DISASTER has been averted. Just a few months ago, many thought that Thomas Cook was not long for this world. After yesterday’s update, it is clear the firm will live to fight another day. The imminent sale of its Indian business, which is expected to net £130m, along with a stabilisation in trading, means its debt repayments no longer seem so onerous.
As far as the good news goes, that’s about it. Thomas Cook holds the title of Britain’s oldest tour operator – and it is hopelessly stuck in the past. It specialises in the kind of travel that is dying out, what the Association of British Travel Agents describes as “bucket and spade in Spain-type holidays”.
Yesterday, management were keen to trumpet a 14 per cent rise in bookings at its specialist and independent division, which sells individual components like flights and hotel rooms rather than package holidays. Anyone who has observed the huge success of Expedia or lastminute.com in recent years will know that this is the way the travel sector has been going for some time.
Nobody seems to have told Thomas Cook. Summer bookings might be up, but sales in this division accounted for just a quarter of revenue last year. The firm is still far too reliant on bland package holidays to Costa Del Somewhere, which generated three quarters of revenue and yet hardly a single penny of underlying profit in 2011.
The digital revolution also seems to have passed it by. According to Ipsos Mori, 68 per cent of Britons now book their holidays on the internet, yet online bookings accounted for just 25 per cent of Thomas Cook’s sales in 2011. That puts it well behind its closest rival Tui Travel, which takes around 40 per cent of its bookings in this way.
Instead of investing in a better website, former chief executive Manny Fontenla Novoa brokered an ill-judged merger with Co-operative Travel last year, landing the firm with 1,200 old-fashioned shops.
Whoever ends up occupying the empty chief executive’s office has an awful lot of work to do.
NOKIA VS APPLE
Nokia, once the king of the mobile phone world, is taking on Apple, the firm who stole its crown. Both are desperate to develop the next generation of Sim card. Apple has submitted its design to the European Telecommunications Standards Institute, but Nokia is threatening to scupper the whole process by witholding crucial patents. This is one of the few areas where Nokia has an advantage. It might seem like an irrelevance, but it still owns much of the intellectual property that underpins the mobile phone. The so-called patent wars have only just begun.