How The Tourism Distribution Channels Adapted To The New Trends In Tourism Over Time. Case Study Thomas Cook Tour Operator
=== cc76dc4e7755147235482c51ec819ceadfee9a99_574037_1 ===
HOW THE TOURISM DISTRIBUTION CHANNELS ADAPTED TO THE NEW TRENDS IN TOURISM OVER TIME
Introduction
Although the European tourism has been impacted by recent socio-political events, it has remained an important part of the European economy and it drives additional revenue to the entire territory annually. Economic growth is determined by the development of tourism in a specific area and Europe’s tourism makes no exception. Globalisation, the freedom to travel and the desire of tourists to explore new territories while in search for leisure constitute the main reasons behind the development of tourism promotion channels.
According to statistics released by the European Commission, tourism plays an important role not only because of its economic potential, but also due to its employment potential. Its social and environmental implication must not be disregarded, either. Tourism is one of the areas that is constantly monitored in Europe due to the sustainable development policies.
It is estimated that 62.1% of the EU’s population has travelled for personal purposes in 2016. Also, 1.2 billion trips were taken by EU residents in 2016, for both personal and business purposes. These numbers show an increased interest of Europeans in the tourism sector, which is why it is important to analyse and discuss the ways in which tourism has evolved in the past years.
Modern tourism has changed significantly compared to a few decades ago, when the Internet was not available and the online environment was an unknown place. The travel and tourism sector has evolved in an unprecedented way since the Internet has become available to most European citizens. Due to the online users’ emancipation and demand for more and more information accessible at all times, the tourism industry has adapted to the market’s demand. This way, the middlemen disappeared and it is almost no longer needed in the process of holiday booking. Computer Reservation Systems appeared and later on, technology evolved even faster, making travel agents almost useless.
Nowadays, the changes in telecommunication and the popularity of the Internet are placing various tasks that were previously done by agents under direct control of the customer. Finding, planning and booking a vacation is easier than ever. Along with these changes, tourism companies had to adapt and find new ways to reach their potential consumers. In an online world where millions of active users are constantly looking for tourism packages and deals, the competition is fierce.
The motivation behind this choice of topic is represented by the desire to analyse the progress that the tourism industry has made from the beginning of times until the current day. It is easily noticeable that there has been a shift in the usage of distribution channels by the tourism agencies and tour operators across the world, which is why I find it essential to study the ways in which present day tourism agencies have adapted to the new trends. The choice of distribution channels is an important part of a marketing strategy, which is why I will analyse the activity and progress of one of Europe’s leading tour operator: Thomas Cook.
The objective of this thesis is to prove the following three hypotheses:
Thomas Cook has managed to adapt to current trends
Customer satisfaction reflected in online reviews is linked to the financial success of the company
Thomas Cook has managed to stay on top of its consumers’ preference list due to its ability to adapt to new trends
The structure of this paper is simple, split in three main chapters that lead the way from the ancient history until the modern day’s tourism habits. The first chapter, The History of Tourism, offers a historical perspective over tourism and studies Thomas Cook’s history in England. In this chapter, I will be discussing about pre-modern, modern and contemporary tourism. The second chapter, named Distribution Channels and How They Adapted to the New Tourism Trends, is split in three parts that discuss the modern distribution channels, the tourism distribution channels in the UK and the future trends in the tourism industry. The third chapter offers an introduction into this thesis’ case study: Thomas Cook Tour Operator and includes a research part in which the collected data from two reliable online review platforms will be presented and interpreted.
The history of tourism
Tourism, as we know it, is thought to be a recent development. However, researchers, historians and specialty authors believe the contrary. Historical proof shows that people have travelled ever since the ancient times, for various purposes. Even though mobility was a disputable factor a few thousand years ago, as the development of vehicles was rudimentary or inexistent, tourism was possible and took place in many parts of the world.
In the ancient world, tourism was time consuming, it implied high costs and it was unsafe. These three elements allow us to understand the differences between ancient and modern world with regards to traveling. In spite of these inconveniences, there are many records of people travelling to Asia and the Pacific (Hudman & Jackson, 2003:25). Today, tourism is a powerful industry that ensures various traveling means, an infinite list of destinations and the possibility of traveling at all times.
At its core, tourism is a recreational and educational activity that plays a major role in the development of a phenomenon that we nowadays refer to as globalisation. Although today, tourism is available for anyone who wants to explore new territories, either for recreational or business purposes, it had entirely different purposes in the past. The discovery and exploration of territories was done strictly for political and commercial reasons when people all over the world started travelling in the ancient times. The history of tourism exposes the most important developments in this industry which lead to economic, social, cultural and political evolution. The expansion of tourism is important not only from a traveller’s perspective, but also from any modern nation’s one, as the path to modernity was paved with information and data that people started collecting while travelling. They then started applying the acquired data in their own countries, changing their beliefs and systems. Also, travellers that made history made use of collected information from the entire world for evolutionary purposes that gave contour to the world as we know it today.
As this thesis focuses on understanding the changes in the tourism distribution channels that took place as a movement towards current trends, I find it essential to shortly discuss about the history of tourism. Knowing what stands at the foundation of this industry is crucial for future discussions about modern tourism and its developments, which is why pre-modern, modern and contemporary tourism will be briefly described in this first chapter.
The pre-modern tourism
Mesopotamia
The historical roots of tourism go back to the origins of civilization. Mesopotamia (nowadays the territory of Iraq) is considered to be the location where tourism emerged. The roots of civilization, and hence the tourism concept were born in this given area due to factors such as the availability of water supply, rich alluvial soils, a favourable climate and territorial delimitation between Asia, Africa and Europe. All of these factors have sustained the development of agriculture that is so important for survival. The surplus of food fostered the formation of wealth and the emergence of a leisure class, mostly consisting of priests, warriors and others. The availability of time and income motivated this leisure class to engage in tourism. Another motivation was the fact that the main cities, Ur and Nippur, were overcrowded, and the leisure class preferred to escape it. The Mesopotamian civilization later on expanded to the Nile Valley (nowadays Egypt) and to the East, to the Indus Valley (nowadays Pakistan), where similar factors to the above mentioned enabled tourism (Casson, 1994).
According to Casson (1994), the main element that favoured early tourism in Mesopotamia was the existence of two rivers. They were both navigable, yet the wind conditions were not as convenient as those offered by the Nile. Water travelling was done using small wooden boats and had mainly commercial purposes. Mesopotamians had the possibility to carry heavy loads from bank to bank, as well as on long distances. Water transportation was not available on all of the ancient territories. Travellers who were located far from rivers used to either walk or ride donkeys, until the year 3000 B.C, when vehicles started becoming available. Historical proof shows that the Sumerians, the people of northern Mesopotamia, used wagons that featured four solid wheels and a body borne inspired from the design of a box. Such wagons were drawn by donkeys or other animals (Casson, 1994:22-23), giving the fact that the horse started to be used in this area as a draught animal 700 years later, in 2300 B.C.
Hundreds of years later, the chariot was used for travelling short and long distances. Historians claim that it wasn’t until 1600 B.C that wealthy men started using horse-drawn chariots, especially in times of war.
China
The civilization in China emerged approximately at the same time as the one in Mesopotamia. The tourism In China was well established by 2000 BC, and four groups of tourist were predominant in that time:
Royalty – their reason of traveling was to demonstrate government authority, and to learn more about different regions of the empire
Scholars, artists and students – they were reflecting a Chinese Confucian tradition of respect for learning, education and self-improvement
Buddhist monks and pilgrims – their reason to travel was visiting the sacred sites related to Buddhism within China. They used to travel for religion reasons to India as well, this being known as the first outbound tourism movements
Traders – they travelled for business reasons.
Between 600-900 B.C, China was the centre of the world tourism. The capital, Xi`an had a population of at least two million and hosted a large number of students and other visitors (Weaver, Lawton: 2014).
Historical evidence shows that silk trade was one of the most important commercial activities in China in the ancient time, which is why travel was crucial. Traders travelled from China to Bagdad using camels (Jayapalan, 2001:10-11).
Greece
Tourism was popular in ancient Greece for a number of reasons. Except for business, Greeks were interested in leisure and were known for their wanderlust. Jalapayan (2001) reminds us of Homer’s Odyssey in which the desire to travel and know new territories was described. The author also mentions Ulysses, who inspired the Greeks to travel after describing his journeys. Moreover, Herodotus has travelled for approximately 1600 miles, visiting Egypt, Asia Minor and other countries. In Greece, tourism was popular due to its people who were interested in intellectual, scientific and artistic matters. World famous philosophers like Plato, Aristotle and Pythagoras travelled with the purpose of collecting material, observing, participating in important festivals and religious events (Jalapayan, 2001:9).
The ancient Greece tourism is mostly associated with the national festivals. The most prestigious being the Olympic Games that gathered people from all over the country every four years to compete in athletic events and hold religious ceremonies. The Games are considered to be the oldest event and sport tourism ever recorded. The transit process was not easy, considering that the tourists were targeted by robbers and pirates, depending on the transportation system they were choosing. The accommodation facilities were unsanitary and often dangerous (Lunch and Veal, 2006).
If in other parts of the world, the quality of roads was disappointing, Greeks often focused on building sturdy, durable roads. The population of Crete was especially known for its interest in extensive road building between 1600 and 1200 B.C. Casson (1994) mentions the fact that archaeologists discovered remains of a highway that ensured transportation and travel starting from the south cost to Cnossus, with a width of 13 feet. The highway was strengthened with terracing walls of stone. Similar roads were discovered in Pylos, Boetia and Thessaly.
Rome
One important geographical region in the history of tourism is Rome. Ancient Rome (which peaked between 200 BC and AD 200) is known for its political, economic and technological achievements that helped to sustain the tourism level. An important factor to pinpoint is the large population of the Roman Empire of approximately 200 million people. Although the elite class was a small share of the total population, their trips were favoured by the huge size of the Empire, the level of safety achieved during the Pax Romana (Roman Peace), and by the well-known network of military roads, which are still in use today. The tendency of elite class to travel gave rise to an industry that supplied transport, guide-books, accommodation and souvenirs. The number of tourism destination increased as well. The oldest roman destinations to be known are: Pompeii and the beach resort of Tiberius. The wealthy romans owned villas on the beach side or in the inferior side of the peninsula, in order to escape the hot summers and the cold winters. The elite class also were willing to travel to other more distanced destinations like Greece, Egypt and other (Casson, 1994).
The Middle Ages
The collapse of the Roman Empire during the 5th century AD strongly affected the factors that were sustaining the tourism movement. These factors are: the network of military roads, the size of the elite class, the urban areas, and the safety within the Empire. This period, 500-1100 AD is known as the Dark Ages.
The economic, political and social situation in Europe got better at the end of the eleventh century, known as the beginning of the Middle Age (c.1100-1500). Very famous in this period is known the Christian pilgrimage, which is considered the main tourism movement reason. The Christian pilgrimage stimulated the construction of great cathedrals all over the Europe.
Another reason to travel was the Crusades (1090-1291). Although the participants of the Crusades were not considered tourists, they contributed to the development of tourism at that time period. They fight to free the Holy Land from Muslim domination. Thus, they exposed Europe to the outside world, and occasionally they engaged into tourism-related behaviour (e.g. sightseeing, souvenir collecting)(Weaver, Lawton 2014).
The modern tourism
Early Modern Tourism
In the Renaissance period (1500), the world power started shifting to Europe. In contrast, the tourism in China declined, because the Ming Dinasty and successive rulers become xenophobic and China-focused.
The well famous Grand Tour facilitated the development of tourism in this time period. The Grand Tour become famous during the mid-sixteenth century and lasted until mid-nineteenth century, and it describes the travels taken by the aristocratic classes from United Kingdom and northern European countries to the classical Europe for cultural and education reasons.
The travels kept some travel diaries, thus later on helped to identification of the most visited destinations. Among the most visited destinations was Paris, followed by the Italian major cities, Florence, Rome, Naples and Venice. Some of the wealthier participants were accompanied by tutor, servants and guides. New regions of Europe became popular. One of them is Germany (the Alps). The share of United Kingdom`s population engaged in the Grand Tour counted 7-9 % (Towner, 1996).
The reasons of traveling changed gradually during this era, from cultural and education reasons to sightseeing and making important social connections on the continent. The Grand Tour had a huge influence over social and cultural aspect of United Kingdom, due to the ideas and goods brought back by the participants. The Grand Tour facilitated the development of new business opportunities within the destination cities as the souvenir trade and the tour guiding (Withey, 1997).
The United Knigdom and the seaside resorts
The Industrial Revolution had a huge impact over United Kingdom. Beginning with the mid-1700`s the United Kingdom transformed from an agrarian society to an industrial one and dominantly urban. Thus, by the early 1800`s the tourism opportunities became more available to the middle class of UK and other eastern regions of Europe. The difficult work conditions and the crowded cities created a demand for recreational activities, taken periodically by the workers and inhabitants of the big cities. Thus, the domestic seaside resorts emerged to fulfil this demand. Another belief that stimulated the working class to travel to the seaside was that the bathing in the sea combined with drinking the salty water was a good treatment for various illnesses.
An important factor to be mentioned that facilitated the development of the coastal areas tourism is the construction of the railways connecting the main nearby large industrial British cities. As a result, during the 1830`s and 1840`s the coastal towns became much more populated. Once with the spread of Industrial Revolution to Europe, North America and Australia, the same process took place (Stansfield, 2005).
The expansion of the seaside resorts in this time period was chaotically, with no management coordination. Thus, nowadays a lot of the British resort destinations are in a phrase of stagnation and in need of innovation (Towner 1996).
Thomas Cook and the British Tourism (1840 – 1950)
Being one of the highest profiles in perceptions of tourism’s past according to many authors (E.g. Butler & Russell, 2010), Thomas Cook is often associated with the emergence of modern tourism, even though the mass tourism took 150 years to be spread globally. He was often referred to as a forgotten hero of his age and described as the few historical figures on the 19th century to project tourism studies.
Being concerned with declining morals of the working class, Thomas Cook organized one day trips at cheap fares for the workers to the countryside, where they had temperance meetings (E.g. anti-alcohol) and bible camps.
The first excursion was organized on 5th July 1841 from Leicester to Loughborough; this is considered to be the symbol of the emergence of contemporary tourism era. The Thomas Cook & Son travel business was born at that time. By 1845 they were offering tours between Leicester and London.
The arrangements for the Great Exhibition that took place in 1851, in London, was the perfect event to demonstrate the innovations that Thomas Cook introduced to the tourism sector. One of the innovations was the package holiday. Around six million people visited the Great Exhibition in 1851 in London. Many purchased organized travel and accommodation from travel clubs, or from agents, such as Thomas Cook. Thomas Cook organized travel for 160,000 excursionists (Page, 2009).
By this time, travellers were more and more eager to visit museums, exhibitions and any culture-related event. Thomas Cook’s package tours to European destinations like Italy or Greece in the 1860s accelerated the travelling rhythm. The middle class now had the opportunity to visit places abroad that other generations could have only dreamt of (Richards, 1996:12).
If in 1843, Thomas Cook offered 3000 children the opportunity to take trips from Leicester to Derby, by 1963 circular tours of Scotland were already popular, approximately 5000 tourists being able to take them every season. This development in the tourism field led to the opening of railway lines across Europe. France, Austria and Switzerland, as well as America built railway lines that facilitated tourism and offered British people the ability to travel comfortably (Jayapalan, 2001: 13).
W. Fraser (1891) begins its writing on the progress of the Thomas Cook business with a quote by Bacon: Travel, in the younger sort, is a part of education; in the elder, a part of experience. When describing Cook’s trip organization, Fraser states: the design of such a trip was to allow those who made it to have `an outing` on cheap terms and without interfering with their hours of labour, working men being the persons in whose interest the trip was planned (Fraser, 1891:54). Traveling by train offered tourists the ability to spend a day at the seaside, as mentioned by Fraser: trains were running during the moonlight nights of the summer months from the principal towns in the Midland and Northern countries to Scarborough and other seaside places, the charge being very low.
In 1863, Thomas Cook’s tourist arrangements in Scotland were stopped when their popularity was at its peak, due to a conflict with the Scotch railway manager. This event led to Cook’s focus on the rest of Europe, where he had hoped to find new ground and fresh opportunities for prosecuting the business of travel (Fraser, 1891:56). The author also mentions that Cook went even further in his business, trying to obtain reasonable hotel fairs for his travellers when organizing trips from London to Paris later on. In this period of time, 578 people took advantage of the opportunity, traveling to the capital of France.
A huge impact on the development of global tourism had the introduction of the holiday time in 1871. In 1871 and 1875 the Bank Holiday Acts in United Kingdom offered four holiday days. The act made the coastal tourism more accessible for the middle-class workers. By the 1900s a demand for business travel and recreational travel was created by the European powers. By 1914, up to 150 000 American travellers could visit the UK yearly.
In the Edwardian years, the middle class started using their available income on overseas travel, being fascinated more by the rural areas and following their pursuit for outdoor activities (E.g. shooting, hunting, and cycling) in the Highlands of Scotland.
Following the deaths of both Thomas and John Mason Cook in the 1890s, the business is inherited by the three sons of John Cook: Frank Henry, Ernest Edward and Thomas Albert. Acknowledging the purpose and meaning of the inherited business, the company, later named Thos Cook & Son Ltd (1924), the new owners introduce winter sports holidays, motor car tours and the air travel to the public. The first air travel package was sold to a group of six people. They flew from New York to Chicago for a boxing contest and paid $575 for flights, hotel rooms and seats at the boxing show.
In 1908 the Ladies Scottish Climbing Club was founded, which was a first movement as women emancipation and their role as travellers. The railway facilitated the access to mountain for climbing activities. In 1931 hiking started to emerge as a popular activity with the creation of the Scottish Youth Hostels Association (Page, 2009).
A very important historical event that facilitated the development of tourism was the creation of the guidebook. This publication allowed tourists to know where and how were the people on that time travelling. An important example is the Queens Newspaper Book of Travel from 1910, which was published every year since 1903. The guidebook contained details about the places that could be visited within British Empire, as well as overseas. Using the guidebooks, it becomes easy to observe one important aspect of the history of tourism: the travels taken by the colonists, as the seasonal migration of the British to India.
World War I (1914-1918) affected the growth of international tourism, although the domestic tourism was not affected on the same proportion. On December 10th 1918 `the newspaper The Times wrote an article advising people to avoid the travels on the cross-Channel routes to Belgium and France, due to the congestion created by the war troops. However, the research by Page and Durie (2009) states that despite the Government efforts to limit de use of railways on that time, the domestic travel was not slowed down. Even if the wartime government increased the rail fares the domestic travel was not stagnated and actually London Transport encouraged it through their posters.
The new demand for domestic holiday for leisure purposes emerged in UK between 1914, due to the emancipation of women and their employment in high risk munitions work.
At the end of the First World War, the coastal holidays were in high demand, considering that British resorts such as Blackpool reported that they are full booked. Furthermore, new types of travels emerged. When the number of cars in UK started increasing in 1904, more road-based and flexible travel was offered.
Air travel increased in frequency during the First World War as well. The Thomas Cook Company started offering scenic flights over the battlefields in Europe. The first passenger flight route between London and Paris was open by Thomas Cook and others. The miles flown increased from one million miles in 1919 to 70 million miles in 1930 234 million miles in 1938. Thomas Cook air travel network expanded from a daily route from London to Paris and back, to new routes to other European destinations in 1922, as well as to the Middle East and India. Their number of passengers also increased from 11000 in 1924 in 1924 to 24000 in 1930 ad therefor to 222000 in 1938 (Page, 2009).
The crisis of the industrial economies during 1920s and 1930s negatively impacted the growth of international and domestic tourism, with the exception of the international air travel. Other new trends in tourism emerged during this time interval, such as the working holiday taken by the poorest working class or the Londoners from the East End harvesting hops in Kent in the autumn season. The mechanization process from the after war limited some of the tourism opportunities and created new ones. The construction of second homes by the working class on the coastal areas was a new kind of chaotic and uncoordinated domestic tourism (Page, 2009).
Lickorish and Kershaw (1958) stated that the First World War brought about many changes which were to influence the volume of tourism. It had wrought great social changes: people returning from the war expected new opportunities, better living standards, mire breadth to their lives; the war had broken down international barriers, and it had resulted in the fostering of an ideal, an optimistic, peaceful internationalism-just the climate in which tourism was most likely to flourish (…) The post-war era saw a rise in the standard of living of the working and middle classes in America and certain European countries.
The authors also stated that the 1930s were important because most countries started to understand the economic impact of tourism. The League of Nations simplified the frontier formalities, like removing visa fees and internationalizing driving licenses.
According to the Thomas Cook Tour Operator’s data, since 1948, the Thos Cook & Sons Ltd., became state-owned under the British Transpor-Holding Company. By 1959, the company started introducing worldwide credit schemes to business clients. In 1965, the company’s net profit exceeded 1 million pounds for the first time and in 1966, it celebrated its 125th anniversary. A new change in the administration of Thomas Cook Company takes places in 1972, when it is privatised and bought by a consortium of Midland Bank, Trust House Forte and the Automobile Association. The Holidaymaker, a travel platform was launched in 1981 which featured a reservation system that allowed travel agents to view private data. In 1991, the 150th anniversary was celebrated and in 1992, the company is bought by the Westdeutsche Landesbank and the LTU Group, which is Germany’s larger charter airline. In 1997, Thomas Cook goes online and becomes the first UK travel agency that offers foreign currency, cheques and guidebooks. Ever since, the travel company continuously adapts to new trends, which will be further discussed in the case study of this thesis in a chapter dedicated to the analysis of Thomas Cook Tour Operator.
The contemporary tourism
Contemporary tourism is a topic that can be discussed from a variety of perspectives: the international travel movement, the tourist behaviour, the evolution of marketing, the contemporary destinations or the entire tourism industry. In this chapter, I will focus on the beginnings of the British tourism starting from the 1950s until the present day, as I find it important to refer to the delimited area of the United Kingdom giving the subject of this thesis and the case study that I will present in the last chapter.
Before describing the British tourism, I find it essential to define the concept of tourism using a modern view that is obviously different from the historical definition. According to the World Tourism Organization, tourism is a set of activities of persons traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited. Another definition was given by Chadwick (1994) who stated that tourism is a field of research on human and business activities with one or more aspects of the temporary movement of persons away from their immediate home communities and daily work environments for business, pleasure and personal reasons.
Compared to the past, when tourism targeted sightseeing and the discovery of new territories, contemporary tourism focuses on more than just visiting. Studying, business traveling, research or leisure in remote and exotic places are among some of the interests of contemporary travellers.
According to Cooper & Hall (2008) contemporary tourism is one of the world’s most significant phenomenon and at the same time, one of the most misunderstood. The authors describe tourism as an agent of cultural, environmental and global change and not just one of the world’s leading industries (Cooper & Hall, 2008:4). They bring into discussion the importance of a high quality service in a field of activity such as tourism, as it is an experiential industry that places the consumer in the centre of the whole business concept.
As people travel more intensively, they discover that not only the geographical position of a destination is important, but also the psychological factors that will shape the whole experience. Contemporary agencies, therefore, must focus on basic elements and create a tourism system that satisfies potential travellers, such as:
The decision to travel
The travel to destination
The activities at destination
The travel from the destination
The recollection of the trip (Cooper & Hall, 2008:10).
When establishing a tourism system, an essential question must arise: who are the tourists? Based on the answer to this question, a travel agency can begin to understand what kind of tourism offers it can make, based on the income, timing, political rights, health, information and education, safety and security, family, legislation, work, location, gender and culture (Cooper & Hall, 2008:14-15).
Such a contemporary perspective is present in all of the world’s leading travel companies and comprises all dimensions of the tourism phenomenon, from the customer satisfaction to profit. In order to understand the roots of modern thinking in terms of tourism, I will analyse the trends and factors that have led the British tourism to adopting this perspective.
British tourism – trends and factors (1950 – present)
Giving the existence and development of one of the most important travel agencies in the world, Thomas Cook, the British people accessed tourist services earlier than many other countries in Europe. The major developments in transportation technology, such as air travel and automobiles, have opened new doors to travellers who were eager to visit foreign destinations, especially after the 1950s. Lickorish (2005) describes British travellers in the 1950s as being war survivors at the approximate age of 45 and affirms that potential travellers before 1950 that were under 45 were often called up for military duty. Before the mentioned year, even the government was expressing its disagreement with those who wanted to travel. A classic slogan was: Is your journey really necessary? It was only after the war came to an end when the British started to rethink tourism. Availability and affordability were the main elements that tourists were looking for. At that time, these requirements were easy to fulfil by travel agencies, as the accommodation and the entertainment facilities were simple and the standards were still poor (Lickorish, 2005:51-52). Immediately after the war, seaside resorts in Britain were the ones to benefit from the people’s desire to enjoy a holiday.
Statistics, however, were encouraging. In 1951, a survey conducted by the British Travel Association has shown that approximately 26.5 million British people have travelled, out of which 1.5 million travels were abroad. The survey showed that throughout the 1960s, tourism encountered a period of relative stability. Williams (1998) claims that there are a few factors and events that led to this growth:
The latent demand that was built up in the last part of the 1930s and during the war years was released as the Holidays with Pay Act 1938 came into force
Real wages increased
Holidays were actively promoted by the media, by transport operators and a rapidly developing travel industry
Popular expectations were that an annual holiday was an attainable and routine part of most lifestyles (Williams, 1998:30-31)
According to Lickorish (2005), in the 1950s most holiday journeys were short, under two hours. Traveling by car or by any other transportation was still unusual at the time and was part of the joy of travelling for the British. Later on, scheduled air transport was ever more fascinating, but mostly targeted the rich and famous (Lickorish, 2005:56).
The post–war era came with new objectives that also targeted the tourism sphere. The government’s desire was to establish seven systems:
For obligatory town and country planning
For the development of new towns in regional contexts
For National parks, conservation and access to the country-side in England and Wales
For a National health Service
For the nationalization of coal, electricity, gas and railways
For the conservation of the built heritage
For a national motorways network (Travis, 2011:6)
The above objectives were the reasons behind a national legislation that focused on the development, management and marketing of tourism in the UK. A London Tourist Board was set up in London in 1968-1969. Travis (2011), divides the London tourism development into two periods:
1970-1980 – the period when London’s tourist system was shaped
2008 – the year when sustainable tourism has been introduced to the UK citizens and tourists
Specialty authors show through their work and studies that the British tourism was focusing not only on travelling abroad, but also on developing touristic sites and cities that foreign tourist would target. Therefore, it is easily observable that both perspectives are highlighted: that of internal tourism and that of international tourism.
With regards to UK tourism planning, Travis (2011) exemplifies a few areas and tourist objectives that were included in the main plans in the 1970s:
The English National Park
The Scottish regional tourism
The Welsh post-industrial coalfield tourism
The Scottish historic city conservation
The English and Welsh coastal planning
The English post-industrial city centre planning
In the 1980s, tourism in the UK was facing a marketing challenge. Not long after, the National Trust was founded, a charitable organization that was created with the purpose to conserve the heritage and landscape of Britain. The organization also entered the tourist trade area, providing public access to historic properties, offering catering services, entertainment, souvenirs and organized tours (Lickorish, 1997:28).
In 1993, statistics in the UK were showing approximately 1 billion trips each year and almost 17 billion pounds spent on leisure day trips. Despite these numbers, Britain has lost out to foreign competitors. In this context, it is important to discuss about the motivational factors which have to be taken into consideration when opening up the topic of demand for travel. Education, urbanization, marketing, the travel trade and destination attractions are the five motivational factors highlighted by Lickorish (1997) in a global contexts. These factors will be considered during the case study in the last chapter, when analysing the perspectives that Thomas Cook Tour Operator can adopt, as well as when studying the trends that it follows at the moment.
Starting with the year 2000, tourism perspectives transformed, as the trends were more and more optimistic. According to visitbritain.org (national tourism agency funded by the Department for Digital, Culture, Media and Sports), 175.4 millions of trips were taken by UK residents and 25.2 millions of overseas residents. British tourists have spent 576.4 million nights during their trips, while overseas residents spend 203.8 million nights. As seen in the below table, the statistics show that both UK residents and overseas residents’ purpose of tourism in the UK was predominantly holiday, business and visiting.
Table 1
Purpose of tourism in the UK – year 2000. Source: visitbritain.org
The Office for National Statistics in the UK provided in 2010 important data regarding travel and tourism between 1985 and 2010, the overseas residents’ visits to the UK until 2010 and the UK residents’ visit abroad in the same period of time.
As it can be observed in Table 2, the overseas residents’ visits in the UK have increased from a number of 14.4 million in 1985 to 29.8 million in 2010. Although the numbers have increased, the average annual growth is of only 2.9 %.
Table 2
Overseas residents’ visits in the UK in 2010 – Source: Office for National Statistics
In Table 3, an average annual growth of 3.6% is reflected in the UK residents’ visits and spending abroad between 1985 and 2010.
Table 3
UK residents’ visits and spending abroad 1985-2010 – Source: Office for National Statistics
According to the statistics done by Tourism Alliance, the domestic tourism in the UK has known an optimistic increase, with almost 126 million visitors in 2015, as it can be observed in Table 4.
Table 4
Domestic tourism in the UK until 2015-2016 – Source: tourismalliance.com
In Table 5, the increase of inbound travellers can be observed. 36 million visitors have been registered in the UK until the end of 2015.
Table 5
Inbound travellers in the UK until 2015-2016 – Source: tourismalliance.com
Tourism trends today
Since 1950 onwards tourism was in a consistent pattern of growth, with just a few exceptions which are worth mentioned and explained. In 1981 the descending trend was due the economic recession of the early 1980`s. The terrorist attack from 2001, the effects of War in Iraq and the SARS epidemic in 2003, as well as the global financial crisis of 2008 had a negative impact on the international tourist arrivals for the following years.
Despite the above mentioned facts, the Office for National Statistics in the UK showed that overseas residents made 2.9 million trips to the UK in January 2017 and 4.6 million trips were taken by UK residents until the beginning of 2017.
VisitBritain’s forecast shows that comparing to 2017, when 39.9 million overseas visits were taken to the UK, in 2018, 41.7 million other tourists will visit the country.
In 2016, according to VisitBritain reports, the following attractions categories were the most popular:
Country parks
Farms
Gardens
Historic Houses / Castles
Leisure / Theme parks
Museums / Art Galleries
Steam / Heritage Railways
Heritage Centres
Wildlife attractions / Zoos
Workplaces
Places of Worship
Current trends and forecasts are influenced by a number of factors, as well as risks and assumptions. Brexit had a major impact and according to the reports of VisitBritain, still remains a key source of uncertainty. So far, business visits to the UK have decreased with 3% in the 2016-2017 interval. Terrorist events, natural disasters and health issues are also challenges that the UK tourism will be influenced by. The economic performance of the country is also one of the factors that might determine tourists to choose the UK as a favourite destination. At the present time, the data shows a positive forecast, yet competitor destinations must also be taken into consideration.
Giving this data, in the following chapter I will discuss about the present tourism distribution channels in the UK and the new tourism trends, as well as the new factors that may influence the growth of tourism agencies such as Thomas Cook.
Distribution channels and how they adapted to new tourism trends
To gain a better understanding of the concept of tourism distribution channels, it is essential to find the correct context. Distribution channels are an important part of tourism marketing, allowing promoters and marketers to make certain products and services known to the public, using various methods. Lickorish (2005) states that one should first consider the definition of marketing as an art or management practice and then the concept of marketing in tourism. He defines marketing by quoting one of the best known parents of marketing, Philip Kotler (1967): marketing is the analysis, organizing, planning and controlling of the firm\s customer impinging resources, policies and activities with a view to satisfying the needs and wants of chosen customer groups at a profit.
Tourism is a demand force and the total product is made up of a range of various components. Before deciding which distribution channels are most efficient for a tour operator, there are a few steps that should be taken: market research, demand research, supply determinants, price and the importance of consumer motivation (Lickorish, 2005:135).
Tourism distribution channels are systems of intermediaries that facilitate the sale and delivery of tourism services from suppliers to consumers according to Kracht and Wang (2010). The reason why they have attracted tourism agencies’ attention is that they play an important role in the marketing departments all over the world. As Kracht and Wang mention, they serve as a part of the marketing mix that makes the products available to consumers, giving the existing connection between suppliers and consumers, as well as the connection between supply and demand (Kracht & Wang, 2010: 4).
Buhalis (2000) defines distribution or marketing channels as sets of interdependent organisations involved in the process of making a product or service available for use or consumption. In his opinion, the ultimate objective of distribution channel can be summarised as: delivering the right quality and quantity of a product, in the right place, at the right time, at the right cost, to the right customer. Several important distribution and marketing functions performed by channel members, such as: carrying of inventory; demand generation through promotion; market information collection and analysis; negotiation between channel members and consumers; physical possession and distribution; risk taking; payment and financial arrangements; and after-sale service (Buhalis, 2000:18).
The information technology that has been integrated into the marketing processes nowadays restructures the tourism industry distribution systems, by bringing all the available information into the online environment, increasing the competition. Some of the most important developments that Kracht and Wang mention are the following:
Additional layers of intermediation
Disintermediating certain players by bypassing traditional intermediaries
The emergence of reintermediation by adapting to market changes and new technologies
Adopting value-added intermediation services
If in the past, tourism was advertised using traditional distribution channels such as print advertisements or affiliations with travel agencies. Just like all other industries, tourism has been faced with the effects of globalization, being forced to adapt in order to gain competitive advantage. Lickorish (2005) discusses the globalization of tourism, mentioning that the interpretations of this concept are rather ambiguous. The author affirms that global tourism not only refers to the tourism activity, but it should also include the distribution of it. According to him, Tourists are not only travelling to the traditional destination countries, but also new tourism destinations and generating countries are represented on the global tourism maps (Lickorish, 2005:5). Also, the author mentions that the globalization trend does not simply replicate past trends. There are different groups of people travelling and travelling longer distances. As people become more sophisticated travelers, the travel trade has adapted to meet their needs. Safety, comfort and reassurance are still travel prerequisites.
There are a few important contemporary drivers of globalization in the tourism industry that are worth mentioning:
Technological drivers. Globalization has been facilitated by two technologies:
Transport technology has reduced both the monetary and the time-related costs of travel and acted as a ‘space shrinking’ technology, in turn breaking down geographical boundaries and constraints.
Communication technology with the synergy between the processing power of computers and the transmission capabilities of digital media has boosted both the speed and capacity of communication. Here, tourism has certainly been influenced by the revolution in global communications, allowing international communication, the development of global distribution systems and increasing the reach of small businesses.
Economic drivers. Economic drivers of globalization include the shifting patterns of production and consumption across the world, which are challenging traditional economic assumptions of world trade and markets.
Political drivers. Political events have fueled globalization, creating a new world order. As the traditional core-periphery pattern no longer explains the location and success of businesses and nations, Dicken (1992) argues for a multi-polar economy with three economic regions dominant: North America, the European Union and the economies of South East Asia. The resultant trade tensions in the global marketplace between these ‘mega-markets’ has prompted a response by the World Trade Organization to draw up the General Agreement on Trade in Services (GATS). The GATS has a range of impacts upon tourism businesses including:
Promoting free movement of labour globally
Enabling the international development of, and access to, computer reservation systems
Removing barriers to overseas investment
Cultural drivers. The rise of global culture impacts significantly upon tourism. Many resorts are criticized for their uniform landscape of fast food restaurants, international hotels and chain stores. This Coca-Cola-isation or McDonalds-ization of destinations is a consequence of the globalization process, converging business practices and communication of both ideas and brands through the media.
Environmental drivers. The natural environment is a global resource for tourism and non-sustainable practices in one destination impact upon others. Whilst globalization does have positive consequences for the environment, there are also a number of problematic issues:
The reduced effectiveness of governments acting unilaterally weakens those who regulate and prevent pollution
In an increasingly market-based economy, externalities will not be addressed
Environmental problems do not respect traditional political boundaries, and there will be a blurring between economic and environmental boundaries
Rapid tourism growth in South East Asia means that governments are grappling with the impacts upon both environments and cultures
Business drivers. Creation of a global society means that tourism businesses have the ability to operate globally and many have opted for a competitive strategy of internationalization.
Global businesses view the world as their operating environment and establish both global strategies and global market presence. Changing business practices in response to the drivers of globalization in turn, sustain, extend and facilitate the process of globalization, and reshape the very boundaries that previously constrained them. In tourism, these boundary-breaking processes include:
Creating global brands, products and personalities
International tourism education and training transmitting global concepts and approaches.
Reduced transport costs through innovations such as the low cost carrier business model.
International communication mechanisms such as global distribution systems (Cooper & Hall, 2008:275-276)
Another important aspect that Lickorish (2005) highlights is the new organization in the tourism industry, in which changes in distribution have been detected. More than that, it has become obvious that the large wholesale, retail networks and technology have changed. For some years after the war European governments intervened substantially to support tourism growth, with foreign currency earnings as the main public benefit. It was a time of socialist-inspired state planning, and subsidies for development especially in the hotel industry were common. In Britain, however, state support was largely confined to marketing action (Lickorish, 2005:30).
Consumer segmentation and motivation have been mentioned in the tourism literature, too. According to Lickorish (2005), they are key aspects to the consumer preference, which determine the success of the marketing operation. In the author’s view, tourism’s mass expansion takes many different forms. It is a heterogeneous not a homogeneous movement, made up of many different types of traveler, seeking a wide range of tourism products. Thus the mass movement divides up into a number of segments, each differing from the others and needing a separate approach in sales, servicing and product provision (Lickorish, 2005:149).
It is also mentioned that there are plenty divisions and subdivisions of consumers that must be taken into consideration when performing a marketing and promotion plan. The segmentation task is to identify specific groups in the traveling population that are interested in the same facilities and services. A crucial step is identifying a group that is large enough to guarantee separate marketing and production attention and that makes a specific approach profitable. A few criteria are crucial in this process:
Geographic selection
Trade
Legislation
Regulations
Fiscal and economic conditions
Language
Fashion
Travel behaviour patterns (Lickorish, 2005:149).
With regards to the economic conditions, a relevant approach is that of Cooper and Hall (2008), who remind of the importance of the knowledge-based economy that has emerged in the late 1990s. This type of economy is directly based on production, distribution and use of knowledge. From a tourism perspective, there are a number of features that allow the entire industry to develop:
Structural economic change is driven by the development of new products and innovations that are brought about by technology. Technology, particularly the Internet, breaks down barriers to knowledge sharing. The knowledge-based economy is characterized by the development of interactive knowledge management systems that were only really possible once the Internet was available as a major facilitator.
The employment and development of highly skilled labour is seen as a means of competitive advantage and long-run economic growth. This is an important issue for tourism where many of the sector’s HR practices militate against employment and retention of highly skilled employees, as outlined later in this chapter.
The fact that the knowledge economy is characterized not by the scarcity of a resource, but by the abundance of information and knowledge.
The creation of a new paradigm of knowledge commerce (k-commerce) where traditional competitive measures, such as location, are less important.
As the tourism industry grows, the entire movement becomes more specialized and a large number of motivations and purposes can be detected. Demographics, economic factors, education levels, occupation, region of residence and lifestyle are just a few of the elements that tourism marketers must consider.
The choice of tourism distribution channels relies on powerful influences that can be observed in the consumers’ lifestyles. Hobbies, leisure pursuits and temperament are three of the most important. However, these cannot be generalized, as every individual has a particular set of preferences.
From an evolutionary point of view, Kracht and Wang (2010) state that the effective use of distribution channels depends on a sufficient understanding of the evolution and transformation of such channels in the tourism industry (Kracht & Wang, 2010:5).
Lickorish identifies two basic functions of marketing, as well as a few special characteristics of tourism. The first marketing function of tourism is to ensure that the consumer will be interested in the product and knows about its existence and values. The second function is to ensure that the consumer knows how to buy it using efficient channels. The main special characteristics that the author emphasizes are:
The wide range of available products
The interdependence of components
The methods of promotion
The methods of distribution
At the same time, he focuses on identifying four main distribution channels on which all other sub-channels depend:
The travel trade – tour operators, travel agents
Travel shops
Transport organizations – airlines, hotels, theatres and all event organizers
Auxiliary travel organizers
It is important to mention that the fast development of information technology makes it difficult to predict the impact on the entire distribution system. Also, he states that the tourism movement is now so vast and so highly segmented that there is room for many distribution systems. The frequent traveller and the more sophisticated tourist is more likely to buy directly from the principal (the airline, hotel, car hire company, etc.). The travel trade is most important in the international field, but in Europe it has only a minority share in international leisure travel.
In the past, most travellers used to appeal to a tour operator’s assistance when in search of a holiday package. These days, the tourism movement is vast and highly segmented and makes room for many distribution systems. The modern traveller has the ability to buy directly from airlines, hotels and many more in order to organize a holiday. According to Lickorish, more than 50% of Europeans stopped using the middlemen and make their own arrangements.
The fact that almost all travellers are computer literate and have Internet access, makes them even more capable or making their own arrangements. Thanks to the existence of computer reservation systems, the online environment has become the most powerful distribution system. Lickorish (2005) defines the computer reservation system as a distribution system for displaying available services and facilities, making bookings and ticketing by tourism producers.
In this regard, Kracht & Wang (2010) also reinforce the idea that the tourism distribution system has witnessed not only the incremental evolution but also radical transformation since the advent of the Web. In this process of progression and change, the commercial application of the Internet in 1993 serves as a milestone, owing to the introduction of the web browser into the marketplace, which makes the communication between suppliers and consumers possible. After consumers began to feel comfortable with the usage of the Internet, suppliers began to create web pages that allowed them to connect with online users. This way, they started to disintermediate travel agents. The first online travel agents appeared in 1995 and Microsoft launched the first online travel agent named Expedia in 1996. Another famous such platform, lastminute.com was launched in 1998 and later on, Travelocity was introduced to the market, while owned by American Airlines (Kracht & Wang, 2010:9-10).
In the context of tourism distribution channels, it is also important to mention the existence of networked tourism businesses, which are ideally suited in the age of the new tourism, as Cooper and Hall (2008) name it. According to them, the new tourism is characterized by flexible specialization, rapid communication and globalization. By referring to the work of Achrol and Kotler (1999), the authors confirm that there are four categories of network organizations that will be used in the future. When referring to the future, they were predicting the next following years. It is now confirmed that their perspective was correct. The four categories are the following:
Internal networks that are designed to reduce hierarchy and open businesses to their environments – in other words to enhance customer responsiveness and awareness of the external environment
Vertical networks that maximize the productivity of serially dependent functions by creating partnerships among independent, skill-specialized businesses – essential in the delivery of the tourism product and inherent in flexible specialization
Inter-market networks that seek to leverage horizontal synergies across industries – the rise of the technology companies in tourism distribution channels is a good example.
Opportunity networks that are organized around customer needs and market opportunities and designed to search for the best solutions to them (Cooper & Hall, 2008:293-294)
A scheme that applies to today’s tourism promotion approach has been proposed by Cooper and Hall (2008), as follows:
Table 6
Service interactions and tourism interactions – Hall & Cooper (2008)
Tourism distribution systems are also impacted by the existence of tour operators that also participate in the disintermediation and reintermediation process, along with those facilitated by the Internet. Various literature (Eg. Kracht & Wang, 2010) reviews show that tour operators have been involved in vertical integration, becoming suppliers of air travel and owners of retail agencies. More than that, tour operators have gained a much wider visibility thanks to the Internet, being able to sell to consumers directly through their own websites.
At the moment, a scheme proposed by Cooper and Hall (2008) to differentiate the main elements of tourism production and different components of the tourism geographical system, applies to the current industry, ruled by the online environment. Online, travellers and tour operators have endless possibilities, being able to supply all the below elements of tourism, simply by booking and planning them online:
Table 7
Main elements of tourism production that consumers can book and plan online
Source: Cooper & Hall (2008)
In the past few years, tourism consumers have been overwhelmed by the variety of platforms, applications and websites that have become available for holiday booking services. The entire e-marketing solution system was, however, built using user-friendly interfaces and easy-to-use applications, to help consumers find their desired destinations fast and efficiently. Buhalis (2003) proposed a table in which he classifies the e-marketing applications in tourism as follows:
Table 8
E-marketing applications in tourism
Source: Sari et al. (2006)
Sari et al. (2006) mentions the usage of electronic documents and brochures as part of the modern tourism distribution system. These elements are defined as files that consist of every kind of text, voice, image or graphic that can be transferred to the computer environment by means of devices such as the keyboard, scanner, video, stereo, electronic mail, telex or fax. The use of electronic documents and brochures has become imperative once the Internet became popular among consumers of all ages. As Sari et al. highlights, promotion and advertisement in the tourism industry are imperative to success. Also, it is stated that Promotion broadly aims to reach the consumer, to explain the potential benefits of the product and service, to inform them about the product and to persuade them to buy the product. When it comes to advertisements; they are composed of sales, sales development, individual sales, and P.R. Instruments used in the promotion and advertisement fields are Electronic Documents and Brochures for Sustainable Tourism Marketing printed materials. These tools can empower the current tourism demand (Suri et al. 2006:47-48).
In the tourism distribution system context, the affiliates programs are important to mention. The online travel purchases from third-party travel web sites have been analysed by Cobanoglu et al. (2006), who focus on the impact that the Internet has on consumer motivation and choice of services. In their opinion, the Internet and Web sites had a huge impact on the business world, affecting all parties, from consumers to producers and travel agencies. As travel agencies are discovering the benefits of the Internet, they use it for marketing purposes more than ever. This method allows consumers to skip the middleman and reduce their costs. Cobanoglou et al.(2006) reinforce the idea that online marketing tools include promoting consumer awareness and interest, providing information and consultation, facilitating two-way communication with customers through e-mails and chat rooms, and enabling customers to place orders online. The author also states that by creating a web page, travel agencies can increase their communication with clients to a 24h per day rhythm, without requiring additional costs.
Besides considering the online marketing tools that agencies have at their disposal to distribute their services and products, some authors claim that there is more to this process. Vagionis and Loumioti (2011) claim that movies are an important tool of the modern tourism marketing. They introduce the concept of film tourism, also known as film induced tourism or media induced tourism. They collected several definitions and descriptions of the concept, earlier given by authors like Busby and Klug (2001) or Iwashita (2003). Therefore, it has been suggested that cinematographic tourist is the individual that visits a destination or an attraction because it appeared in a movie. Also, it is claimed that films and television are factors that expose the particular characteristics of a destination and can influence the traveling preferences of individuals (Vagionis & Loumioti, 2011:354). The authors conclude that it is plausible that communication via product placement in movies is better targeted, more sophisticated and more widely received than traditional advertising methods.
In Buhalis’s view, there are 22 functions of tourism distribution channels:
Identify consumers’ needs, requests and expected experiences
Assemble tourism products from different providers according to customer expectations
Provision of co-ordinated and seamless tourism products
Facilitate the selling process by reserving and issuing travel documents
Reduction of prices by negotiating and pre-purchasing tourism products in bulk
Ameliorate inventory management by managing demand and supply
Issue and deliver travel documentation, i.e., ticketing, vouchers, etc.
Assessment of quality of facilities and products
Assistance in legal requirements for consumers (e.g., visas) and suppliers
Facilitate communications between consumers and suppliers especially in multilingual and multicultural environments
Reduce the perceived risk for consumers
Provision of information by using leaflets, maps, brochures, video, CDs
Consumers guidance/advice/consultation
Undertake pre- and post- experience marketing research
Facilitation of access to often remote tourism products, for both bookings and purchasing
Establish a clearing system where each channel member receives payments for their services
Spreading the commercial risk involved between channel members
Arranging details and ancillary services, such as insurance, visa, currency, etc.
Assume risk when pre-purchasing tourism products
Promotion of particular products or packages, in co-operation with suppliers
Promotion of distressed capacity in low period and at the last minute
Complaint handling for both customers and industry (Buhalis, 2000)
Having all this information at hand, it is important to make a brief classification of all the general distribution channels that can be used in the modern digital era by tour operators and travel agencies. Pearce (2009) has created a simple scheme that can be extended depending on a business’ needs and strategies.
Table 9
Distribution channel system
Source: Douglas Pearce (2009)
Pearce (2009) also proposes seven steps that are required to design a distribution strategy:
Identify the distribution needs and preferences of each customer segment targeted;
Identify the supplier’s distribution needs;
Identify the functions to be performed to meet the distribution needs of the customers and the supplier;
Evaluate the alternative ways by which these functions might be performed;
Decide on the distribution mix;
Implement the distribution strategy;
Monitor and evaluate the distribution strategy (Pearce, 2009:513).
In his later work, Buhalis (2001) compares the traditional eTourism intermediaries with the new intermediaries that can be used be tour operators and travel agencies. His comparison shows that traditional eTourism includes GDSs (Global Distribution Systems) such as Sabre, Amadeus, Galileo or Worldspan, as well as Viewdata or Teletext, while new eTourism intermediaries include:
Principals (airlines, hotels)
Destinations
Switch companies
Travel agencies
Last minute booking websites
Portals
Vortals
Newspapers
News media
Auction sites (Buhalis, 2005:5)
Concluding that the distribution channels topic is highly complex and its establishment depends on a business’ needs, I will focus on the distribution channels that are widely popular in the United Kingdom currently, with a focus on the Thomas Cook Tour Operator, which will thoroughly be analysed in the last chapter of this thesis.
Distribution channels in the UK
Distribution channel systems are part of a larger marketing mix that every travel agency or tour operator agrees to during the creation of the marketing strategy. In time, in can suffer modifications, yet it starts from a well-established foundation. Before proceeding to the analysis of Thomas Cook Tour Operator, I find it important to highlight some of the most popular distribution channels in UK’s tourism industry.
In the United Kingdom, there is an intense focus on tourism promotion. The national tourism agency, Visit Britain (visitbritan.org) is a non-departmental public body funded by the department for digital, culture, media and sport (DCMS). It plays a major role in the promotion of British tourism and invests constant efforts in raising Britain’s profile worldwide, according to the declaration present on the organization’s website. By effectively promoting British tourism, Visit Britain / Visit England has set as a main objective to develop visitor economy. According to the facts exposed by the agency itself, it collaborates with a wide range of local and international partners with the purpose to grow volume and value of tourism across the world.
The global network that was created with the primary purpose to achieve these goals is formed of partnerships with a large number of countries in which regional hubs have been established. These regional hubs create a network that spreads along Europe, the Americas, Asia Pacific, the Middle East, Africa, China and North East Asia.
According to Visit Britain, this network’s goal is to collect market intelligence, develop and maintain relationships with international media and influencers. To achieve this goal, the agency works with the trade to ensure the efficient transfer of knowledge towards the customer and to ensure secure partnerships locally and internationally. It is also mentioned that a wide range of digital tools are being used to ensure that relevant content is distributed to tourism consumers, through the appropriate channels.
Currently, the national agency has set regional priorities for the British tourism that target locations worldwide, such as:
Americas
Reverse decline in numbers from the US
Revitalise Britain brand proposition in North America to build new & repeat business across the nations and regions of Britain
Continue to build growth markets in Latin America
Europe
Grow regional travel & dispersal from core near-European markets through new & repeat business
Partner with commercial intermediaries to build range of product distributed to the customer, driving conversion
Build awareness of reasons to ‘travel now’ & change perceptions through compelling & engaging content
Asia Pacific, Mid East & Africa (APMEA)
Leverage partnerships (especially carriers) to open up distribution & promotion opportunities across diverse Asian markets
Build compelling content targeting core drivers for travel through traditional & digital channels
Address barriers to travel
China and North East Asia
Invest long-term in key growth market of China
Ensure top-level engagement with HMG partners in China
Use influencers & brand partnerships to drive compelling content
Address barriers to travel
The national tourism agency in the UK has publicly described its segmentation strategy, stating that it has a large amount of data regarding different characteristics of inbound visitors. The segmentation has been split as follows:
Business visits and events – fairs, congressed, outdoor and entertainment events, business tourism
Luxury
Visiting friends and relatives
Youth and study
The below countries are currently targeted in UK’s tourism development strategy.
Table 10
Worldwide countries targeted in UK’s tourism development strategy
Source: visitbritain.org
The main focus areas in the government’s tourism action plan are the following:
Tourism landscape
Jobs and skills
Transportation
In regards to the tourism landscape, the agency supports the continued administration of the Event Support Programme and coordinates an industry proposal for potential tourism sector deals. In regards to the jobs and skills sectors, the government’s plan is to continue to improve the Business Advice Hub. As for the transportation, developing rail itineraries on consumer and trade websites, as well as publishing best practice guidelines, showcasing different solutions for connecting transport hub with accommodation and attractions represent the main objectives.
A Tourism Action Plan has been published in August 2016 by the UK Government in which new initiatives and priorities are mentioned. Among the most important are addressing the industry’s seasonal nature through a flexible apprenticeship scheme that allows training to be completed over 16-18 months rather than 12, with breaks included and Cutting red tape with sensible regulation by changing licensing to allow B&Bs to offer a welcome drink, and modifying vehicle licensing will allow B&B owners to pick up visitors from train stations. The priorities since 2016 are the following:
The tourism landscape – including the restructuring of VisitBritain and VisitEngland and the announcement of the £40 million Discover England Fund
Skills – boosting apprenticeships and attracting more people to careers in tourism
Common sense regulations – examining the scope for deregulation
Transport – making it easier for visitors to explore by rail, bus and coach
A GREAT welcome – driving continuous improvements in the visa service
A 2016-2017 report from Visit Britain displays the outcomes of the agency’s efforts. Having invested in promoting the British tourism, this industry continues to represent a priority for the UK, not only with the purpose of gaining visibility, but mainly for the increase of economic worth. The 2017-2018 Business Plan of Visit Britain includes financial information about previous years. It is, therefore, stated that British tourism is worth £127 billion each year, which represents approximately 9% of GDP. Also, it is mentioned that international tourism is highly competitive and that market share is lost every year due to better marketed destinations.
The same report discusses UK’s mission in regards to the tourism industry. It is stated that it is to grow the volume and value of inbound tourism across the nations and regions of Britain and to develop world class English tourism product, to support our growth aspirations. The same mission statement includes information about the organization’s role to deliver 40 million international visitors that would spend £31.5 million by 2020.
The funding for 2017-2018 has also been included in the business plan, as seen in Table 11.
Table 11
Funding 2017-2018 for British tourism
Source: visitbritain.org
Also, in Table 12, the investment by region can be seen, with Europe’s contribution of 22%.
Table 12
Investment by region in British tourism 2017-2018
Source: visitbritain.org
In the marketing strategy for 2017-2018, a mix of factors has been highlighted, apart for the distribution channels. The agency’s representatives state that the digital tools represent the main focus of their marketing strategy. The agency focuses on content creation, curation and distribution, as well as creating partners to deliver this content internationally and nationally. It is also mentioned that Visit Britain has research teams that inform regularly with regards to their knowledge on domestic and international customers. The research takes place based on metrics that help measure the success of marketing activities.
The business visits and events represent a priority in the marketing strategy of the UK’s national tourism agency. Therefore, a team based in London, New York and Paris delivers an international platform for the English tourism. The key marketing activities are based on the following activities:
Deliver tourism growth
Delivery of the Discover England Fund
Deliver and amplify the GREAT OMGB Marketing campaigns
Deliver research and insights to inform Government, industry and our marketing activity
Deepen our partner relationships to leverage value
Develop our role in the BVE sector
Ensure that we manage our funds efficiently and comply with government guidelines
Build the skills and capabilities of our staff and teams to deliver our priorities
To ensure the success of the marketing strategy, a large number of activities are being planned:
Hosting key international media and influencers to experience the British tourism throughout the year
Influencing international media and influencers through communication tactics such as newsletters, press releases, story ideas, events, imagery and broadcast footage
Delivering communication campaigns that challenge important barriers
Combining the marketing team
Receiving positive feedback from the staff
L & D plan with agreed priorities and resources
Identifying major events targets
Planning to secure events from each segments
Delivering pipeline campaigns to drive future event prospects to UK partners
Delivering market insights to inform the agency and partner investment decisions
The expected outcomes are the following:
Editorial coverage of the nations and regions of Britain
Delivering a ROI of 25:1 on investment
Positioning Britain as a fun, stimulating place
Driving regional spread of international visitors by communicating the diversity of Britain’s offer
Delivering the right content for the right visitor at the right time and place on the right platform
Making use of user generated content to promote authenticity
Increasing reach and engagement
Increasing effectiveness and efficiency of content planning, delivery, evaluation and optimisation
Delivering peer-to-peer marketing using the words of those who have visited Britain
Increasing the financial outcome
In regards to the key international network activities, the following objectives appear in the business plan:
Deliver tourism growth
Delivery of the Discover England Fund
Deliver and amplify the GREAT OMGB Marketing campaigns
Deliver research and insights to inform Government, industry and our marketing activity
Deepen our partner relationships to leverage value
Develop our role in the BVE sector
Ensure that we manage our funds efficiently and comply with government guidelines
Build the skills and capabilities of our staff and teams to deliver our priorities
The UK’s national tourism agency, Visit Britain, focuses on four important channels:
Product development
Partnership development
Digital and Social Media
High performing teams
Although these four channels are not the usual distribution channels that one might encounter while reviewing specialty literature, they are adapted to the market’s needs. An attempt to achieve the desired results through the contributions of people and content is ongoing.
The product development activity refers to developing bookable regional and seasonal products that are bespoke and attractive to the market. New products and itineraries that meet the target audience requirements, as well as developing new products represent the main outputs. The expected outcomes are the increased reach and engagement with target visitor segments and delivering against corporate visitor, spend and dispersal targets.
The partnership development refers to Establish long term integrated partnership activity and ensure VisitBritain is a valued HMG partner supporting the Governments agenda in Europe, the commonwealth countries like Canada, China, APMEA and its ambitions in the USA and Brazil. The planned outputs are Multi-channels partnerships that deliver regional priorities to key segments and partnerships that are integrated across all channels: content, B2B, product development and retail, as well as a diversified portfolio of partners to match the segment fit. In this context, the desired outcomes are partnership activities that drive conversions and increase Britain’s SOV throughout the year, an increased reach and engagement across the markets and soft partnerships with HGM partners.
The Digital and Social Media channels represent the main priority in this marketing strategy and they refer to the ability to harness the power of digital and social media to amplify the impact of marketing and partnership activities. The outputs are digital content and print content and PR activities. These activities should lead to additional business generated as a result of digital and social campaigns and a larger number of travellers from the International Network to Britain.
By prioritizing high performance teams, the agency refers to building on talent and skills to provide the needed capabilities, to equipping staff with a full understanding of the marketing mix and to developing succession plans and trainings. Efficiency and productivity are needed in this case to obtain effective directorate that is able to operate across all markets and regions.
The agency also reveals the commercial activities and the distribution channels through which it plans to obtain the desired outcomes. The most important commercial activities for 2017-2018 for the British tourism are the following:
Focus on the development of longer term partnerships
Working with global and regional sector leaders like airlines, OTAs, tour operators, airports etc.
Product placement, market consumer insight, research, tactical campaign marketing
Driving a ‘one partnership team’
Product development and distribution across England and Britain
Increased engagement with the Travel Trade to educate, increase awareness and to improve conversion to sales of UK tourism products
Retail product development and effective distribution through the network of retail online shops
Maximising operational efficiency of the network of retail online shops
These strategies have been developed after analysing the key facts regarding inbound tourism performance in 2016, when the UK achieved a record of £22.5 billion in inbound visitor spend, with 2% more than in 2015. The overseas visits also increased with 4% comparing to 2015, reaching 37.6 million in 2016. In 2017, 23.1 million inbound visits were registered in the UK, with 8% more than in 2016. There are other facts that show that the efforts invested in Britain’s tourism has led to financial increases:
Overseas visitors to the UK spent £22.5 billion in 2016
£713 was spent by inbound tourists per second in Britain in 2016
Visits to Britain grew by almost double the European average in 2016
Edinburgh was the second most visited city in the UK, with 1.7m inbound visits, spending £822m. Manchester was third, with 1.2m visits spending £475m. Cardiff welcomed 357,000 visits, spending £110m.
Scotland welcomed 451,000 visits from its top inbound market the USA in 2016, up 10% on 2015.
Germany was the leading source market for regional England in visits terms in 2016, with 1.5m visits.
For Wales, Ireland was the top market in visits terms, with 169,000 visits, up 31% on 2015.
However, the ultimate purpose of reaching the top five destinations in the world was not achieved. Among the top markets (by volume) visited in 2016 were France, the United States, Germany, the Irish Republic and Spain. 37% of tourists travelled for holiday purposes, 31% visited their family or friends, 24% travelled for business purposes and 6% travelled for other purposes, as seen in Table 13.
Table 13
Top five destinations in the world
Source: visitbritain.org
UK’s national tourism agency offers its partners, travel agencies and tour operators sales and distribution channels such as selling products in its online shops or selling holiday packages, tickets, entrances etc., as an affiliate. Visit Britain’s shops targets tourism suppliers who are looking for effective routes to the market in a local language. The 94 shops cover seven languages and twelve currencies, in exchange for an agreed commission rate and no further costs. The affiliate program targets tourism organisations that wish to expand their product offering and earn commissions. It is a multi-market program that is free of charge and works by setting up trackable links on websites to start earning commissions. The affiliate program includes:
Cheaper tickets and fast entrance at top UK attractions
Instant access to over 250 top British products including theatre, attractions, travel and more!
Exclusive products and Newsletters with latest news
Dedicated Key account management and global marketing
Enjoy trade discounts on most products simply by using your trade discount code at check-out
No contract needed, instant confirmation
Simply book and share with your clients – confirmation vouchers don’t have final price mentioned in the copy
Multilingual platform, ideal if you have a global client database
Having the above information, it is easy to relate UK’s tourism distribution system to that promoted by Buhalis and Laws (2001), as seen in Table 14.
Table 14
Old and emerging model of distribution systems
Source: Buhalis & Laws (2001)
In the old distribution system models, it can be seen that the Internet was practically focused Computerized Reservation Systems (CRS), while the client had to appeal to a middlemen which was, in most cases, the travel agent. The travel agent could present the destinations and the accommodation and transport choices, but the client had little to no access to this information independently.
In the emerging model, that applies to today’s systems, the Internet is the main focus of any strategy, through which transport, accommodation, destinations, insurance and other financial services can be provided. The travel agents are, most of the time, virtual and the client has access to all the reservation systems himself, without depending on the travel agent.
In UK’s distribution channel system, a different approach applies, as the national tourism agency is the main organization to control the number of tourists that visit the country. However, it is also dependent on the smaller, private travel agencies and tour operators and their activity. Still, the emerging model proposed by Buhalis & Laws applies in this case, in my opinion, as most of the domestic collaborations are being done using the Internet, including sales and affiliate programs.
It becomes easy to observe that the main distribution channels on which the UK tourism agency relies are social media, digital content, their own website and their affiliates’ websites, their domestic and international partnerships. The awareness campaigns ran by Visit Britain throughout the world represent the main focus of their communication strategy. Therefore, I can identify four main distribution channels used constantly by the UK’s tourism agency:
International publicity
PR
Spanning print
Broadcast and online media
Journalists
Bloggers
Digital and online marketing
Website visitbritain.org and extensions
YouTube
Google+
Flickr
Social Media channels
YouTube
Flickr
Advertisements & Sales
Online retail
Britain Magazine
Oyster cards
Visit Britain Shop Affiliate Scheme
Business promotion with Twitter and Pinterest
London Planner guide
Events, workshops and sales missions
A research report published in April 2017, Technology and Social Media, showed the most important achievements of Visit Britain, gained through the extended effort and investments in Social Media channels:
The most popular use for social media is to access news (53%), followed by uploading photos or videos (47%).
Over two thirds (69%) agree that they like to stay connected when on holiday. Three quarters agree that their smartphone is essential when they travel, and 56% say the same for their tablets.
The majority of international travellers (61%) have shared photos of a holiday online, and 42% have done the same for video.
Whilst on holiday, social media is most often used to keep in touch with home, followed by posting or uploading photos.
Whilst many are happy to use their smartphones abroad, an overwhelming proportion (83%) still wish that it was cheaper.
In 2001, Buhalis and Laws were promoters of Muller’s (1998) predictions that by the year 2005, the following information sources will be of greatest importance in the tourism industry:
Online information
Radio, TV features, videos
Reports from recommendations of acquaintances and family
Other books, magazines
Travel guides
Information, travel agency advice
Travel destination decision reached without using these information sources
Travel operators’ catalogues, brochures
With small alterations, Muller’s classification still stands and applies to today’s market. The main difference is that today’s reviews portals such as TripAdvisor or Booking offer the recommendations that acquaintances and family used to provide in the future. Also, books, travel guides and magazines, as well as travel operators and catalogues can also be accessed on the Internet, so all of these categories could be included in the online information, too.
Having analysed UK’s tourism distribution channels, I find it important to also look at future perspectives in the travel industry.
New tourism trends
ABTA, the UK’s largest travel association, is the representative of travel agents and tour operators that sell £37 billion worth of holidays and travel arrangements annually. According to ABTA, the future holds new technologies that are waiting to be integrated in the tourism industry from 2018 onwards. Business intelligence and artificial intelligence will represent primary focus points in the near future. With unpredictability due to the recent events in Europe always concerning statistics experts, business intelligence systems will make forecasting eve more accurate. Business intelligence tools are already used by savvy travel businesses with the purpose to gain the ability of analysing patterns in customer behaviour, market trends and socio-political-economic factors. In the tourism distribution channels context, it is easily noticeable that such technologies would only increase the chances of reaching the desired goals.
Another positive trend that will influence consumers to buy their holidays online will be the Payment Services Directive II, which prevents businesses to charge consumers a fee for paying by credit or debit card. Although, on one side, one might consider this a loss, more and more tourism consumers will start paying online by card.
ABTA predicts that there are five key trends that concern the travel industry from 2018 onwards:
Responsible tourism – TV shows such as Blue Planet have raised awareness on the human impact on the environment. Tour operators have started initiatives for responsible tourism starting 2018.
Alternative destinations – popular destinations no longer represent the main focus of travellers
Holiday packages – tourists will be drawn by the sensation of certainty in the next 12 months
Low-cost airlines – a number of low cost carriers have decreased their prices for long-haul destinations
Luxury holidays – tourists will be looking for luxury destinations as opposed to extremely popular destinations
Virtual reality will also represent a key trend, as technology continues to evolve. The Travel Technology Show in February 2018 awaits new technologies to be revealed for the travel industry, such as voice, AI, chat bots, virtual reality travel booking and many more.
The analysis of old and new tourism distribution channels with the help of specialty literature and theoreticians also leads to the need of analysing a modern-day tour operator in order to discover real time facts. In the following chapter I will be presenting data regarding Thomas Cook Tour Operator.
CASE STUDY – Thomas Cook Tour Operator
Introduction
Thomas Cook is the world’s oldest tour operator and the best-known brand in the tourism industry. As shown in the first chapter of this thesis, it was founded in 1841 when a successful one-day rail was organized from Leicester to Loughborough on the 5th of July. Through major efforts and determination, the Thomas Cook tour operator has managed to organize short and long trips throughout Europe from the British at first and it expanded its activity along the 19th century.
Thomas Cook is a pioneer in mass tourism and the first to have launched a series of travel coupons that could be exchanged for meal and accommodation. The business focused on holiday packages and its main mission remained the same until the present day.
Nowadays, Thomas Cook is a group formed of:
Thomas Cook Holiday division
Thomas Cook Retail
Thomas Cook Airlines
Condor Airlines
Thomas Cook TV
The company offers a variety of services among which forex exchange, corporate business houses, credit cards etc. The foreign exchange services provided by Thomas Cook are some of the most complex in the world, dealing 26 currencies.
This service brand focuses on its customers as well as its workforce. The workforce includes trained employees who are with the sales team or are tour guides who take tourists. Today it is present at over 55 Indian cities and has over 5000 employees, in India. It has more than 3100 stores, 94 fleet and more than 31000 employees all over the world. More than 32,000 hotels are owned by Thomas Cook in India and more than 150,000 worldwide. The airline company was founded in 1999 and in 2015, a mobile app for forex services was launched to help international travellers make fast and efficient exchanges.
In its 177 years of history, Thomas Cook has managed to lead its operations in the UK and Ireland, in Continental Europe, Northern Europe and Asia. Its airlines fly to Belgium, Scandinavia and the UK. The group also owns a scheduled-airline name Condor and Hotels4u, a booking website.
Its marketing strategy has changed over time, while trying to adapt to new trends and use high-end technology to provide tourism consumers the best services on the market. Until 1990, maintaining the company in the top of the consumers’ preferences was easy, yet it became more difficult once the competition started to arise. Currently, TUI Travel, Cox and Kings, Virgin and Emirates are Thomas Cook’s main competitors. Even so, according to marketing specialists, it occupies the second place as the largest travel agency in Europe. Some of the most important facilities and services that it brings to the market are the following:
Luxury Destinations
Flights
Foreign Exchange Facility
Receiving Money via Xpress Money and MoneyGram
Education Forex
One Currency Card
Buy Foreign Exchange
[anonimizat] Foreign Exchange
Sending Money abroad
Borderless Prepaid card
Reload Currency Card
Holiday Types Deals
All Inclusive
Family Groups
Beach
Package
Last Minute
Holidays including Water Parks
Honeymoon
Destination Weddings
Hotel
City Hotels
Beach Hotels
Side Tours or City Escape
Disneyland
Las Vegas
Romantic Breaks
Cruise
Cruise and Stay
Cruise Excursions
Luxury Cruises
River Cruises
Family Cruises
Fly Cruises
Travel facilities
Premium Cabin
In-Flight Services
Car Hire
Airport parking
Airport Lounges
Airport Hotels
Travel Insurance
Travel Advice
Travel Money
Holiday Tips
Insurance
[anonimizat] Travel Insurance
Thomas Cook offers tours to destinations like the UK, Egypt, Greece, Caribbean, Corfu, Portugal, India, Turkey, the United States, Spain and Italy. The company has 32,722 employees, 2,926 stores, 97 aircrafts and serves almost 19.1 million customers annually.
A variety of distribution channels is used by the tour operator to promote its services. Giving the wide range of facilities that it offers, it is understandable that all the available channels must be used to reach the target consumers. According to marketing specialists, Thomas Cook has an aggressive marketing policy that helps it maintain and increase the brand awareness worldwide. It is renowned for its innovative ad campaigns in print and electronic media that are distributed through channels like TV, radio, billboards, newspapers and travel magazines. Its campaigns can also be seen on its website, https://www.thomascookgroup.com and on Social Media: Facebook, Twitter, Instagram, YouTube and travel blogs. In its attempt to increase the brand visibility, Thomas Cook has also sponsored football clubs like Peterborough United and Manchester City. In 2012, it sponsored the London Olympic Games, offering accommodation and holiday packages to tourists and Olympic teams.
According to the group itself, its main core values focus on the customer. Customer is King is a motto present in all its mission statements. The three pillars of its strategy are:
Product and service innovation – -trusted products and services based on feedback
Single customer gateway – personalised customer experience with access to a full range of products, services and personal recommendations across all channels
Execution supported by brand and technology – draws IT capabilities into a consistent platform that enables the extension of a dynamic packaging capability
Sustainable tourism, also known as responsible tourism is Thomas Cook’s way of making a positive difference to the people and environment while offering holiday packages. On the group’s website it is stated that: Our mission is to perfect the personal leisure travel experience whilst at the same time, managing our activities in a sustainable way. The comp – Respecting local cultures and the natural environment
Respecting local cultures and the natural environment
Buying local, giving fair economic returns to local families
Recognising that water and energy are precious resources that we need to use carefully
Helping to protect endangered wildlife
Protecting and enhancing favourite destinations for the future enjoyment of visitors and the people who live there
Taking responsibility for our actions while enjoying ourselves
In this case study, I aim to prove the hypothesis according to which Thomas Cook Tour Operator has managed to adapt to the current trends, by analysing the reviews on three renowned platforms:
https://www.feefo.com
https://www.trustpilot.com
https://www.compareholidaymoney.com
Another goal is to prove the hypothesis according to which the customer satisfaction, reflected in online reviews is linked to the financial data of the company.
This case study’s objective is to show that Thomas Cook has managed to stay on top of the consumer’s preference list in spite of its long history and rather traditional marketing approach that it had in the past. By studying the company’s history and development, I will show that it started promoting its services using simple, word-to-mouth methods and traditional marketing strategies that focused on its services’ presence in travel agencies catalogues. In time, the company has built teams of individuals specialised in marketing, advertisement and promotion with the purpose to fulfil the market’s requests. To prove that the hypothesis can be confirmed, I will analyse the company’s revenues in the past two years, as well as consumers’ reviews from the past three years.
Data collection and methodology
The analysis of the data regarding Thomas Cook Tour Operator’s activity and feedback from tourism consumers was done based on the reviews collected from three trusted platforms:
https://www.feefo.com
https://www.trustpilot.com
https://www.compareholidaymoney.com
Feefo is a trusted platform known to collect reviews independently from customers. It helps raise awareness and make decisions about products and services thanks to authentic reviews that are matched with the consumers’ transactions. The platform gathers more than 4,000 industry leaders. It has offices in London, Boston, Sydney, Hong Kong and Petersfield.
Trust Pilot is an online review community founded in 2007 in Denmark. Its main purpose is to help online shoppers around the world choose the best products and services for their needs. It has offices in New York and London, Melbourne, Berlin and Denver and has 500 employees. With 45,000 new reviewers every day, 1 million new reviews each month and over 179,000 businesses reviewed, it is one of the world’s largest online review communities.
Compare Holiday Money is a website that contains consumer reviews, as well as comparisons between services of all kinds, throughout the United Kingdom. Being launched in 2010, the website contains travel finance information such as travel money, currency buy backs, prepaid currency cards and international money transfers. Also, it includes reviews of products and services that companies in the UK sell.
The Thomas Cook Group is present on all three platforms and reviewed by a large number of users. The reviews are reliable and include a description. All users can rate the service or product that they used by giving a rating from one to five stars, in which one star is considered to be a bad experience or the last satisfactory experience, while a five star rating is considered to be a great experience or the best experience.
After collecting all the reviews from the three platforms, I entered them into a database and compared them to the financial reports available on Thomas Cook Group’s website, looking at data in the past three years: 2015, 2016 and 2017. Giving the limitations of this thesis, I analysed reviews starting with the year 2015. At the same time, I will be analysing current improvements in the company’s strategy, recent events or technological implementations that have the ability of increasing or decreasing the company’s reputation.
The presented results will show if the above mentioned hypothesis is confirmed or disproved and if the company’s attempt to adapt to the new trends in the tourism industry has led to an increase in its financial data or not.
Limitations
The limitations of this paper are given by the fact that the reviews from the two platforms do not differentiate the products and services offered by the company. Therefore, a consumer can only give one rating for all the services they were offered during their experience with Thomas Cook Tour Operator. For instance, an online user cannot give separate ratings for the accommodation, the flight, the package or the customer service. The rating has to be combined, which is why, apart from the description, there is no way of telling what the service that users liked or disliked the most was.
Case study
Thomas Cook, one of the world’s leading leisure travel groups that provides package holidays that includes flights, hotels, car hire, travel insurance etc., is well-known for its constant efforts to please its customers and help them book a vacation throughout the year with minimum effort. Being the oldest of its kind, Thomas Cook Tour Operator has a long history of activity. At the same time, it had a long trajectory during which it adapted to the market trends in the attempt to remain one of the top rated travel agencies in the UK and in Europe. One of the most notable challenges for Thomas Cook was adapting to the digital era, its results being mostly led from traditional marketing campaigns and conventional tourism distribution channels. According to the Thomas Cook Holiday Report 2017, the most significant shift in the last three years has been the rise in people using their mobiles to search for holidays, up 113% on thomascook.com between May 2014 and April 2017. As for looking vs booking, there is a definite play off between mobile and desktop channels. Tablets and smartphones dominate searches whereas desktop and laptop are the preferred choice for actually making a booking. Given it’s often the two most important and treasured weeks of the year, perhaps it’s no surprise that people want to use a bigger device to check all the details before clicking ‘book’. However, after a survey conducted in this period of time, 43% of the customers declared that they use shops for tourism research and 60% declared that shops are their preferred means of booking. The report also states that even for dedicated web users, two-thirds of those who research their holiday online come into store as they still value speaking face-to-face with a travel expert who can help them design a holiday to best suit their needs. Unlike online, where traffic is relatively spread out throughout the week, it is the weekend when Brits take full advantage of speaking to an expert. While Sunday is currently seeing the biggest growth in bookings year-on-year, it is Saturday which remains the busiest day in stores – 20% of an average week’s bookings take place on Saturday.
In spite of the above results, the company has decided to go mobile. According to the report, mobile is the king for obvious reasons: you are more likely to have a phone in your pocket than be sitting at a desk.
The first example of adaptation to market trends is followed by another one which also implies a much larger investment. Soon after virtual reality became popular among technology savvy users, Thomas Cook adopted goggles that are able to transpose their potential customers in various destinations. The GoggleBooks, as Thomas Cook named the product, is a headset used in eight of the company’s branches, from Glasgow to London. While wearing them, customers can see 40 immersive videos, becoming able to experience the holiday without stepping on a plane. After implementing this new idea, fly-through helicopter package sales increased by 28% and Royal Caribbean’s cruises led to an increase of sales of 45%.
The third and most important example is represented by the responsible tourism policy that Thomas Cook has implemented. Nature documentaries and movies that promote ecology and environment protection have led tourism consumers towards a positive attitude regarding the environment. Wanting to travel was not enough anymore. Thomas Cook was among the first to promote such a policy. The Sustainable Tourism site is split into six sections, each giving its potential customers an insight over a field of interest:
Looking after the environment
Environmentally aware hotels
The travel foundation
Sustainable-tourism-partners
Looking after wildlife
How to play your part
All three of the above examples are proof that Thomas Cook has adapted successfully to new trends and even took them to a whole new level. Its constant focus on the customer has led to the creation of complex campaigns that promoted the ideas it believed in.
When analysing the number of positive and negative reviews on the two chosen platforms, a few question marks arise.
Feefo’s rating system is, as described previously, formed of one to five start ratings. Thomascook.com has had 11,452 reviews over the past year, as follows:
Table 15
Percentage of ratings – Source: https://www.feefo.com
As seen in Table 15, the majority of users have given a 5 star rating. Here are a few examples of rating descriptions from 5 star ratings:
A few examples of poor ratings can be seen as follows:
Both new and old reviews are mostly positive on Feefo.com, which creates a discrepancy between consumers that reviewed the company on this platform and on the other two. The example below shows that in 2015 consumers were satisfied with the services, comparing to consumers that commented on Trust Pilot or Compare Holiday Money.
As observed, only one of the 5 star ratings included descriptions of the services, explaining why the user was satisfied, while the others referred to the booking process. On the other hand, poor reviews tend to be more specific. Users mention their challenges, regardless of the topic. The most important aspect that is worth mentioning in this case is Thomas Cook’s representative’s response to the user’s complaint.
Thomas Cook has an average score of 4.5 out of 5 stars on Feefo, with a majority of 5 star ratings.
On Trust Pilot, the situation is entirely different. The number of reviews is much lower, of only 857, out of which only 133 date from 2015 onwards. Judging by the total number of reviews, Thomas Cook has an average rating of one out of 5 stars after the end of 2015 and a score of 1.4 out of 10. The 16 reviews that were posted by unique users from 2016 to the current day are 5 star ratings. However, in 2015, there were 117 reviews from very dissatisfied users. Approximately 10% of all the reviews given in 2015 were negative. These later ratings have been thoroughly described, as it can be seen below.
The above review example from 2015 belongs to an extremely dissatisfied user, as well as the example below. There are plenty of such reviews during this year on Trust Pilot, yet the fact that the company has invested in customer service and quality by the end of 2015 is reflected in their financial results and in the positive reviews that came after that.
Judging by the 16 reviews that were given by users starting with 2016, Thomas Cook would have a rating of 5 out of 5 stars, as no poor rating has been given.
Compare Holiday Money, the third platform that displays consumer reviews based on their experience with currency, has a smaller rating for Thomas Cook than the other two platforms. As it can be seen in the below figure, the rating to date is 2.3 out of 5 stars. This statistic is based on 83 reviews that were offered since 2015, out of which 59% of the customers offered a 1 star rating, 10.8% offered a rating of 2 stars, 1.2% gave 3 stars, 3.6% gave 4 stars ratings and 25.3% offered 5 stars ratings. There is a high discrepancy between the results from this platform and the previous two, yet I must take into consideration that type of services that were reviewed. If the first two websites contain holiday package reviews, this third one refers only to financial services, mostly currency exchange.
When offering ratings for Thomas Cook, online users must take into consideration a few aspects, such as:
The amount that was ordered
The currency arrived on time
The requested notes were received
Ordering was easy and straightforward
The user would recommend the supplier to others
Online users have the option to agree or disagree with the above statements, except for the first one. In the first field, they must fill in the amount that was ordered. Satisfactory reviews (4-5 stars) show that consumers were satisfied with the service, but would not recommend others this supplier. Their comments are surprisingly elaborate, by comparison to the cases I observed in the first two platforms.
Two examples from 2015 can be observed below. The difference that can be observed in the reviews offered before 2016 is that an additional statement was included in the form: this is my first time using this supplier. It was withdrawn from the site after 2015, so the reviews differ in ratings. However, this statement was not reflecting the quality of the service and it was not relevant for the final rating.
In this case, the consumer offered a 4-star rating and explained the reason of his disappointment. Although the service was offered as it should have, they would not recommend it to others.
In the above case that dates from 2017, the consumer was very satisfied with their experience and described it in detail, offering a 5 star rating.
In the above review example, the user was dissatisfied by the fact that they lost a significant amount of money while using currency exchange services from Thomas Cook. However, they offered a 2 star rating and checked three out of four statements. Also, they mentioned that the service was offered properly, but there was a mismatch between the information they found online and in store.
To conclude, the first two platforms show ratings above 4.5 stars out of 5, which confirms the fact that the main goal of the tour operator, that is to focus on customer needs, has been accomplished during the past two years. The third platform recorded a rating below 3, yet the analysed services were different. It must be taken into consideration that services that relate to finances are much more sensitive and that consumers might be easier to displease.
The financial reports of the company display the same. In 2015, the Thomas Cook Group declared that it had an underlying EPS of 8.9p and a profit after tax of £19 million. The company invested during 2015 in 209 own-brand hotels, 25 new aircrafts, 60 new cabin interiors. Also, it invested in customer service and experience, quality and assurance, as well in its brand strength. The financial report in the UK and Ireland states that the company’s revenue in 2015 was of £2,457 million, less than in 2014 when revenue of £2,585 million was declared. The gross margin during this year was of 26.7%, higher than in 2014 (26.1%). The financial results have improved overall, having an EBIT of £310 million, a net debt of £139 million, an underlying gross margin of 22.6%. The same financial report displays an optimistic statement. According to the Thomas Cook representatives, despite a competitive environment in the Nordics, our business remains the market leader in terms of number of passengers and profitability.
In 2016, Thomas Cook reported revenue that was well-maintained despite certain market disruptions. The gross margin was up to 80 basis points to 23.4%, while the underlying EBIT was of £308 million. In the UK and Northern Europe the margins have surpassed the company’s record, while the recommended dividends were of 0.5 pence per share. According to a survey conducted by the company itself, the net promoter score was up with 6 points in the summer of 2016, the aircrafts were improved and the share of web sales increased from 40% in 2015 to 43% in 2016. As per the operational delivery, consumers reported that the holidays were delivered more efficiently compared to the past years. Although the net debt was lower than in 2015, the underlying EBIT was lower due to Condor’s weakness in 2016, as it can be seen in Table 16. Also, the like for like revenue was 5% lower.
Table 16
Financial situation 2016
Source: https://www.thomascookgroup.com
Table 17
Overall financial situation 2016
Source: https://www.thomascookgroup.com
Overall, the financial situation of the Thomas Cook Group has improved, yet it was dragged down by the weakness of Condor, as it can be seen in Table 17.
In 2017, the financial situation of Thomas Cook improved even more. The company’s revenue increased by 9%, while the underlying EBIT has increased to £330 million, with £24 million compared to 2016. Condor’s situation has also improved significantly in 2016, while the UK margins were lower after four consecutive years of profit growth. However, the net debt was reduced with £40 million and the recommended dividends were of 0.6 pence per share. If in 2016 the like for like revenue decreased, in 2017 it encountered a growth of 9%, as it can be seen in Table 18.
Table 18
Financial situation 2017
Source: https://www.thomascookgroup.com
Table 19 shows the overall financial situation of the group, in which the UK margins have dropped, yet the overall situation has improved.
Table 19
Overall financial situation 2017
Source: https://www.thomascookgroup.com
Conclusions
Looking at the financial data of Thomas Cook Group from the years 2015, 2016 and 2017 and comparing them to the online user reviews, it is safe to affirm that Thomas Cook has managed to stay on top of its users’ preference list, despite a history of traditional marketing. More than that, the company has adapted quickly and efficiently to the new trends, by implementing new business models, new technologies, communication strategies and promotion.
There are three hypotheses that I attempted to prove in this thesis:
Thomas Cook has managed to adapt to current trends
Customer satisfaction reflected in online reviews is linked to the financial success of the company
Thomas Cook has managed to stay on top of its consumers’ preference list due to its ability to adapt to new trends
The three innovation examples in the case study show that the first hypothesis can be confirmed, as the group has managed to innovate continuously, by bringing new technological tools to its customers, being willing to invest in new and expensive equipment in order to offer the ultimate simulation experience. Also, the online 5 star reviews from all three platforms show a high customer satisfaction, regarding the use of the company’s website, the customer service and the overall experience. More than that, the 67% of 5 star reviews showed that, overall, tourism consumers were satisfied with their experiences.
The second hypothesis can be neither confirmed nor disproved, as the data is not conclusive enough. Judging by the online reviews, the company’s success is ensured. However, the numbers and statistics show that Thomas Cook Group is an extremely complex company, with numerous subsidiaries, applications, platforms etc. and that its overall results cannot be based only on customer satisfaction. In the extreme situation in which all consumers would be satisfied, the company would still be faced with the competition, with technical difficulties that cannot be entirely predicted or with market factors that could influence its financial growth. Therefore, this hypothesis is partially confirmed, as most of the online reviews were positive and the financial situation of Thomas Cook was mostly satisfactory in the past two years.
The third hypothesis according to which Thomas Cook has managed to stay on top of its customers’ preference list has been confirmed. The online reviews were mostly positive on one of the platforms and entirely positive on the second platform. This shows a high satisfaction level. Also, the reason why it stayed in the top 5 tour operators in Europe is that it has invested a lot of effort and attention into choosing the right distribution channels and focusing on customer needs. The main tourism distribution channels that revolve around the online environment have been successfully embraced by the company. Its main promotional and advertising work takes place online, adapting to the needs of the modern tourism consumer and to the market’s demand. Having an intense activity in the United Kingdom, where new marketing models are being applied, Thomas Cook has invested in research, development and innovation to remain on top of the travel agency companies list.
I would like to conclude by stating that choosing the right distribution channels in the tourism industry is crucial for all travel agencies and tour operators that wish to gain the desired visibility. Throughout this paper, I have described a wide variety of distribution channels that can help a company achieve its goals. Apart from Social Media and the Internet, online marketing campaigns and online brand awareness campaigns, there are various other distribution channels available that place the product or the service in the centre and drag the consumers’ attention. Thomas Cook has managed to make the right decisions and to face fierce competition on the European market.
Bibliography
Buhalis, Dimitrios. Laws, Eric. Tourism Distribution Channels: Practices, Issues and Transformations. (2001). Thomson. Cornwall
Buhalis, Dimitrios. Licata, Maria Cristina. The Future of eTourism Intermediaries. (2001), Genesis Information Limited. Borehamwood, UK.
Buhalis, Dimitrios. Marketing the competitive destination of the future. In Tourism Management. Special Issue: The Competitive Destination. (2000). University of Westminster, London.
Casson, Lionel. Travel in the Ancient World. (1994). John Hopkins University Press.
Cobanoglu, Cihan. Powley, H. Jonathan. Cetinkaya, Ali Sukru. Cummings R. Pamela. Online Travel Purchases from Third Party Web Sites. In Page, J. Stephen. Progress in Tourism Marketing (2006). Elsevier, Oxford.
Hudman, Lloyd. E. Jackson, Richard H. Geography of Travel and Tourism (2003) . Fourth Edition. Thomson Delmar Learning. New York.
Jayapalan. N. An introduction to Tourism (2001). Atlantic Publishers and Distributors. New Delhi.
Kracht, John. Wang, Youcheng. Examining the Tourism Ditribution Channels. Evolution and Transformation. (2010) in International Journal of Contemporary Hospitality Management. Emerald Group Publishing Limited. Orlando, FL.
Lickorish J., Leonard. Jenkins, L. Carlson. An introduction to Tourism. (1997). Butterworth – Heinemann. Oxford
Lickorish J., Leonard. Middleton T.C, Victor. British Tourism. The remarkable story of growth. (2005), Oxford
Lickorish, L.J., Kershaw, A. G. The Travel Trade. (1958). Practical Press.
Page, S.J. and Durie, A. Tourism in war time Britain (1914-1918) Adaptation, Innovation and the Role of Thomas Cook& Sons. (2009) in J. Ateljevic and S.J Page (eds). Tourism and Entrepreneurship. Butterworth-Heinemann. Oxford
Page, Stephen J. Tourism management, Managing for change, (2003), 3rd Edition, Routledge.
Pearce, Douglas C. Channel Design for Effective Tourism Distribution Strategies. Journal of Travel and Tourism, 26:5-6, 507-521. (2009). Routledge. Available online at https://doi.org/10.1080/10548400903163046. Accessed at 15.01.2018
Sari, Yasar. Cinar, Ismail. Kutukiz, Dogan. Use of Electronic Documents and Brochures for Sustainable Tourism Marketing. In Page, J. Stephen. Progress in Tourism Marketing (2006). Elsevier, Oxford.
Sari, Yasar. Kozak, Metin. Duman, Teoman. A Historical Development of IT in Tourism Marketing. In Page, J. Stephen. Progress in Tourism Marketing (2006). Elsevier, Oxford.
Travis, S. Anthony. Planning for Tourism Leisure and Sustainability: International Case Studies. (2011). London.
Vagionis, Nikolaos. Loumioti, Maria. Movies as a Tool of Modern Tourist Marketing. In Tourismos: An International Multidisciplinary Journal of Tourism. Vol. 6, Number 2 (2011), pp. 353-362. University of the Aegean.
Veal, A.J. Research Methods for Leisure and Tourism: A Practical Guide Paperback (2006). 3rd Edition. Financial Times. Prentice Hall.
Williams Wynn, Stephen. Tourism Geography. (1998). Routledge Contemporary Human Geography. London
Web resources:
https://www.e-unwto.org , accessed at 15.01.2018
https://people.hofstra.edu, accessed at 15.01.2018
https://www.visitbritain.org/sites/default/files/vb-corporate/Documents-Library/documents/England-documents/uk_tourism_facts_2000.pdf , accessed at 15.01.2018
http://www.tourismalliance.com/downloads/TA_390_415.pdf, accessed at 15.01.2018
https://www.visitbritain.org/governments-tourism-action-plan, accessed at 15.01.2018
https://abta.com/tips-and-latest/reports-and-trends, accessed at 15.01.2018
https://www.visitbritain.org/sites/default/files/vb-corporate/Documents-Library/documents/transparency/busines_plan_2017-18_-_final.pdf , accessed at 15.01.2018
https://trade.visitbritain.com/promotional-opportunities/sales-and-distribution/ , accessed at 15.01.2018
https://www.visitbritain.org/reaching-consumer , accessed at 15.01.2018
https://abta.com/news-and-views/news/2018-a-busy-year-for-the-travel-industry , accessed at 15.01.2018
https://abta.com/about-us/press/value-for-money-and-increased-awareness-of-responsible-tourism-set-to-shape , accessed at 15.01.2018
https://abta.com/news-and-views/news/virtual-reality-and-mobile-solutions-for-travel-bookings, accessed at 15.01.2018
https://www.marketing91.com/marketing-mix-thomas-cook/ , accessed at 15.01.2018
https://www.thomascook.com/thomas-cook-history/ , accessed at 15.01.2018
https://www.thomascookgroup.com/wp-content/uploads/2016/12/TCG-FY-2016-Results.pdf , accessed at 15.01.2018
https://www.thomascookgroup.com/wp-content/uploads/2016/01/Thomas-Cook-Group-plc-Annual-Report-2015.pdf , accessed at 15.01.2018
Copyright Notice
© Licențiada.org respectă drepturile de proprietate intelectuală și așteaptă ca toți utilizatorii să facă același lucru. Dacă consideri că un conținut de pe site încalcă drepturile tale de autor, te rugăm să trimiți o notificare DMCA.
Acest articol: How The Tourism Distribution Channels Adapted To The New Trends In Tourism Over Time. Case Study Thomas Cook Tour Operator (ID: 116060)
Dacă considerați că acest conținut vă încalcă drepturile de autor, vă rugăm să depuneți o cerere pe pagina noastră Copyright Takedown.