are the largest sector in the world, accounting for around 10.5 percent of global GDP.
However, there is another side to the story. Travel and tourism may be a huge and growing industry, but their structure is changing very fast. Three things have weakened the tour operators' position: low cost carriers, the Internet and changing holiday habits.
Before Ryanair and easyJet revolutionized European air travel, charter airlines were the cheapest way to fly. Now, each of us can buy a seat, provided we book at the right time and buy a bit, at a price that a tour operator airline has to charge its parent. Thus, the advantage for the tour operator that he can make profits with the flight, has largely disappeared.
So also the possibility to book an accommodation cheaper than an ordinary customer. Yes, they can still block a floor in some hotels at a preferential rate, as it may be appropriate for the hotel owner to know that there is guaranteed revenue. But the hotels now have other options. They can sell through the online booking pages and have their own websites and databases of potential customers. The tour operator's advantage of being able to shop cheaper than anyone else remains, but much weaker than it was a decade ago.
The third change concerns holiday habits. A tour operator can still offer a package in which everything is done: travel, accommodation, transfers, tours and so on. That's the same proposal that Thomas Cook made a century and a half ago: you do not have to worry about going to a foreign land because we'll settle all the details. But now anyone who has access to the internet has information similar to the tour operator and can find out the details themselves. There is a loss of comfort, which is compensated by a strong increase in flexibility. Many of us can no longer set their vacation dates months in advance. The patterns of work vary, there are more self-employed and more complex family relationships. We can find out the best hotel deals in a few minutes; We do not need Thomas Cook to tell us.
And we definitely do not need Thomas Cook if we're stranded in a strange city. This is the last sad turn of this sad story. All companies trade reputation, but reputation is particularly important in a business where you pay in advance and receive service months later. In the case of Thomas Cook, a brand that took more than 150 years to survive all kinds of tamping, this reputation was destroyed within a few days. Although the people who are worried about how they get home or what will happen to the holiday booked will be compensated in one way or another.
Maybe the business will be saved – I hope it will – but I very much doubt that many people will want to book with Thomas Cook again, if that is the case.