Thomas Cook declined to comment on reports it is to undergo a radical overhaul to become an “online holiday marketplace”, but a source close to the company reiterated that accelerating its digital presence remained core to its strategy.
The Telegraph reported at the weekend that Cook had held shareholder meetings, outlining plans to transform into a “holiday comparison website”.
But an insider said: “The absolute priority is to give ourselves greater financial flexibility to pay down debt and enable us to accelerate our own-brand strategy and have more of a digital focus. The strategic review of the airline is key to this.”
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The source added: “We need to become more streamlined with a lower cost base; and we need to genuinely set ourselves apart. The only way of competing in an overcrowded market is to differentiate your holiday offering from others to target higher margins.
“If, in a year’s time, Thomas Cook is a smaller business but one that is more fleet-of-foot and focused on higher margins from our investment
in our own-brand hotels, that will not be a bad thing.”
Earlier this month, as the group reported a half-year loss of £1.45 billion, largely due to a £1.1 billion write-down of the value of its MyTravel assets, chief executive Peter Fankhauser said: “We are following our customers’ behaviour, and the more customers are [using] digital, the more we have to follow
Last year, 64% of Cook’s bookings were made online, up from 49% in 2017. In March, Cook announced 21 shop closures. Fankhauser said Cook’s retail network – currently 560 shops – would be reviewed “constantly”, adding: “If a shop is falling below profitability and has no chance to return to profitability, then we see [if] we can transfer the customer into the next shop and we close the shop when the leases expire.”
Cook will open 20 new own-brand hotels by the end of 2019 as part of its turnaround strategy and expects its portfolio to reach 200.
It has secured £300 million in financing from banks to help see it through next winter, but this is dependent upon the sale of the airline.
The group received a bid last week for its Scandinavian business from investment firm Triton Partners. Meanwhile, German broker Berenberg upgraded Cook’s shares rating from ‘sell’ to ‘hold’ status. Its share price stood at 15.5p on Tuesday afternoon.