Tui’s decision to significantly increase capacity for summer 2024 has made it a “good time” to review trade distribution, according to the operator’s marketing boss.
Explaining the rationale behind Tui’s move to ramp up its focus on trade sales, chief marketing officer Neil Swanson told a Travel Weekly webcast the operator’s capacity hike for next year was “the start of a continued growth plan”.
Tui has announced its biggest-ever programme for summer 2024, with 1.1 million extra seats and additional flying from 13 UK airports, bringing the total to more than 10 million seats.
Swanson argued the extra capacity and the fact Tui was missing out on a section of the market were compelling reasons for the change in Tui’s distribution strategy.
He said: “We’ve announced we’re putting a lot more seats on for summer 2024 and that was a good time to review the distribution strategy.
“We clearly have put that additional capacity in and the intention is that we won’t be pulling back from that, and that will be the start of a continued growth plan. It’s up to us to make sure that happens.
“Notwithstanding that, when you look at the distribution strategy, it makes sense to not miss out on any of the market. When you sit back and look at it, you realise we’re missing out on a portion of the market, and we have done for a lot of years.”
While Tui does already have some ‘key’ trade partners, he added: “There’s a lot of the trade that we haven’t been working with.”
He denied the strategy was a short-term reaction to the post-Covid surge in agent popularity, but did concede: “Maybe it’s [Covid] brought it into sharper focus but I think this is something longer term than that; it’s a much bigger piece. This is about long term relationships.”
The latest move to court the trade ‘long-term’ is particularly significant given Tui’s heavy focus on direct sales for the past 18 years. Since cutting base commission to 7% to third-party agents in 2005, Tui has openly concentrated on sales through its own shops and online to propel its growth.
A decade ago, for summer 2013, Tui’s direct sales accounted for 91% of UK sales, and only two years ago Tui northern region managing director Andrew Flintham told Travel Weekly its direct-to-consumers distribution model was likely to grow further post-Covid.
Swanson refused to be drawn on the current proportion of direct sales in the UK but insisted: “I can tell you it didn’t get as high as 95%.”
He admitted the current proportion of third-party sales was “relatively small in percentage terms”, but stressed there was a “big opportunity” to grow this figure.
He said: “It is relatively large when you look at the actual absolute numbers of passengers that we’re talking about [through third party sales].
“As far as I’m concerned, they are quite chunky numbers, given the capacity we run through Tui, and we just think there’s an opportunity to grow it.”