Specialist
Former C-level Executive at Thomas Cook Group plc
Agenda
- Thomas Cook's EBITDA and cash flow sustainability in 2019
- Thomas Cook's competitive positioning vs Jet2, TUI and online travel agencies
- Tour Operator and Airline performance analysis for the UK, Continental Europe and Northern Europe
- The rationale behind own-brand hotel focus and strategic partnerships
Questions
1.
There’s been discussion about the long summer and the impact on Tour Operator for Thomas Cook. Was 2018 a one-off, or is it a sign of a wider structural problem for the company?
2.
Why do you see the Thomas Cook model as being more exposed vs a Tui?
3.
Do you see any difference in performance for Tui’s tour operator business, or is TUI’s comparative resilience just a function of its diversification?
4.
Does the hotel ownership allow Tui to hedge its tour operator exposure? Or are the returns that you’d expect from your own hotel business and the tour operator wholesale business correlated?
5.
Thomas Cook gives an average selling price [ASP] in its Tour Operator business of about GBP 650. Do you think Tui is significantly higher than that?
6.
How well-positioned do you think Thomas Cook is for tour operators in 2019, given its cash positioning?
7.
Regarding these tour operator market trends, is there somewhere we can check these industry data figures, or are these proprietary? Do you have the UK figures on hand?
8.
What do you think could account for the underperformance of Thomas Cook vs those industry figures?
9.
Of the total sun and beach core holidays market, roughly how much is tour operator package holidays, and how do you see that share evolving over the next few years?
10.
For the traditional wholesale models such as Tui and Thomas Cook, Jet2, do you have a sense of how much they occupy of those total UK and central European markets?
11.
What’s driving that decrease in market share for Thomas Cook?
12.
Have you seen significant activity from Booking.com or Expedia in sun and beach packaged holidays?
13.
What kind of brand power do you think Thomas Cook has vs those online travel agencies [OTAs], in the mind of consumers?
14.
You said Thomas Cook’s brand power isn’t a significant driver. Given the threat from OTAs, do you think that the ASP for Thomas Cook is sustainable even next year for Tour Operator products?
15.
What levers are available to Thomas Cook to improve performance? If there was a similar long-heatwave situation this year, what can the business do operationally to respond to that kind of external impact?
16.
Moving on to the cash profile, the supplier and negotiations generally for these businesses and also the customer payment period. For Thomas Cook, there’s a view that, based on historical working cap movements, things should improve moving into Q1. Would you agree?
17.
Have those payment terms that you gave for tour operators been stable or is there any movement there?
18.
In this kind of situation where Thomas Cook had a booking issue in the previous year, what kind of negotiation could Thomas Cook or another tour operator achieve with its hotel supply base?
19.
Are the terms that a hotelier would get with a Booking.com otherwise comparable to a tour operator?
20.
Would tour operators typically have a long-term contract with their hotel suppliers?
21.
What kind of guarantees does Thomas Cook give its hotel suppliers, typically?
22.
Does Thomas Cook commit to a given price, or is it renegotiable after the company has sold the holiday?
23.
What would Thomas Cook’s strategy be for the supply base in a year such as this one, where booking performance was exceptionally weak? Can it go back and significantly renegotiate down those payments?
24.
Assuming that Thomas Cook bought as much inventory as it did back in 2017, would you expect the cash outflow to suppliers in Q1 this year to be comparable to the previous year?
25.
Based on your personal experiences at Thomas Cook, would you expect the company to seriously consider that strategy in Q1?
26.
Thomas Cook had a line in the annual report saying that customer bookings are being delayed. Apparently, it has pursued a zero-deposit strategy for some customers. Do you expect the customer impact to have a material impact on the company’s future cash flow?
27.
You don’t think it’s effective, but presumably, it would have a material impact, correct? If it’s not getting that 20% deposit that you mentioned on the tour operator side for some customers, would there be a material impact on the deferred revenue that Thomas Cook would get?
28.
Do you think it has an impact on the cash flow in a material way?
29.
Client: Is the zero deposit, which Thomas Cook is now obviously marketing, something that the company’s done normally or this is a manifestation of more aggressive marketing? Do you also see this in Germany? Finally, what do you think are the benefits? Does it get the higher margins? Or is there something that they hope to get in return for a zero deposit, given that it results in a much more deteriorated cash flow profile?
30.
Client: Thomas Cook’s performance in central Europe not quite as bad as the UK, but it looks like the EBIT for there was quite significant. Could you outline what you see as the company’s key drivers in that market?
31.
Client: Would you expect a material reduction in the average price for Thomas Cook across the major tour operator destinations in continental Europe, given the dynamics that you’ve highlighted?
32.
Client: We discussed the capital structure for Thomas Cook before the Interview. Do you think that the current model is sustainable with the current level of financing?
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