Friday, May 16, 2008

Big two offer little (dot)comment

Europe’s two largest leisure travel operators, TUI Travel plc and Thomas Cook Group, both issued their half-year results this week. Reading through the numbers one would imagine that the internet doesn’t exist.

Listening to the calls with analysts, one would imagine the internet doesn’t exist.

And calling their financial PRs to ask for some more colour about their online business, one would imagine that the internet (to say nothing of Travolution!) doesn’t exist.

So what did we find out? For TUI Travel, online accounts for about 35% of its UK mainstream business. ‘It’s building, but it has slowed,’ said chief exec Peter Long. Requests for more details were met with a polite ‘it’s not the sort of information we give out’ response.

The UK is a mature market for both travel and online so a slowing in growth while volumes increase is no surprise. TUI has been reducing capacity on its loss-making seat-only operations. Fewer seats will lead to fewer web bookings.

So where is the growth coming from? Mass-market price-led fly and flop short-haul packages, or exclusive upmarket Holiday Villages/Sensatori products? or what about the web side of its separately reported specialist and activity units?

Its consumer-facing dotcoms are doing well enough. Laterooms lifted its bed nights booked by 146% to 994K while hotelopia was 18% up at 1.3m.

A technical hitch prevented questions from being asked on Thomas Cook’s call with the trade press. “Thomas Cook is still on target to achieve 35% of group sales online in the 09/10 financial year,’ it said after the event, repeating comments made earlier this year. “In the year to end-Oct07 online accounted for 13%.”

Hopefully there might be some more details when the big two’s full year results come out at the end of the year. Travolution isn’t reading anything too sinister into their muted response this week, but it hasn’t stopped us from idly speculating on how important the internet is to Europe’s two biggest travel companies.

Martin Cowen, chief writer, Travolution

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