TUI UK undergoes cost-cutting review

NEW TUI UK managing director Peter Rothwell is conducting a major review of the business with a view to saving around £25 million, Travel Weekly has learnt.

Details of the cost cuts will be revealed to staff in the coming weeks, but job losses across the company are rumoured. Rothwell, who retains his role as chief executive of TUI northern Europe, takes the more ‘hands on’ role of managing director following the sudden departure of Chris Mottershead on Monday.

A spokeswoman for TUI UK confirmed a business review was under way.

“Peter will look at lots of things and staff will know more soon.”

Mottershead’s decision to leave came after a seven-week sabbatical for a holiday the company claimed had been planned since he started with TUI at the end of 2001. The break, during the peak period, led to widespread speculation Mottershead would not return.

“I got to the stage where I wanted to try something different,” said Mottershead.

He refuted rumours he’d been made a scapegoat for Lunn Poly’s aggressive January discounting – rumoured to have gone £4 million over budget – or that he failed to cut enough capacity. He also denied rumours there were shortfalls in this year’s targets for TUI UK.

“We’re as close to being on target as we can be and the summer’s pretty strong. When your target is £100 million, being £4 million over is rather small,” he said.

“We haven’t had to cut capacity too much – there has been plenty of demand; prices and yield this summer have demonstrated that.”

Mottershead said a review of the business now “made sense”.

“We’ve had a pretty good summer but Peter will want to have another look,” he said.

Observers, however, say Mottershead’s departure immediately after his sabbatical has left the company with egg on its face.

“They made themselves look very foolish and they’ve lost credibility internally,” said one.

Another source close to the company said further cuts were inevitable.

“The big four have to review their overheads and the biggest costs are salary related. The cuts will come over a period of time and will be across the board.”

Mottershead joined TUI UK in 2001 from Airtours in Canada. He said his future plans include working with venture capitalists and admitted he would look outside the travel industry.