Tui Group chief executive Fritz Joussen gave a ringing endorsement of “physical retail” and “shared channels” with third-party agents at an exclusive Travel Weekly dinner last week.
Having taken sole charge of the group this month when Peter Long stood down, Joussen declared Tui UK’s shops to be “in a very strong position”. But he said a further increase in direct sales would risk the company “being too direct”.
Joussen said: “As a consumer company you need to be online, but you need to be where your customers are, and [where] customers want physical retail you need to do physical retail, otherwise you lose market share.
“The UK business is doing a lot of physical retail on top of online and I would say physical retail is in a very strong position to go forward.”
Tui reported 54% of UK bookings were through its own online channels last year, plus 38% through its own stores, with 8% sold via third-party agents.
Joussen suggested direct sales could not go higher, saying: “When you go higher you increase the risk of being too direct. Is 90% the right number? I don’t know.
“Tui UK is enormously successful, so it must be a good number. My view is 60% is also good. In Germany in my former job at Vodafone we had 1,600 direct outlets which covered 50% direct. This was enough. All the rural areas were more or less shared.
“When you have rural areas, how can you finance a direct channel? You don’t have enough volume. You want shared channels.”
However, he added: “If you are too little direct you fight on a commission basis which is expensive, [and] innovation becomes difficult. When you go to a shared channel and say I have an innovation, the shared channel says ‘Nobody else has it’ and ‘No customer asked for it’. If you have 50% direct, you go with the innovation in the direct channel and the shared channel says ‘I want it’.”
Joussen stressed his belief in the future of the integrated tour operator model, saying: “Where will the industry be in 10 years? Integrated tourism will have an enormous position. Unbundling of products will be good for some markets, but when it comes to leisure travel, bundling [packaging] will be very good.”
He confirmed the Thomson brand will disappear next year in a rebrand to Tui and declined to say whether the brand would persist into summer 2017.
“Global brands scale better, particularly online, than local brands,” he insisted. “We don’t want to lose the specificity of the Thomson brand. [But] it is the people serving customers that are the brand, so nothing will change but the icon.”
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