UP TO 75% of Lunn Poly’s package-holiday sales will be for Thomson Travel Group products if Airtours’ bid for First Choice is successful.
The news comes as sources in Brussels claimed the Airtours bid will be allowed to proceed, although the operator may have to make concessions. And if the bid is given clearance, it is almost certain to succeed because it has the backing of shareholders (see stories below).
Lunn Poly will drastically cut its number of sales for First Choice and make up the shortfall by increasing its bookings for Thomson. Currently, Thomson accounts for between 50%-60% of Lunn Poly’s business.
Some 400,000 First Choice sales go through Lunn Poly but this will be cut back to around 60,000, in line with the retailer’s current share of sales for Airtours.
As Travel Weekly revealed on May 10, Lunn Poly will be offering less choice than its competitors as it will not be promoting a mainstream alternative to Thomson. But Thomson does not believe this is a problem, because its brand is liked by the public.
First Choice pays 17% commission on average sales of £400, so Lunn Poly will also be turning its back on more than £20m commission.
But Thomson believes it will make up the loss through increased profits for its tour operation as bookings increase through Lunn Poly.
Thomson categorically denied the strategy change was in preparation for rebranding Lunn Poly shops as Thomson, but did admit the policy was a massive change from a year ago, when Lunn Poly claimed that it did not directionally sell Thomson products.
Aspokesman for Thomson said:”It is a sea change in policy, but it reflects changes in the marketplace.”
Meanwhile, Thomson is continuing with its plan to increase distribution by 50%. Its 792 Lunn Poly shops will be expanded by a significant, but undisclosed amount and sales through its shareholders’ Founders’ Club, Internet site and direct-sell operator Portland Direct will all be increased.
Airtours said it was not concerned and claimed Thomson would harm its own profits by cutting back on First Choice.