Tui Travel’s specialist sports division will not pursue high profile deals with Premiership football clubs like its big two rival Thomas Cook has done.
Tui currently has a commercial relationship with Arsenal, while Thomas Cook has tied up deals with a raft of other clubs including both Manchester clubs City and United, and reigning champions Chelsea.
Speaking at an e-tid briefing this week John Wimbleton, Tui’s specialist and activity division managing director, said the firm found it hard to justify such deals commercially.
“We have a relationship with Arsenal which makes sense for us commercially, but if you look at the likes of Manchester United, the royalty they demand makes it difficult for us to justify,” he said.
Wimbleton said Tui was more interested in being the number one travel provider for sporting events which attract a loyal following of cricket, rugby and football fans worldwide.
“If you’ve got access to tickets the same people travel year in year out. We went on sale for the 2011 rugby world cup a few weeks ago and people are not shy of making a commitment a long time out.”
Another key sector for the division is education in which Tui has just invested in three English language schools in the UK.
Wimbleton said globally the market for English language teaching was worth $10 billion with the biggest source markets being Russia and Brazil.
“We can own the whole value chain. We can add further value by participating in distribution and the travel ,” Wimbleton said.
One of the big drivers of the education market is the UK government’s learning outside of the classroom initiative and the fact that health and safety issues are forcing teachers to look to use reputable operators.
“Education is a wonderful market place. We have just entered the English language teaching market – we have a really good history of going into fragmented markets and consolidating,” Wimbleton said.
Tui’s specialist and activity division has seen impressive expansion since 2005, growing from £18 million in earnings to £82 million in 2009, fuelled largely by acquisition.
The division has 1.6 million customers globally and makes “very healthy margins” of 6.4% on average, Wimbleton said.
“When you have been as acquisitive as we have been you need to have a very clear participation strategy. We do not do anything unless we can be the market leader, we want to be number one in everything we do.
“We look for businesses with growth characteristics, we do not have the luxury of investing our investors money in mature businesses. We are looking for businesses with a high barrier to entry [in their sector].
“We are looking for something that has a real wow factor that gives a unique customer experience and given what we have been through in the last couple of years flexibility is absolutely key. In bad times the business model has to have the flexibility to contract and pick up again when things get better.”
Wimbleton said he follows an “ice cream principle” for the consumer facing side of the businesses in the group and believes competition between different brands in the group was healthy.
“If something touches the consumer it has to be Tutti Frutti, if it does not it can be vanilla – the consumer does not care about the system that issues the ticket or processes their payment.
“At the very least you need a very strong FD and MD in each business and they have to have the passion and commitment to carry on growing.”
Tui’s specialist and activity division is split into four sectors: Marine, which ranges from nuclear powered ice breakers in the Arctic to warm water yacht charters, Adventure holidays, Education, the Specialist Group, including the likes of Hayes and Jarvis and Citalia, and Sport.