Tui Travel developed its focus on selling distinctive resorts or ‘differentiated product’ as a way to “escape the trap” posed by the internet, according to group chairman Michael Frenzel.
He told the Captains of Industry Lunch at WTM on Monday: “Tour operators in the past had a monopoly of information. This has totally changed. The market today is transparent. We lost our monopoly of information so we had to change and we did it by concentrating on product.”
Frenzel, chief executive of Tui Travel’s German parent company Tui AG, said the threat posed by the web was about to multiply.
“I’m pretty sure Apple will enter the [travel] market and Google will enter,” he said. “We talk with them and they say ‘No, we have a different business model’. But it is a short step for them [to enter travel]. So we concentrate on product.
“We developed a form of differentiated product as the only way to get out of the trap [as a tour operator].”
Frenzel dismissed recurring speculation that Tui AG would bid to extend its ownership of Tui Travel beyond the current 55%. But he said the company was is in a position to make acquisitions.
He said: “There is a lot of speculation. We have good relations with Tui Travel and from time to time we consider how we could create synergies [between the businesses]. We have two headquarters, for example.
“If there are synergies we are obliged to look at them. But at the moment there is no decision, no plan, and if there is a decision we would inform the markets [first]. The key question is how do we grow in new markets.”
He added: “We have a lot of experience of [financial] markets and how share value can be created and destroyed. After September 11 2001, 50% of our shares were short sold and their value dropped by 25%-30% in two to three weeks. Volatility is a big part of this industry.”