The boss of Virgin Holidays has not ruled out a return to selling through third-party agents despite describing a 75% increase in profits as “confirmation of the success” of its decision to go direct-sell only in 2015.
Speaking during a Virgin Atlantic and Delta trip to Seattle to mark the switch of the Heathrow route from Delta to Virgin Atlantic, Dave Geer, interim managing director of Virgin Holidays, said although there were “no immediate plans” to restart selling via the trade, “another model could potentially work” in the future and the operator would “never say never” to working with third-party agents.
Virgin Holidays grew profits before tax and exceptional items by 75.2% to £19.1 million in 2016, in its first full year since deciding to cut out third-party agents.
Geer told TTG that Virgin’s current business strategy, in which it seeks to “fully control the customer journey”, was not suited to the method with which it had historically worked with trade partners.
Geer, who took over from Mark Anderson in January, also hailed the “refreshing” of Virgin Holidays’ own retail network. He said despite the gap between retail and online sales “narrowing quickly”, sales through Virgin Holidays’ own retail network remained its largest channel.
Geer explained that while Virgin Holidays’ store footprint had decreased over the last few years, he foresaw new stores opening up in “different forms and different locations”.
“I don’t think you’ll see big wholesale store closures coming from us anytime soon. It’s more about optimising what we have already got,” he said, adding: “We are continually trying to look at optimising our store network and I see it having a real role to play over the next five years.”
In Virgin Atlantic’s financial results statement, Geer said: “This [the financial result] was both a fantastic effort from the entire Virgin Holidays team, and a confirmation of the success of our decision to move to a direct-sale only model.”
Virgin Holidays increased passenger volumes by 4.9%, supported by the co-location of Delta into Terminal 3 at Heathrow.
Virgin Atlantic chief executive Craig Kreeger added that there was no booking evidence to indicate a so-called “Trump slump” affecting intent to travel to the US. “While I have read a number of articles in the UK media suggesting such a thing exists – and it may well at some point – we haven’t seen it in our bookings in the first part of 2017,” he said.