What we can learn from the demise of Thomas Cook

What we can learn from the demise of Thomas Cook

Must Read

Top 10 Most Expensive Universities In Nigeria

For many Nigerians, high-quality higher education is a luxury. There are many private universities who are known not only...


Pigs are kept in almost all the farms in Nigeria. It is still common to find pigs roaming freely...

List of Guaranty Trust Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...
- Advertisement -
- Advertisement -

By now you will probably have heard that 178-year-old British travel company Thomas Cook ceased trading recently, stranding 150,000 UK holidaymakers, threatening over 20,000 jobs and challenging the tourism industry around the world. The company’s demise is a salutary reminder that big is not the same as strong when it comes to business and brands.

This was not the first brush with disaster for Thomas Cook. In 2011 the company nearly collapsed but was saved by a last-minute £100 million loan extension. In retrospect, this action simply staved off disaster and added to the debt burden the cost of which the company was already struggling to pay. Since then, the company has been living a hand-to-mouth existence that ended abruptly when talks with investors failed to extend funding.

The inquest into how so a big company could suddenly cease trading has already begun but the conclusions will likely highlight that the company failed to adapt to changing times. Setting aside the short-term impact of Brexit, two major changes combined to change consumer behaviour and undermined the prevalence of the package holiday, as follows.

  1. The rise of the low-cost airline meant that people could easily take short breaks in major cities across Europe, undermining demand for the traditional two week packaged holiday. At the same time, Thomas Cook was challenged to match low-cost airline prices without the same infrastructure or scale.
  2. The advent of the internet meant people could easily put together their own vacation, from finding a destination to booking flights and accommodation. However, this in itself does not mean a lack of desire for specially curated vacations, simply a lack of need for the everyday package holiday. Thomas Cook might have been better off if it had introduced a premium vacation service instead of buying up equally challenged competitors.
Read:  Foreign exchange rate and reserves: A looming devaluation?

Essentially these two changes created a travel ecosystem that debundled the package holiday for many people. It was not a case of one thing or the other but both. Many, like financial analyst David Buik quoted in the New York Times, have suggested that Thomas Cook failed in part because it had too many physical stores. However, as we see with many DTC companies, a physical store can be a strength if it is used to add value to the company’s offer. Where Thomas Cook failed was in not figuring out what its real strengths were compared to cheaper, shorter and do-it-yourself breaks. In 2019, the brand was hugely salient but lacking both meaning and differentiation compared to other vacation providers, proving once again that size is no substitute for relevance.

Read:  Jumia To Host Maiden World Tourism Day Event on September 27th

However, capable today’s management team, what is clear is that past incumbent were to blame for not evolving the company’s business model to a changing environment which enabled people to easily satisfy their desire for a quick break now over the delayed gratification of a long vacation in several month’s time. Failing to adapt led to the financial death spiral which ultimately led to the company’s demise.

But what do you think? Could Thomas Cook have changed its future for the better?

Please share your thoughts.

Insights from Kantar Millward Brown

- Advertisement -

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

11 PLC FY’19 – Lower Margins Weaken FY’19 Earnings

Revenue advances 16% y/y FY’19 rental income dips 7% y/y Records a PAT of ₦8.9 billion (-5% y/y) ...

Stanbic IBTC Holdings Plc FY’19 (Unaudited) Earnings – Bank Records Modest y/y Improvements

PAT beats estimate on lower Interest Expense Loan portfolio up 21% y/y, Deposits down 34% Opex declined 1% y/y to ₦71.6 billion (Estimate:...

Total Nigeria PLC – Better Margins, Debt Cut To Buoy FY’20 Earnings

FY’19 fuel sales down 7% y/y Lubricants operations grow 4% y/y Bank overdraft declines to ₦35.9 billion (9M’19: ₦53.9 billion) Target price revised...

Businesses to Flourish in Omishakin Community as Airtel Pledges to Provide Electricity after 13 years

The third episode of the award-winning television programme ‘Airtel Touching Lives’ is scheduled to air on the 16th of February on national and cable TV....
%d bloggers like this: