The Thomas Cook and Co-operative Travel merger should provide opportunities for the independent sector as the new joint venture attempts to merge two very different retailing cultures.
Experts speaking at an e-tid breakfast briefing at The Travel Convention in Palma, Majorca, today agreed the deal was great news for the Co-op, which was struggling to make money out of travel.
But doubts were expressed about the ease with which the two entities will be brought together and whether the Co-op will be able to maintain its independent character.
Miles Morgan, owner of Miles Morgan Travel and himself a former boss at Cook rival Tui Travel, said: “It’s an absolutely world class deal by Peter Marks [Co-operative Group chief executive]. How he pulled it off I do not know.
“What the Co-op now becomes, what they offer and how that works we will see in the next few months. It’s definitely not a threat, it’s definitely an opportunity.
“It will be interesting to see what they do with 1,200 outlets in a country where broadly you only need 600 to 700. What will they do with the residue?”
Morgan said the joint venture could be left with significant costs of unwanted leases if it decides to consolidate its shop network and it remained to be seen if it will help Cook increase in-house sales.
Disposals of stores could be difficult to achieve in a struggling UK high street, Morgan added.
The panel, which also included Hays Travel founder John Hays, agreed that working with the big two would remain important for independent agents but only as part of a mix of suppliers.
“There is almost an inherent contradiction in the Co-op being an independent business but being owned by a Plc.
“I think they will have cultural issues going forward, with the staff not used to selling directionally. If they go down this route, which Cooks will inevitably want them to, that presents opportunities for the independent sector.”
The panel agreed that although the big two were only looking for around 20% third party sales that still offered a very important opportunity for independents.
Moderator John McEwan, Abta chairman and chief executive of Advantage Travel Centres, said the increasing expense of taking controlled distribution past the 80% mark left the variable cost of dealing with third party agents more attractive.
Alan Lambert, chairman of Tipto (Truly Independent Professional Travel Organisation) and Bourne Leisure head of sales, said he was concerned about the impact on distribution for independent operators.
“The Co-op group was a big fan of independent tour operators. For us there is a danger that some of us will lose distribution.”
He expressed surprise that the deal was given the green light by the UK competition authorities with no caveats.