Specialist
Former Managing Director at Tui AG and former Head, Strategic Projects & Business Development at Tui AG
Agenda
- Revenue drivers for Thomas Cook (LON: TCG) vs Tui (LON: TUI), including pricing, volume and product offering
- Gross margin dynamics by destination
- Hotelier relationships and benefits of a capital-intensive model
Questions
1.
Can we outline key differentiations across Tui and Thomas Cook’s tour operator offerings?
2.
You mentioned that Tui has a strong hotel offering. Why might it be stronger than Thomas Cook’s?
3.
Can we unpack Tui’s ability to drive higher customer loyalty and gain supreme margins?
4.
Where do those supreme margins come from? Is it due to the hotels being own-managed?
5.
Could you outline the difference in profitability for tour operators’ retail vs direct bookings?
6.
Could you share your thoughts on the concerns around impending oversupply in the German cruise line market, and the subsequent downward pressure on pricing?
7.
How is Tui’s EBITDA likely to be impacted by this saturation in the German cruise line market?
8.
How would you rank Thomas Cook’s ability to sell the additional tour operator capacity that has so far been unsold in the peak period?
9.
Thomas Cook’s recent reported numbers were for around 57% of summer bookings already completed by the end of March. What price reductions are the bookings team likely to introduce to boost those sales, if the company is aiming for the 100% mark? Could we expect a 20% price cut?
10.
What are some market ranges for the difference in margin between peak bookings vs late bookings for a tour operator?
11.
There are guarantees to hotels that mean Tui and Thomas Cook are still responsible for paying if the obligation is not fulfilled. What happens if they are unable to shift the capacity that they guaranteed with the hotels at the end of the summer? Do they still pay, or can they defer payments to the next year? In previous Interviews, we have not necessarily determined a clear opinion (see Third Bridge Forum transcript: Thomas Cook & Tour Operator 2019 Summer Bookings – 24 May 2019).
12.
Say an operator guaranteed a certain number of rooms with a hotel, and at the end of the season was unable to fill them. What is the likelihood that it still has to pay the hotel for those unused rooms?
13.
In the contract, it is 100%. In reality, given the spread of hotels, is it likely that those hotels would be demanding the money or that they would be lenient with, say, Thomas Cook and defer the payments?
14.
Can we explore operators’ flexibility to change capacity at this stage of the year? Hypothetically, say Thomas Cook examines its summer bookings now and realises it will only hit 80% capacity. Can it go back to the hoteliers and renegotiate the capacity now, rather than waiting until the end of the season?
15.
What would be the average percentage split of non-guarantee, release hotel contracts vs guarantee contracts for an operator such as Thomas Cook or Tui?
16.
To confirm, it is more likely that Thomas Cook would have a non-guarantee contract than a guarantee?
17.
If Thomas Cook is unable to sell the hotel rooms but it has a non-guarantee contract, how much notice does it have to give the hotelier in order to shift the liability back onto the hotel?
18.
What is the typical release period?
19.
Can you outline the typical hotelier franchise agreement for Tui or Thomas Cook?
20.
As Thomas Cook seeks to increase the number of branded concepts, it is likely that the share of guaranteed rooms will also increase?
21.
Can you share any typical industry averages for the margin benefit to an operator managing its own hotel vs having a franchise agreement?
22.
Thomas Cook is looking to build out its own-managed hotels. Would you say that is the correct strategy, given the fixed-cost increase this will cause on the balance sheet?
23.
Turning to Tui’s airline assets, obviously the most pressing issue is the Boeing 737 Max’s grounding. Do you know what sort of compensation Tui could expect to make up for the losses from those groundings?
24.
For Thomas Cook’s airline assets, the most pressing news surrounds the airline business sale. Once it is sold, what remains is a semi-aggregator of sorts. Does the sale make sense for the company, from a business model perspective?
25.
Given that it would have to purchase the flights off additional airlines at potentially higher prices, it could make the offering less competitive from a price perspective vs Tui, say?
26.
Based on what you have said, would you say it is counterintuitive for Thomas Cook to build out the managed hotels but then, on the other hand, sell the airline asset?
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