Tui Travel has transformed its business so it is able to sell more of what customers are demanding than what it wants to sell, deputy chief executive Johan Lundgren told the Abta Travel Convention.
Speaking in a main stage session on the opening day of the annual event, being held this year in Belek, Turkey, Lundgren said Tui wanted out of the more commoditised price-led end of the market.
He said large tour operators like Tui had previously got into a situation where what it sold was more determined by its assets like aircraft or hotels.
“It was more about what we wanted to sell rather than what the customers wanted to buy,” he said.
“What we have been doing is looking to see what is the purpose and the value we can add to our customers’ holidays experiences.
“It’s very much doing it from the outside in about what we can do for them.
“There has been a polarisation of the market. In some cases customers are driven by going to a hotel because it is cheaper.
“There is a commodity market out there driven by big suppliers, a lot of hotel sites, and the only thing that matters is price.
“The position we want to be in is very much the purpose of the trip. Many people want to go to places like this [convention venue Cornelia Diamond Resort] to spend time with their family.
“On their next trip they may want to go away to shop. People are travelling more and there is a particular purpose for that trip.
“Sometimes it’s just to relax and recharge the batteries, sometimes they want excitement.”
Lundgren said the capacity that Tui has taken out of the market during the downturn has been in the commoditised end meaning it has been able to grow its sales of differentiated product.
And he said Tui was poised to build on this by growing capacity but not in a reckless way.
“We will put on capacity when we see we have demand for it. This is not about going back to the old ways of just putting on aircraft – we want to make sure demand is out there.
“We want to continue to focus on differentiated exclusive holidays where we add features and we design the holidays and it’s being sold exclusively through ourselves and that has always shown growth through this period.
“It’s grown 5% to 10% each year and we have remixed the business to get rid of the unprofitable commodity business.
“The more focus there will be on value the better placed we are because that’s what to are providing.”
This attention to offering exclusive product will ensure that Tui is not competing in the same online space as some of the major web retailers, he added.
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