Why failing to adapt takes down even the biggest of brands
By Paul Charles, CEO, The PC Agency
Thomas Cook, an iconic British travel brand even older than British Airways, committed the cardinal sin – it didn’t do enough to adapt its business model fast enough.
We’re living in a world where all of us are a travel agent – with easy access to internet booking sites for airlines, hotels and even experiences (check out fast-growing PC Agency client makemyday.travel to book one!)
With power at our fingertips, the demand for pre-packed, off the shelf package holidays is declining – it’s far more exciting to plan our own trips in an interactive way these days and explore the possibilities.
Cheap may still be cheerful but the trend among younger travellers is clearly towards the experiential, and that means more innovative trips. We save these days for the best, for great value, for new experiences and for something to brag about on our return.
Thomas Cook was the victim of lower demand for its off-the-shelf trips, weak exchange rates, Brexit uncertainty and, crucially, a lack of focus over the last ten years. It’s a far cry from the days when Thomas booked a train between Loughborough and Leicester – the first Thomas Cook ‘holiday’ – in 1841.
The irony is that people booked with Thomas Cook because they trusted it – and thought they were protected. They were protected of course, with flights bringing back 150,000 people over the next two weeks. However, those who won’t be travelling anymore thought their holiday was protected in terms of being guaranteed, because they were booking with a major operator. This saga may put off thousands of people who now aren’t sure whether booking with a tour operator protects their holiday at all.
This sorry story is far from over, despite the early success of the CAA’s Operation Matterhorn. It’s impressive that it has set up a “shadow” airline, Britain’s fifth biggest, in under a month.
The likely implications on lost jobs will be far higher than the 21,000 estimated, of which 9,000 are in the UK alone. These numbers do not factor in the impact upon the suppliers who worked with Thomas Cook around the world: the hotels that won’t fill occupancy so quickly, the car hire firms who won’t be hiring, the ground handlers at airports who won’t be turning around Thomas Cook aircraft.
In fact, those with most to lose are the small destinations, especially islands in Europe like Madeira, the Canary Islands, and Zakynthos, who relied on Thomas Cook for a large proportion of their visitors. These tiny islands will be hit hard as it’s unlikely that the Thomas Cook gap will be filled quickly by other operators, especially during the harsh economic winds of winter.
Sadly, Thomas Cook won’t be the last travel casualty this winter. Expect frail airlines hanging on by a thread to disappear too.
This puts further pressure on us as travellers and holidaymakers to do our research thoroughly before committing to credit or debit card. The reality is we’re all Thomas Cooks now, plotting our own explorations around the world but in 21st-century style.
You can also tune in to hear Paul and the PC Agency team discussing the demise of Thomas Cook with Nigel Cassidy on BBC World Business News.