Diethelm Travel Group CEO Stephan Roemer tells Xinyi Liang-Pholsena how he is reinventing the legacy DMC, one of Asia's oldest and most storied, into a leaner organisation with sharper positioning and 'handicraft' spirit
How did the merger of Diethelm and Tourasia come about?
The owners (Keller family) of Diethelm and I met from time to time; they saw what Tourasia did and I knew what they did. It was late 2016 when they approached me and asked ‘why not bring our ideas together?’
At that time Diethelm had a different focus and we had a different focus. I don’t need to be a big player but I need to be a special player. Tourasia was like a handicraft – we offered small details which others probably would not go that far for. That were the niches of our companies, and we were very successful with that.
When Diethelm offered me an opportunity to merge with each other, I was quite quickly convinced because (Tourasia’s) model was such a small-scale niche that we couldn’t scale up or develop further; and for Diethelm I didn’t see at the time much chances for them to grow with their model (otherwise).
The business (of travel) has changed completely and that made me decide (to take) Diethelm and our smaller companies into the 21st century with a clear strategy.
What were the first things you did following the merger?
The first thing after I came here was to start a clear positioning turnaround at Diethelm – what do we want and where do we stand? Diethelm didn’t have a clear positioning at that time, they were doing everything. I was convinced you cannot do everything.
Number two was Diethelm’s organisation structure – it was not a modern organisation any more and nobody changed that. If you want to steer forward, you need to have the vehicle to steer forward, not with a huge truck behind, which was the case with Diethelm.
After the repositioning I started to work on the organisation. Our organisation is now much faster, much leaner and much more accurate. We underwent a complete change and had considerably less executives.
What are the results of this flatter organisation structure?
We have considerably less management positions, but the positions we have are now entrepreneurs; they are not just managers any more. I have to change the mindset of the company and management. It’s a process; it’s not done from today to tomorrow.
We changed the organisation completely by giving competences to the front. I knew from the beginning it’s a risk because mistakes would happen and mistakes have happened but there will be less and less with time. If I do my calculations, it certainly costs me less at the end of the day to have a smaller (reporting) chain than a bigger one, and in the future there will be less mistakes.
Can you imagine if you’re close to the client and you (want to) make a decision in favour of them, but if you have to refer the decision (upwards), most likely the (outcome) will (not) be made in favour of the client. Staff closer to the clients think, act and decide for them – this is what we see already. We are much, much more client driven.
So the recent changes were more about introducing a clearer positioning for Diethelm.
Yes, very much so. Actually it was more a consolidation. We let certain clients go and we gained a number of new clients – and quite a big number of new clients and even some former clients of Diethelm came back. Because they see what we do and we can show them where our position is nowadays – it’s a hard fact.
And within a year at the driver’s seat, you managed to steer the company of the doldrums.
Yes, we did. The two quarters (1Q and 2Q in 2018) were the best over the past 10 years in terms of profitability. I expect to come close to a balance out in the fiscal year, and we’re aiming for profitability, which was not the past case. 2019 will be profitable. 2018 will certainly be on a solid, balance out level, considering the losses that were written out before.
What about the recent merger with Travel Center Asia (TCA)? Has that brought any synergy?
There are synergies, yes. TCA is exactly following an added value philosophy, which fits ours. TCA also has a succession question – owner Thomas Maurer is of retirement age – but their clients are not willing to move somewhere and are looking for someone who can provide what they had in the past. Maurer has a high responsibility and would certainly not just let his clients go, and he approached us with the idea if we could provide what he’s doing.
We saw an opportunity in TCA. One, we can take over the business aspect. Two, we can give a future for their staff and we needed professional staff. Third, Diethelm has been in this building* for 30 years, and we questioned being in such a prestigious but expensive location in Bangkok, (when the office) did not have more modern facilities. I need an office that’s 21st century compatible with daylight and modern air-conditioning system, so we reconstructed our office there (at TCA premises).
What do you see in the future of tour operating?
One, we have to be much closer to the clients, and two, our jobs have changed with digitalisation; if you don’t add value you’re out of the chain and not needed anymore. You have to consider that every client can book a hotel directly – whether they book it with me or the hotel they get the same bed. So I need to put added value to every service or entire package. The 21st century business is added value, otherwise we don’t need to exist anymore, and that is what I’ve been changing (at DTG).
We make holidays the way clients want it. What I’m giving (to clients) is the complete package on an added value. He exactly tells me what he likes to do and we do it the way he wants, we provide him all the facilities that we have and he benefits from that, he actually enjoys his holiday much more than he would had he done it by himself.
*Editor’s note: DTG was still based in its old office at Kian Gwan II Building on Bangkok’s Wireless Road at the time of interview. The company has since relocated to its new premises at ITF Tower on Silom Road.