That Tui Travel was able to announce record profits this week when the economy is on its knees might seem remarkable but is down to a clear strategic vision of its role in the travel sector.
This was apparent a year after the merger of Thomson and First Choice when Tui Travel hosted a birthday party at a venue on the north bank of The Thames in London.
At the time Dermot Blastland was the man in charge of the UK operation and he gave the typically rousing address you’d expect at an event intended as a public show of confidence.
Also present was Dave Burling, the man who three years on is in the Blastland hot seat who, speaking informally, offered an insight into the emerging Tui philosophy.
He explained how the travel giant saw itself as a hotelier first and foremost. Yes, it has an airline, and, yes, it has a large retail estate, but while these are important they have supporting roles.
After all, when a customer comes back from holiday raving about it, it’s not the flight or the agent that sold it to them they talk about, it’s the experience while on holiday, he said.
This goes to the heart of what Tui means by differentiated product and it was this that it highlighted as a key factor in its success as it revealed record profits yesterday.
The contrast in fortunes to its ailing rival Thomas Cook could not have been greater, and the results communications were no doubt crafted specifically to emphasize this point.
Because, while some trade observers may doubt the extent to which these two virtually integrated rivals are actually different, it seems Tui’s tour operating prowess is what is setting it apart.
Seasoned industry watchers will find this hardly surprising.
The two mergers of the Big Four in 2007 put together the two weakest tour operators, Cook and MyTravel, and saw the two strongest join forces, Thomson and First Choice.
An indication of what this means on the ground came at the recent Tui Travel retail managers’ conference in Albufeira, Portugal. It was hosted at the brand new Salgados Grande Hotel which next year will be sold in the UK exclusively by First Choice.
The development is truly exceptional – the kind of quality you’d expect from a sleek city centre business property rather than a bucket and spade beach hotel.
And Tui is working closely with the owner to make sure that by the time the British arrive next year there are the kind of facilities they expect – an outdoor kids’ zone, for instance.
This sort of tour operating is built on decades of close relationships with those hotel partners who invest many millions and take the ultimate risk in producing the end product.
Contrast what this tells you about the business relations Tui has with its hoteliers with the outrage that resulted from Thomas Cook’s blanket decision last year to pay its suppliers 5% less.
How many of those suppliers lost no time reigning in credit lines with Cook last week once the true extent of its troubles was made public? Good business relations are always mutually supportive.
The reason Tui is so happy to laud the impact of its differentiated product is precisely because this is going to be the hardest thing for its rivals to make up ground on.
As Matt Cheevers, managing director of youhotels.com, was lamenting recently the industry has lost much of its traditional tour operating expertise.
“The last 10 years has been dominated by dynamic packaging where effectively we are saying do it yourself. The consumer is now saying we like the choice but in a lot of ways there’s too much choice.
“Unfortunately in dynamic packaging systems a lot of the product that sits behind them is the same. We have to be a bit more creative,” he said.
Cheevers believes, even for the pure play online retailers, the market is coming full circle and it will be those companies that best meet customer expectations with relevant product that will win out.
Tui appears to be proving his point.