When giants fall it’s not time to celebrate
I know a lot has already been written about the demise of Thomas Cook, the famous UK based travel giants. They were hopelessly in debt, but there were many more reasons that they ultimately couldn’t reverse their situation at the end.
Unlike the biblical story of David and Goliath, sometimes when giants fall it’s not time to celebrate. In fact the dreadful end result of the Thomas Cook collapse was the loss of thousands of jobs …and that’s something that we in South Africa can definitely ill afford.
I thought it might assist our own TMCs therefore, to have a closer look at what Thomas Cook possibly could have done a lot earlier to prevent their downfall.
To be fair, there were other factors like a weakened pound, the heatwave of 2018 and Brexit that didn’t help Thomas Cook, but in essence it brought to mind that any business, in any industry, has to maintain a solid financial bottom line.
To continue to draw massive salaries and live the high life based on a long time reputation smacks of the ignorance of a company that has made the mistake of hanging for too long on that reputation without taking cognisance of change.
Thomas Cook had 600 physical stores just in the UK and maintained a staff of 22,000 in 16 countries. This meant they were overburdened and had to model their offerings around their old package style instead of being able to offer the more streamlined packages offered by more digitised TMCs
Technology ran away from them
The biggest factor behind the downfall was that the very nature of the giant either made it too difficult for them to adopt (or they simply chose to ignore) important technological advancements. This has in fact been the downfall of many businesses who have not been prepared for the massive impact that Artificial Intelligence, for one thing, has had on their industry.
Just one example is that low cost airlines business models necessitate digital capacity in order for TMCs to reduce costs. According to one commentator Thomas Cook were so hopelessly out of touch with the digital technology that they “couldn’t offer access to unrestricted inventory, unlimited price comparison and an increasingly personalised experience.”
Focus and using technology
So what are a couple of things our TMCs can take away from this and avoid stumbling into the many pitfalls this challenging business lays before us?
Clear purpose – Thomas Cooke should have chosen between being a Travel Agent and an Airline Operator. Being both spread them too thin. Decide who you are serving and what problems you are solving, then focus on that.
Get technology working for you – More than ever before TMCs need to take steps to ensure that digital business operations are designed, or redesigned, in such a way that they can meet challenges head-on.
There is a reason that I have written so much about the importance of Data and A.I. The technologies they have created enable us to have the ability to understand customer preferences and refine their products and services.
The main reason, in my opinion, for Thomas cook’s failure was to ignore that the travel industry is as susceptible as any other to digital disruption.
A proud heritage
Thomas Cook was a well-respected, iconic travel company with a very proud heritage. It was they who invented the concept of package holidays and brought joy to many generations of travellers for over 178 years. The fall of this Giant certainly is nothing to celebrate, but as with all things in life, there is something valuable to be learned from it.
What the Travel industry can celebrate is our resilience and determination to continue to learn from the mistakes of others and bounce back to offer even more of exactly what our clients expect of us …seamless, customised, personalised travel experiences!
CHIEF EXECUTIVE OFFICER