Tour operators debate

Name:Simon Vincent

Age: 35

Title:Sunworld and Flying Colours managing director.

Career history:Joined Thomas Cook in 1988 following a brief career in international banking. Worked in a variety of management roles, including a secondment to a Japanese joint venture travel operation in Tokyo, before returning to the UK to set up Thomas Cook Direct in 1992. In 1996 given the additional role of commercial director for UK travel business and in March 1998 added further responsibility for the Thomas Cook travel businesses in Canada, Australia and New Zealand. Appointed to current position in July 1998.

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Name:Chris Mottershead


Title:Airtours Holidays managing


Career history:Was a graduate trainee at Wales Gas, before taking various finance positions at Burroughs Machines, Sterlin/Motil Plastics and Avon Inflatables. Joined Aspro Holidays as group finance director in June 1990. Appointed finance director of Airtours Holidays in 1993, added the title of deputy managing director in 1997 and became managing director in May 1998.

“You cannot any longer divorce absolute commission levels from productivity. It’s gone past the threat stage into

real trading.”

Simon Vincent, Thomas Cook.

Michael East, MD, Eastcastle

“We are already seeing in the three main integrated groups, that their strategies are being neutralised by each other – we don’t sell you because you don’t sell us; you only give us this commission so we will only give you that.”

Dermot Blastland, First Choice

In our latest lunch-time discussion with industry leaders, leisure analyst Michael East quizzes top tour operators and summarises their views. In the spotlight are Chris Mottershead of Airtours, Simon Vincent of Sunworld and Dermot Blastland of First Choice. Thomson was invited to take part but declined.

“I believe the overall market size will be about the same over the next three years, and pricing will be relatively stable. Costs will be driven up,particularly for beds – beds is where the real challenge lies.”

Simon Vincent, Thomas Cook

Name:Dermot Blastland


Title:First Choice Holidays and Flights managing director.

Career history:After completing a diploma in business studies and qualifying as an accountant, joined Thomson Holidays in 1970. Become commercial director in 1984 and managing director of Portland Holidays in 1985. In 1988 joined First Choice (then known as Owners Abroad) as managing director of tour operations and in 1994 was seconded to First Choice’s Canadian division, Signature Vacations as president and chief executive officer. Returned to the UKin 1997, initially as managing director of First Choice Ski, Lakes and Mountains.

“What drives people into a

retailer (especially in January) is price. There is an element ofservice, but if you are looking for a mass-market holiday, you will go to a mainstream retailer, because that’s where you believe you will get the best price.”

Chris Mottershead, Airtours

As I said two weeks ago, this is a period of intense change in the structure of the outbound industry and, in particular, in the mainstream operator and agent sectors.

That change is being driven principally by new owners demanding even better corporate performance and by mature customers who know much more about what they want and how best to get it. It is also being driven by newer management teams which combine excellent experience with a younger generation who are perhaps less willing to conform to the strategies of the past.

Dermot Blastland undoubtedly represents great experience in our industry. He has seen three management teams in the 1990s, from the streetwise style of former Owners Abroad chiefs Roger Allard and John Boyle, through the man who rebranded the company to First Choice, Francis Baron, to the present day calm of current chiefs Ian Clubb and Peter Long. But a conformist, he is not.

Chris Mottershead, like Dermot is an accountant. He is the relatively new head of a major tour operator and is in the unique industry position of having the founder of the company, David Crossland, still deeply involved in the business, and also his immediate predecessor, Peter Rothwell, as his boss.

Simon Vincent is very new to operating and arguably has the most challenging task, as he seeks to integrate, in a very competitive marketplace, Sunworld, Sunset, Club 18-30, Inspirations and others into a single, and bigger, whole.

The Marketplace

The summer ’99 market has been relatively flat since Christmas and, like their agency colleagues two weeks ago, our guests think we are no better than on a par with last year. May seems to be doing particularly poorly year-on-year.

Going Places and Sunworld are thought to have done best; the Thomson group less well; and Carlson and Inspirations are perhaps at the bottom end of mainstream performers. The rest, including Airtours and First Choice, are “there or thereabouts”.

Blastland believed that the upper end of the market, where Sovereign sits, was doing well, but saw strong evidence of trading down elsewhere. That great 90s growth sector – self-catering, – seems to have lost some of its fizz.

Vincent is still selling a high level of self-catering but it has definitely levelled off. For Airtours it might now be going backwards.

“We are gradually moving away from self catering,” said Mottershead. “We are getting a better mix. That seems to suit the marketplace more, by increasing the amount of half board and basic hotels and taking less self catering.”

This winter was, according to Vincent, “patchy”.

“Long-haul is a challenge, particularly the Caribbean and some places like the Canaries,” he said. “Passengers will probably end slightly up, but margins will be static at best.”

Mottershead thought the Caribbean peaked a couple of years ago and is now slipping down, especially the Dominican Repubic. “Prices are very cheap, and there are no more new people out there to come into this market, winter or summer,” he said. “We have cut capacity.”

Blastland described himself as “antagonistic” towards long-haul.

“I have set low achievable targets by 1 April, and then that’s it,” he said.


In a price-driven business, quality brand recognition is key and makes the difference.

One of the biggest changes in this late 1990s industry has been the consolidation of the mainstream business around four increasingly similar high-quality companies, rather than having the one exemplary lead-brand, Thomson, which we had through most of the decade.

I was sorry that Thomson was not with us because it remains the company that everybody still watches and still measures themselves against, even if the gap between it and the others is closing fairly rapidly.

Mottershead recognised Thomson’s market leadership and brand strength, but like the others sees it as less of a challenge than before.

“There are now four companies which, if not yet of equal size, are of increasingly equal influence in the marketplace, and are all competing very aggressively,” saidMottershead.

“The products of all four majors have become more and more similar, in particular the quality.”

Blastland agreed: “You could say, for instance, that Sunworld’s growth in the past year or so has come mainly from Thomson, in part because Sunworld has approached Thomson’s perceived standards.”

Thomson’s success over the decades was built on its unique brand awareness. Now as those mainstream operator brands all get to the point where they are starting to cancel each other out in terms of real product strength and brand awareness, others may have problems.

“Look at Inspirations”, said Blastland. “It is doing less well than the big four, despite a very cheap price offer, and an in-house retailer in Carlson, because the public do not see it as having the same brand values as their competitors”.

Who’s customer is it?

If branding, together with that awful late 90s concept, customer ownership, is key to the future shape of the industry, one must ask, “who’s brand and who’s customer is it – the operator’s or the retailer’s?”

I believe, like our guests two weeks ago, that distribution is becoming more powerful. This week’s guests definitely did not agree with that.

“The customer is ours first,” said Mottershead. “They spend half an hour with the agent and two weeks with us. We would have failed if they thought it was a Going Places holiday for instance. They must recognise us and then recommend us.”

Vincent agrees, although his group’s principal brand, Thomas Cook, is a retail brand. “My challenge is to support or create our tour operator brands so they have similar or even greater pull,” he said.

Blastland added:”Holidays buying is the same as for any other high-spend consumer goods. You decide you want a Sony or a Volkswagen, because it’s the product, the brand you want. Then you shop around for the best price.

“You could say that if it was a completely even playing field over the next five years, on quality, price, and product availability, then the agent would have an edge. But it isn’t going to be.”

Vincent claimed that the operator would dominate the sector as long as the principal retail proposition was price and the offers were being paid for by an ever more selective operator.


I see this as the big issue that will divide those who stay in the mainstream business and those who do not, or rather are not allowed to stay in.

The old viewdata systems are about to go, and with them will go free IT access and equipment. At present anybody can access the operators’ systems. As Thomas Cook’s Andrew Windsor said two weeks ago, within three years viewdata won’t be supported and operators will no longer fund agent access.

Mottershead agrees: “Once technology allows it, and it is virtually there now, we will be able to turn retailers on and off,” he said.

And it will no longer be free. All major operators see new technology as a major step forward in controlling their businesses, and who they do business with.


Vincent could not see Thomas Cook going into direct tour operations in the near future.

Mottershead was supportive of Airtours’ recent acquisition, Direct Holidays, but would not have built such an operation from scratch. Nor does he think it worth chasing after direct bookings for his mainstream brands. “My concentration is on the retail network, because that is what Airtours is all about,” he said.

Blastland thought there was a natural level of direct business which perhaps First Choice had not yet reached. “But it’s expensive to get and nowhere near as flexible,” he said.

E-commerce brought even less enthusiasm. Vincent thought that it would take many years for the Internet to become big in the UK.

“Interactive TV might change that, but will people want to sit for hours in front of a screen first choosing and then going the long push-button booking process?” he said.

The next five years will, in my opinion, be strong years for distributors who are in control of what they are doing and are prepared to change where necessary. Of course it is true that they need the operators but not, at present, as much as the operators need them.

The four majors cannot survive without independents. They are simply not being sold in enough multiple outlets. A few short years ago, everybody sold everybody. Independents were in more danger and more likely to be seen to be less important. But this is no longer the case.

All operators understandably talk about turning poor producing agents off – and rightly so. But they cannot afford to turn off the good producers.

And as Blastland said, there are not enough good agents now, not enough to allow an operator to say ‘I will not supply you if you sell any of my competitors.’

We now have four good strong mainstream operators. But that new found strength is also their potential Achilles Heel. They might not have enough controllable distribution.

Or perhaps there are too many good operators for real market needs. Can a relatively flat market and pricing prospects, and this strange mish-mash of a distribution structure, really support the ambitions of these four companies and their managements?

Jeremy Skidmore, Editor, Travel Weekly

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