Hays Travel announced plans to acquire Thomas Cook’s retail estate of 555 shops on Wednesday morning. Managing director John Hays, and chair Irene Hays, spoke to Ben Ireland
When did you begin considering the deal?
John Hays: On September 23, when we were first notified of Thomas Cook’s failure, obviously we were saddened. We have been a really successful business partner of Thomas Cook’s for a very, very long time. We grieved and we were very upset, especially about the staff and their jobs. From that point in time, we had several points to work through.
First, to look after the Hays Travel customers and make sure that those who wanted to rebook or needed to be repatriated were taken care of. We also immediately reached out to Thomas Cook staff to see if they would like to join Hays Travel. Then, we looked at the opportunities which are always created in these circumstances, when travel companies fail.
How did the deal develop?
JH: Before we were certain we would be able to acquire the Thomas Cook shops, the strategy was to make sure the staff were employed. We employed 597 Thomas Cook staff [before the deal was announced on Wednesday October 9]. As of Monday [October 7] we started training them on our technology platforms across the UK, which is continuing.
Last Wednesday (October 2) we trained regional sales managers. We mobilised very quickly. We had all the individuals in place, we have made sure we kept the regulators aware of our ambitions throughout, and before we had formal approval. That came at 11:53pm last night [on Tuesday, October 8]. I noticed about an hour before that it was six years to the day that we doubled our retail network when we acquired Bath Travel.
How much did it cost?
Irene Hays: We are not able to say that because of the agreement that we have reached. We think it was a good deal for the liquidators and a good deal for Hays Travel.
How soon can you get the shops open and how do you see trading going?
JH: We are a successful business and, because we are independent and offer all the tour operators, we are optimistic we will trade well in all the shops. We are training hundreds of people, regional managers first. We’ve ordered thousands of laptops for training purposes, and IT worked through the night to configure them and ship them to various parts of the UK.
That exercise has worked really well. We think a good percentage of shops will be open and trading tomorrow (Thursday, October 10). The rest we will get open as quickly as we can. Both the existing Hays Travel Staff and the former Thomas Cook staff have been incredibly enthusiastic. We are on the case, but it will take us a few days to get them all up and running.
What agreement have you come to on the leases?
JH: We have taken assignment on the leases for a considerable period of time, to protect our interests as well as taking all the fixtures and fittings, and client databases. We will need to talk to the landlords, which we have started to do and so far we have had only positive outcomes with our negotiations. Our indications are that they are welcoming this deal with open arms.
We won’t begin the renegotiation process before the end of the leases. We will engage with landlords over a period of time. All the landlords are guaranteed their rent until at least December 24 under the terms of the current deal. During the next nine months, many leases will come up for renegotiation
IH: The structure of the deal means that we will take over the shops on existing arrangements. Then we have an opportunity to get to know the landlords and build relationships. The rents have all been negotiated at different points of time and have different terms left on them. We have made around 140 approaches [to landlords]. Renegotiating rents would be a second order issue in the structure of the deal.
How are you financing the deal?
JH: We own the retail estate outright, and [the deal] will be funded with no debt.
Some commentators put Cook’s failure down to it having too many high street shops. Now you have even more, what do you think of that?
JH: The differentiation of Hays Travel is that we are already increasing the number of high street stores while others aren’t. That, and excellent customer service. But that alone is not enough. We live in a digital world – the way people behave in 2019 is via social media. We know that more than 50% – approximately two thirds – of people who book in our stores have engaged with us digitally in one form or another.
If you asked a Thomas Cook employee if the web was their best friend, they would say no. There was a price differential online where it would be cheaper than booking in a shop. The web was their enemy, whereas if you asked a Hays Travel member of staff they would say that the web is their friend. We interact positively with the internet. On average, seven people a day come into our stores having made enquiries on our website. They have researched online. We have a very different strategy to Thomas Cook and on that basis I’m optimistic and confident for the future.
People are asking a lot of the same questions as six years ago. We acquired 58 branches [of Bath Travel] and the presence on the south coast has grown to approximately 78 stores now. The death of the high street travel agent is a question we’ve been asked before, but I feel we do something different.
IH: Six years ago, when we doubled the size of the retail estate, we continued to grow organically. Every time we do a deal we look at the capacity and capability and we have done all the due diligence. We are absolutely certain there is enough product for Hays Travel to succeed and this deal to be successful.
What about the duplication of stores?
JH: In towns and cities where we have an overlap, where we have under-performing shops, we will do what any business would do – and have a look at them. [But] we have no plans to close any [of the 555 former Cook shops]. We will cross that bridge when we come to it and engage with our staff as and when if that happens. Staff engagement is very important to us. If we did have to make any changes at some stage, we would do it with a full consultation with our colleagues.
Some Cook shops were losing money. Can you turn them around?
IH: As part of the deal, we were given information on the profit and loss as best they had it. There were some issues in getting complete data but we have a very good understanding of how retail works. In many locations the rent was high, and there were quite a few shops losing money. [But] we do believe that the model we have here at Hays Travel, and because we don’t pay ourselves a lot of money or have any huge overheads like a grandiose head office in the city, that there are a number of factors that have de-risked it for us. We have looked at all of these and are comfortable and confident that now we have had a proper look, we will maintain the vast majority [of shops].
JH: At a branch level, some were operating at a profit and some a loss. The appeal of our deal to the Official Receiver [liquidators] was that we took an overview of the whole operation. In layman’s terms, we took the rough with the smooth. We are very confident that these will work for us economically.
What sets Hays Travel apart from how Thomas Cook operated?
IH: We have a high degree of trust and confidence in our people. We allow all of our staff to bring their personalities and characters to our shops. They know their customers better than we do sat in head office. They know their customers in a way that’s unusual in this country. Because we have that close relationship with our staff, it’s different from a corporate structure.
We see our staff personally and look after them personally – 43 % of our senior managers started with us as apprentices. We have been able to keep that mentality at nearly 2,000 staff and would be delighted to maintain it across an even bigger number. It’s fundamental to our DNA, and we believe it’s scalable.
How many of Cook’s staff are you going to take on and how has that recruitment process been?
JH: We are looking at employing as many Thomas Cook staff as possible and we are reaching out to them. They employed [about] 2,500 people across their retail estate. So far, we’ve taken on a significant percentage of those people. When they are joining us they have been really emotional – and we are as well! These people didn’t do anything wrong, then one day their company went into liquidation and their jobs were gone.
When we have been offering positions, a reasonable percentage have cried. They are quality people and we are optimistic for the future. We will need to recruit at least 2,500 people (including the 597), and the early evidence is that the majority [of ex-Cook agents] are aligning to us. We will also need an additional 100 staff in our headquarters, to support the expansion. We’ve set up a dedicated phone number for former Thomas Cook employees.
IH: The phone line has had 401 calls in the first two hours, and our website has averaged 3,100 users per minute. We want as many of the Thomas Cook staff to contact us as possible. We know that the Thomas Cook staff are desperate to deliver for us. When they came in for interviews, they said they would do everything to pay us back, and many gave us a cuddle.