Specialist
C-level executive of Fast Pay Hotels SL
Agenda
- 2019 macro travel trends affecting Thomas Cook (LON: TCG) and the competitive landscape – TCG vs Tui vs Jet2
- Gross margin drivers – over capacity, price vs volume vs mix, and hotel cost inflation
- Strategic opportunities, including disposals vs hotel acquisitions
- 2012 vs 2019 outlook – can TCG survive?
Questions
1.
Could you outline the potential bull case and positives for Thomas Cook, considering the recent negative press?
2.
How would you compare Thomas Cook’s value proposition to Tui?
3.
Why do you think Tui can build better relationships with hotels than Thomas Cook? Is it simply the volume going through it?
4.
How would you compare the current situation to the last time Thomas Cook was in deep difficulty in 2012? Would you identify any similarities or differences that might suggest whether it can make it through its current financial stress?
5.
You suggested that the pressure Thomas Cook currently faces is more on the market side. Why would you say it is affecting Thomas Cook in this way rather than Tui or Jet2, who aren’t underperforming to the same extent?
6.
To what extent would you say the pressure on Thomas Cook’s gross margins is driven by hotel inflation compared to other factors such as bookings pressure?
7.
If the gross margin pressure is driven by hotel inflation, what do you think are the implications for the structural decline of the tour operator model for Thomas Cook in relation to the relationships it fosters with the hotels?
8.
If Thomas Cook is likely unable to build out the capacity required for its significant customer base, what further margin pressure do you foresee for the rest of 2019 and into early 2020, considering it still needs to shift up to about 40% of its summer bookings?
9.
What price hit do you expect Thomas Cook will take in order to sell the existing inventory?
10.
How much more capacity needs to come out of the tour operator market for prices to recover? Obviously, Thomas Cook has reduced some capacity, but what level of capacity reduction is required from Jet2, Tui and Thomas Cook combined?
11.
How long would you estimate it takes for Thomas Cook to build out a differentiated product?
12.
You said that Thomas Cook has good relationships with 70-80 hotels. If it can’t shift 93% of its hotel bookings, what commitments would Thomas Cook have to the hotels to pay back for that loss?
13.
Do you think Thomas Cook’s cash profile in autumn this year might pose a problem in terms of needing to make a cash outlay towards hoteliers to satisfy pre-existing commitments?
14.
Do you think Thomas Cook has lost some of its negotiating power given the shift towards OTAs [online travel agencies] and the public financial stress it faces?
15.
Are you suggesting that on top of what we have discussed already, Thomas Cook will struggle to build out the managed hotels network, given its financial stress and how public it has been?
16.
Thomas Cook’s Atol licence is up for renewal in the autumn. Given the health of the company’s balance sheet, do you think there are any concerns around a renewal in the Atol licence?
17.
If Atol doesn’t have enough money to cover it, does Thomas Cook have to then foot the bill for getting the rest of the customers home, or do the customers take the loss?
18.
Thomas Cook’s Nordic assets and its airline assets are up for sale. Considering the transactional activity in the market, do you think there is enough demand to command a good price for those assets?
19.
If the Nordic assets and the airline are sold, what would be your medium-term outlook on the Thomas Cook Group’s remaining assets?
20.
If the Nordic asset and the airline are sold, do you expect that there might be an acquisition of the remaining Thomas Cook more broadly?
21.
How do you think Thomas Cook’s management will approach the short-term, medium-term and long-term operational forecasts for the company?
