Phil Gardner, sales and e-commerce director, Thomas Cook, spoke exclusively to TTG at the Freedom Travel Group conference this week; having held closed conference sessions with Freedom members in order to address the group’s profit warning and subsequent shares dive.
And The Times reports investors sprang to the defence of Cook yesterday, sending its shares up by 51%.
The Freedom Travel Group is part of Thomas Cook Group and falls under Gardner’s remit, along with commercial sales, third party relations and – following a management shakeup at the beginning of October – e-commerce as well.
“Clearly one of our key tasks is to offer some reassurance around what we’re doing and the strategy that’s in place,” he said, adding there were “four key areas” Cook would be focusing on in the year ahead for the business.
“Firstly, sales of our branded portfolio – the owned hotel stock,” he said. “It has great customer service, great margins and commissions. These are our best products, so focusing on them is key next year.”
Gardner said the second key aspect to focus on was that Thomas Cook Group’s revenue had grown.
“If you look at our group results the revenue is actually up 6% off the back of some difficult messages around profit,” he said.
“That’s a very positive sign because it makes it clear that as a business we have something to play with and strong customer demand on good revenues – our focus on profit is helped by the fact we’ve got good levels of revenue coming in.”
The third and fourth aspects Gardner highlighted were around reducing costs.
“We are managing our commitment in terms of cost more effectively,” he said. “We’ve made some changes next year which allow us to reduce our reliance on cost commitments with hotels and airlines in terms of capacity.
“In doing so we have the opportunity to continue to have a very good rate of sale through complimentary products where we don’t have the same level of cost commitment, so the risk is reduced but the ability to sell them is high.
“That’s an incredibly important point in terms of how we manage our portfolio in the year ahead.”
Asked whether Cook’s strategy included selling off parts of its business, Gardner insisted there was “nothing on the table”.
“In the short term there’s nothing on the table and we are not actively pursuing a sale of anything,” he said.
“But sometimes you get fantastic offers for things and it’s a bit irresponsible to say never… but it’s not the current plan and we’re not in talks with anyone.”
Garner added that Freedom specifically was a strong part of the Cook portfolio.
“Off the back of a tough year for Thomas Cook, Freedom has had some strong results. We’ve had some good margin and revenue improvement year-on-year and we have a very stable business there.
“In contrast to some more difficult areas they’ve had a successful year. Freedom is a business with a consistent profit.
“If we were ever to make a sale on something like that it would have to be a very, very good offer, otherwise why would we look at it?
“For Freedom it’s 100% business as usual. You can never say never on any of these things but I certainly don’t have a plan for that.”
The fourth part of the plan centres on operating costs.
“Clearly we have to look at our operating costs as any business does at any time, not least off the back of a profit warning,” said Gardner.
Asked about the future for Thomas Cook retail stores, Gardner echoed comments made by group chief executive Peter Fankhauser that the company intended to “stabilise” its retail network.
“While we are absolutely looking at all areas of the business, ultimately the plan is to stabilise the retail network close to its current levels.
“Clearly our plan is to stabilise our retail network and turn around our performance at an overall level to help us do that.”
Asked whether he was concerned about the impact of any fall in consumer confidence for Cook for the upcoming peak booking period, Gardner said two things “made him feel positive”.
“The brand awareness of Thomas Cook is something many other brands would die for,” he said.
“We have great brand awareness and a very trustworthy brand – higher than any other brand in travel.
“And secondly, we know we have very good demand for a lot of our product and you can quite easily credit our branded product for that.
“It has the best customer service and end-to-end delivery. There is strong consumer demand for that.
“Put those two things together and it gives me some confidence that peaks is something that we should be able to enjoy a good rate of sale with.”