The Thomas Cook saga is sad and unhappy – and annoying for the hundreds of thousands of customers who may have stayed away from their homes. Whatever the outcome of the rescue talks started yesterday, changing habits and changing technology mean that Thomas Cook's brand will never be the same again.
What happened? At the dawn of the railroad age, Thomas Cook saw that people needed help organizing their journey. It was in 1841 that he gathered 500 people by rail from Leicester to Loughborough to attend a rally of moderation. Other excursions followed, including one to Scotland, but it was his son John who developed the idea of a package tour of continental Europe that included everything ̵
We'll tell you what's true. You can create your own look.
per day, more exclusives, analyzes and extras.
It was a business model that has survived to this day, though the largest overseas travel market is the growing middle-class Chinese, eager to view the rest of the world, not the northern Europeans, who want a cheap week in the sun.
The fact that the basic model survived allowed Thomas Cook to survive as a business, despite two world wars and numerous changes in ownership and management. It was nationalized for some time between 1948 and 1972, owned by other Midland Bank, merged and left uninterrupted with other tourist groups. The bits were sold out, the bits were added. In 2001, what remained was sold to the German company C&N Touristic, which in turn merged with MyTravel Group in 2007. It is this merged company called the Thomas Cook Group that is currently looking for some way to continue.
This is a very brief overview of property turnovers. It is probably fair, if unfair, to say that this will be studied in business schools as a classic example of management failure: how to demolish a globally recognized brand and one that operates in a huge and growing market. Travel and tourism is the largest industry in the world, accounting for about 10.5 percent of world GDP.
However, there is another side to the story. Travel and tourism can be a huge and growing industry, but its structure is changing very quickly. Three things weakened the position of tour operators: budget airlines, the Internet, and changing vacation models
Before Ryanair and easyJet revolutionized European air travel, charter airlines were the cheapest way to fly. Now any of us can buy a place, provided we book at the right time and shop around, close to the price the tour operator's airline has to charge their parent company for one. So the advantage over the tour operator that it can make a profit from the flight has largely disappeared.
It is also possible to book accommodation cheaper than a regular peter. Yes, they can still block the floor of some hotels at a new price, as this may suit the hotel owner to know that there is some guaranteed revenue. But hotels now have other options. They can sell through online booking sites and will have their own websites and databases of potential customers. The advantage of tour operators being able to buy cheaper than any other is still there, but much less than it was a decade ago.
The third change is in the habits of vacationers. The tour operator can still offer a package that does everything: travel, accommodation, transfers, tours, etc. This is the same suggestion that Thomas Cook made a century and a half ago: no need to worry about going to an unknown and distant land, because we will fix all the details. But now anyone with Internet access has similar information as a tour operator and can figure out the details for themselves. There is a loss of convenience, but this is offset by a large increase in flexibility. Many of us are now unable to set vacation dates months in advance. Job models are different, more people are self-employed and family circumstances are more complex. We can figure out the best hotel deals in minutes; we don't need Thomas Cook to tell us.
And we certainly don't need Thomas Cook if he'll leave us stranded in a foreign city. This is the last sad turn of this sad tale. All companies trade in reputation, but reputation is especially important in a business where you pay money in advance and receive the service months later. In the case of Thomas Cook, a brand that took more than 150 years to build and survive from all kinds of production, that reputation was destroyed in a matter of days. Although people who are worried about going home or what will happen to the holiday they have booked will be compensated one way or another.
Maybe the business will be saved – indeed, I hope it will be – but I highly doubt many people will want to book with Thomas Cook again, if so.