Tui challenges Booking and Expedia

Frankfurt The new head of the Tui travel group is launching an attack on travel platforms such as Booking, Getyourguide and Expedia. Sebastian Ebel’s plan: He wants to expand the business with so-called dynamic packaging. Instead of buying a ready-made trip, in future the customer will be able to decide for himself what is included in his package: in addition to the hotel and flight, for example, there will also be a trip to the hinterland.

It is a business model that online travel platforms have developed and are very successful with. But that doesn’t deter Ebel, who has been running the travel group since the beginning of October. “It would be presumptuous to say that we want to beat the leading platforms. But we want to be an equally good alternative,” Ebel told Handelsblatt.

The vehicle for this should be its own products such as Riu, Robinson or Mein Schiff. Pure platforms would not have their own products, explains Ebel. Tui wants to use this to offer customers extra services that only exist in the Tui empire.

This includes, for example, a later check-out at the hotel in order to make the best use of the day of departure. “We are working on special offers, for example by giving guests access to special places at the holiday destination and offering a discounted ticket via the app at short notice if it rains,” said Tui boss Ebel as another example. And lures customers with an additional advantage: “In terms of customer protection, dynamic package tours from Tui are equated with package tours.”

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Tui had to be supported by the state with 4.3 billion euros during the pandemic. The company has repaid the first national debt. However, many analysts remain skeptical about the company. The new CEO wants to convince them that the image of the sluggish package tour giant no longer fits.

Tui boss: reinvent package travel

Tui grew up selling 100 hotel rooms, for example, and combining this with 100 seats in the Tui planes in advance. This classic package tour remains attractive and a core business, emphasizes Ebel, but adds: “In the future, we want to produce such packages much more daily.”

First the customer chooses the destination, flight, hotel and other services, then Tui makes a package out of it. “The advantages of a package tour and the individuality of the customer come together. This will make us attractive to additional customer groups,” said Ebel.

Sebastian Ebel

The new CEO of the travel group is counting on customers putting their package holidays together more often in the future.

(Photo: TUI)

New products such as the city tour to London or the weekend trip to Mallorca would also be created, which in turn would open up the opportunity for Tui to increase its own market share, according to Ebel: “The proportion of such dynamically arranged trips is already significant in Germany. The nice thing is that half of them are new customers for Tui.” The offer will soon also be introduced in Great Britain and Scandinavia.

The manager likes to use Amazon as an example in his plans. “At Tui, Amazon Prime is our premium hotels or our own cruise brands. Underneath there is a marketing platform for various but exclusive products, some of which also come from other providers, such as other airlines.”

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An ambitious plan. In order to implement it as quickly as possible, Ebel does not want to open up construction sites everywhere in the group at the same time. The strategy is focus. “We don’t need 100, we have to implement 20 projects well and successfully,” said Ebel: “We have twelve months’ advance trust from the market for this. We will use it.”

It’s good for Tui to just do it, not just to have a strategy, but to implement it quickly, said Ebel. Sentences like these show that the new CEO thinks like a medium-sized entrepreneur. That is not by accident. Ebel founded his own company, Eves Information Technology, in 2007. That shaped him. The CEO has been traveling through the Tui world for a few weeks, gathering the executives, recently for example in the Tui Magic Life Club on Fuerteventura.

Ebel needs the support of the management levels, they have to get involved with the approach of the new boss. Because the individual areas should be given the necessary tools and the corresponding freedom, but should be responsible for success. That creates a certain pressure. “Then if there are areas where problems arise, colleagues should raise their hands, adjust and then keep moving forward. Planning is good, doing it together is better. We have agreed on this as a management team,” says Ebel.

Time is pressing to show successes. “In the past we didn’t always deliver what we promised,” admits the Tui boss. In 2019 and early 2020, the company was actually on the right track. At that time, Tui wanted to show that promises would be kept and that the investments made in recent years would show up positively on the balance sheet. “But then Corona came. We received a lot of trust during the crisis, now it’s up to us to show that that was justified,” said Ebel.

There are still construction sites in the Tui balance sheet

Last but not least, it would be important for Tui’s balance sheet if the strategy worked. Tui recently only used 480 million euros in state aid. In addition, there is a credit line from KfW of around two billion euros, which was not used in the summer – in the eyes of Ebel “a good insurance for the winter”. The company was also able to significantly reduce debt in the first nine months of the shifted financial year (as of the end of September). Some analysts appreciate that. The balance sheet is improving and the company will probably be able to cope with a possible downturn, wrote Richard Clarke of Bernstein Research recently.

Nevertheless, net debt of 3.3 billion euros weighed on the figures at the end of June. “We’re reducing debt, and we’ll show that on December 14 when we present our annual figures,” promises Ebel. He also has an eye on the issue of equity. The financial statements of the AG show positive equity, but at the group level the value at the end of June was negative at minus 190 million euros.

No one has to worry about the solidity of the group, assures Ebel: “Tui AG’s balance sheet is good with a solid equity ratio, and we are also on the right track on the group side.” The comparison with Thomas Cook – the rival went bankrupt in 2019 – therefore not applicable. “We are a completely different company with our own hotels and major hotel brands in the holiday hotel industry and a significant cruise business. And against our debts are real assets, such as our premium hotels and hotel brands.”

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