It’s business as usual with Kuoni even as the group is seeking buyers for its outbound units. Asian DMCs hope new opportunities will result from it, with many saying there still is future in traditional tour operating in Europe
Contracting with Kuoni Switzerland, UK, Benelux and Scandinavia/Finland is continuing as per normal even as the Kuoni group is seeking to sell off these operations and its other traditional tour operating businesses in Hong Kong/China and India.
Kuoni’s contracts managers from these markets are attending all trade shows and locking horns with their suppliers over rates and allotments as usual. Sellers interviewed also said the announcement by the Kuoni group that it would exit the tour operating business would not impact contracting at all.
“One has to assume that it (Kuoni UK, Switzerland, etc) will be sold as a growing concern and that the new owners will have a passion and commitment to move the business even further forward than where it is today,” said Chris Bailey, senior vice president sales & marketing Centara Hotels & Resorts Thailand.
But Bailey did express reservations that the announcement might impact Kuoni staff however upbeat the message from the management might be, and that the competition would “cherry pick (Kuoni staff) and/or commercial arrangements in such times”.
Kuoni UK is at pains to soothe any jangled nerves, with managing director Derek Jones issuing a statement saying the UK leadership team remains in place “to oversee the process (of the sale) and continue the ambitious plans for growth in the UK market”. He went on to say Kuoni UK would be “working closely with our colleagues in Switzerland to make sure we find the right buyers”.
In the meantime, Jones said: “It’s very much business as usual right now for all our staff and customers. This is the busiest time for holiday bookings and right now our focus is on continuing to deliver brilliant holidays and service for all customers.”
Like Jones, hotels and DMCs interviewed hoped the new owners of these businesses would be able to take the business forward, saying by no means was Kuoni’s move a reflection that the future of tour operating in Europe was dim.
DMCs are in fact salivating at the prospects of new accounts these sell-offs may bring. For example, only Tour East Singapore now handles Kuoni as the account in the rest of the region has gone to Asian Trails since Asian Trails was bought by Kuoni Group a few years ago.
Said Judy Lum, group vice president sales & marketing, Tour East Singapore: “I see more opportunities than threats with a neutral ownership: the new owner will focus on tour operating, thus the potential of increasing the existing business to our Singapore office even if the DMC in the rest of Asia remains status quo. Or, the potential of a consolidation in ground handling where the rest of the Tour East offices will have a chance to pitch for the business on a more neutral standing.”
Sharing the same sentiments, Exo Travel’s group managing director Hamish Keith commented: “We see this as a logical continuation of Kuoni selling of its operations in France and Spain (in the past two to three years) and welcome their initiative. Any break-up of large travel groups creates an opportunity for independent DMCs to compete for new business, which is of course welcomed from our point of view.
“We also see this as a reaction to the wider trend, where the market has moved away from well-organised, fixed travel and tours, which Kuoni pioneered and become a leader in, and shifted towards more personalised travel provided by highly specialised tour operators.
“Hopefully these Kuoni divisions will not be bought by one of the big operators but will have the opportunity to relaunch themselves as small, more independent tour operators which are able to meet the demands of the changing marketplace.”
Legacy
New owners of Kuoni’s tour operating businesses can continue operating with the name, which carries a legacy of more than 100 years.
Kuoni Group’s spokesperson Peter Brun said: “The main brand ‘Kuoni’ remains with the mother company Kuoni Group as we continue to operate with that name, for example, Kuoni Destination Management and of course Kuoni Group (itself). But potential buyers of the tour operating businesses can licence the brand Kuoni from Kuoni Group and operate with that name.
“That’s why these businesses are so attractive because you can continue like before with your customers in your B2C interaction.”
Brun added: “We already have such agreements successfully in place when we sold Kuoni Austria years ago. Same with Kuoni France and Spain two years ago. If you go to Paris you will find beautiful Kuoni retail stores with the same logo as we have in the UK, Switzerland and in Asia. For the specialist brands like Voyage Jules Verne you mentioned, they normally go with the sale to new owners.”
Voyage Jules Verne is a brand under Kuoni UK, along with Carrier, Kirker, CV Villas and Journeys of Distinction. Aside from established brands, suitors are also buying its 50-year track record, a digital presence and 35 Kuoni-branded shops.
Asked who the potential buyers are at press time, Brun said: “We don’t speculate about any potential buyers. But we are convinced that our outbound tour operating unit with its valued brands can be further developed by new owners.”
To some, however, the announcement was a double-edged sword, as it was akin to Kuoni admitting prospects were better for B2B hotel and land wholesaling, destination management services and visa facilitation than tour operating.
A source said announcing a sale of a company without a buyer was demoralising for the staff, would discourage existing and new clients to book and devalue the company’s image/share value.
But Brun said: “We are a listed company and have to follow certain communication rules.
“If we had started secret negotiations with one or more potential buyers there would be many rumours in the markets. This would cause a lot of uncertainties, especially with employees. If we announce, like we did, everybody has the same communication starting point and we get different interested buyers. This can allow us to find best possible new owners for these businesses. This can give employees better assurance and perspectives for their development,” said Brun.
Currently, only the Hotelplan Group has confirmed it is looking into the possibility of buying Kuoni Switzerland while the industry speculates potential buyers were likely those from the Middle East and North and North-east Asia with deep pockets. Private non-travel related investors are also not ruled out.
Asian DMCs and hotels that contract Kuoni hope for a new owner that has a strategy to expand tour operating in the UK/Europe and bring that to the next level by leveraging technology.
“Anybody that would continue to enthusiastically drive the business, the brand and its management team forward deserves a shot in the arm!” said Centara’s Bailey.
Future
Kuoni’s decision to exit tour operating did not come as a surprise to most industry players interviewed, given the several restructures the group had been making over the years in a bid to survive a changing marketplace. But none said they believed the future of tour operating in Europe was dead – although the caveat was the business must evolve in order to handle the disruption caused by the Internet.
Said a UK operator on the condition of anonymity: “Most of the established conventional tour operators – particularly those that are trade-focused – have seen margins come under pressure primarily from OTAs, bed banks and, in many cases, hoteliers becoming more aggressive in trying to obtain direct sales.
“(However), there is still a place for specialist operators, maybe focusing on a few areas rather than trying to be worldwide.
“The challenge is ensuring those clients who have taken your time to obtain information actually book through you, rather than rushing to an OTA with the information so they can undercut.
“The OTAs here in the UK, and maybe elsewhere, are very tech-savvy and particularly good at selling distressed stock – attributes not usually associated with the more established operators.”
Asked about the future of the tour operating business, Hotelplan CEO Thomas Stirnimann said: “We can only say that it is working out well for us, but you needed to adapt a couple of years ago. Today there is no more B2B or B2C business but only business with which you serve all channels.”
Centara’s Bailey, a former tour operator, said there is “absolutely” a future for tour operating.
“The big trends are very much with the tour operators or, should I say, with travel companies of all kinds, as there is no doubt that people in Europe are travelling more and farther than ever, even if their economies are not doing well.
“Our experience working with tour operators shows us that those dynamic operators who are able to react to the changes and nuances of the more demanding and much better informed travellers are able to succeed and grow their business.”
Who are such players? According to Exo’s Keith, it’s the larger players who are refocusing the business to their core mass market customers and giving them a unique, differentiated product. “It’s about delivering quality, experience and product knowledge at a value for money (not cheap) pricing.
“If they cannot deliver the difference, then there is no place for them. Some will make it, others will not.”
Tour East’s Lum added: “Although technology has changed the dynamics of the travel industry, it does not serve everyone’s needs. Travel and holidays are a non-tangible product and are still very much in need of a personalised customer care element.
“A large part of the industry is still customised, specialised and differentiated. The day we allow artificial intelligence to plan our holiday and standardised it, our life is over.”
This article was first published in TTG Asia, March 13, 2015 issue, on page 4. To read more, please view our digital edition or click here to subscribe
