Sam Ballard discovers the mindset behind Tui’s successful business model.
There are few bigger jobs in the travel industry than being the boss of Tui. The travel giant is licensed to sell 5.3 million Atol-licenced seats every year. The overall business also incorporates about 600 retail stores, a cruise line with six ships, an airline with more than 60 aircraft and a hotel business that includes a portfolio of 4,500 properties – all underpinned by a vast tour operator campaign. By anyone’s standards, Tui is a big deal.
This is why Andrew Flintham made headlines earlier this year when he left Tui, only to rejoin six months later.
“In my six months off on gardening leave, I spent three months of it looking at Tui,” Flintham explains. “My view was that commercially, at least from a product perspective, it’s this depth and breadth of product that is unrivalled.”
Flintham is well-positioned to give an analysis of Tui – his career at the travel giant spans 14 years and features several senior roles. Titles he has held include mainstream planning director, aviation planning director and commercial director.
Flintham says: “Our commercial and sales capability is really strong. The thing that stands out more, and I’m exposed to it more now [as managing director], is our people. Tui has around 15,000 staff and I hear the amazing stories of what our people are doing every day.
“It’s the one thing we don’t accentuate, apart from sustainability: that story about our people helping customers on a daily basis and going the extra mile.”
It’s a story that sits at the heart of Tui. For Flintham, a key point of difference is that his company can handle the customer journey right from the booking stage
(with Tui’s retail travel agents), to the flight (on Tui’s own aircraft), before being handed over to Tui destination services staff and finally holidaying in Tui resorts.
“Fundamentally, most of our customers will see our people at every single stage,” Flintham says. “We have people everywhere to help our customers.”
It is one of the reasons why Tui will never be a truly agent-friendly business, he says, with direct business accounting for more than 90 per cent of overall bookings.
“We can’t claim to be anything other than a predominantly direct business. To be fair, we’ve spent the past 10 years trying to become a predominantly direct business. It’s a little bit inconceivable that suddenly we’d announce, ‘that’s not what we are.’”
But, as an executive who now sits on top of his own retail network of 600 stores, how does Flintham see the future of Tui’s retail footprint?
“It’s a real crystal ball exercise,” he says. “Generally, people are going to become more digital, so we’re going to have to continue to drive that. But a significant proportion of our customers want face-to-face contact”.
“Today our shops are purely sales, but we have lots of customers who come in to print their boarding passes – because they can’t do it at home. We get into a merged world where [Tui staff] become customer assistants.
“In the future, you could have stores where a customer books their own holiday and you have people who are there for advice. You could have scenarios where they’re still selling holidays but they’re there to manage any issues or complaints. Rather than saying, ‘Please call this number’, you could say, ‘Please pop into your local shop’.”
Citing research about the link between SEO and organic traffic and having a brand name on the high street, Flintham says that when First Choice rebranded, people no longer had any reason to know who they were.
“The stores fulfil a really broad role. I’m not sure if anyone really knows what that will be going forward,” he says.
“We’ve seen that about 20 per cent of the people who book online come into a store at some point – that could be after they’ve booked or before they’ve booked, but there is still that degree of interaction. We don’t currently credit the wider influence that our retail estate creates.”
Another crystal ball exercise is the subject of destinations. In the last issue of ABTA Magazine, we detailed the rise of Tunisia, Egypt and Turkey, destinations that are all coming up from a low base. Flintham says that Tui is seeing the same kind of migration back to those destinations, as well as the Eastern Mediterranean. Montenegro, Croatia and Bulgaria are others that are on the rise.
“In the past few years we’ve had a real imbalance. Holidays have concentrated on the Canaries, the Balearics and mainland Spain. It was like 1979 when everyone went to the Costa del Sol,” he says.
“That’s driven a whole hotelier dynamic with rates going up on strong demand and a shortage of hotel beds. That’s started to dissipate. Greece has been strong for a number of years now, but with Turkey coming back up – and if Egypt and Tunisia also come back – then it will start to balance back out between western and eastern Med.”
For Tui, returning to Tunisia is an especially sensitive area. It was Tui customers who were among the 38 people killed in the terrorist attack in Sousse in 2015.
For Flintham, who was in the crisis centre when the attack took place and gave evidence at the inquest at the Royal Courts of Justice, there is an obvious personal connection to returning to the country.
“We probably went through a few more internal decisions that were more psychological than operational in returning,” he admits. “Organisationally, we have a legacy that is emotionally attached to what happened.
“The government had quite clearly said that the security situation had changed and they were happy for Brits to go back. Other operators had gone back. Our cautiousness was more related to the incident and the fact that we and our customers were directly affected by it.”