Project Organisation Analysis Report FINAL
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Transcript of Project Organisation Analysis Report FINAL
Page | 1
Cover Page
1. Name: Pham Thuy Duong,(2430318)
Class: DIM1VC
2. Name: Ivander Laurentius Atmojo (2430243)
Class: DIM1VA
3. Name: Corhana Dan Andrei (2430403)
Class: DIM1VA
4. Name: Gework Petrosjan (2431488)
Class: DIM1VB
5. Name: Mohammed Ababakar (2431451)
Class: DIM1VB
Page | 2
Table of Contents Chapter 1 Introduction ......................................................................................................................... 5
Chapter 2. European Travel Industry Overview .................................................................................... 6
2.1What is travel industry? ................................................................................................................... 6
2.2 European Travel Industry ................................................................................................................ 6
2.3. Business Model .............................................................................................................................. 9
2.5 Daughter companies of TUI and Thomas Cook ............................................................................ 13
2.6 Competitors of TUI and Thomas Cook .......................................................................................... 16
Chapter 3 Financial Analysis ............................................................................................................... 20
3.1.1 Thomas Cook Group PLC and TUI Travel PLC Key Figures Compared ......................................... 21
3.1.2 Profit & Loss Account Compared ............................................................................................... 23
3.1.3 Thomas Cook Group PLC and TUI Travel PLC Balance Sheet Compared .................................... 24
3.2 Profit Margin Analysis ........................................................................................................... 25
3.2.3 Profit Margin Analysis ............................................................................................................ 27
3.3.1 RETURN ON TOTAL ASSETS ANALYSIS .................................................................................... 31
3.4.1 Return on Stockholder Equity Analysis. ................................................................................. 35
3.5 Liquidity Ratios .............................................................................................................................. 41
3.5.2 Current Ratio Analysis ............................................................................................................ 42
3.6 Leverage Ratios ............................................................................................................................. 50
3.6.2 Debt to Asset Ratio analysis ................................................................................................... 51
3.6.4 Debts to Equity Ratio Analysis.................................................................................................... 53
3.7 Financial Analysis Summary ...................................................................................................... 54
3.7.1 Financial Analysis Conclusion ................................................................................................. 57
Chapter 4: Marketing ...................................................................................................................... 58
4.1. Mission statement: .............................................................................................................. 58
4.2. SWOT Analysis: .................................................................................................................... 59
4.3. Strategic Objectives: ............................................................................................................ 61
4.4. Market position: ................................................................................................................... 64
4.5. Product and Service: ............................................................................................................ 76
4.5.1. TUI travel plc ..................................................................................................................... 76
4.5.2. Thomas Cook ..................................................................................................................... 80
4.5.3. Financial Services related travel of TUI travel plc and Thomas Cook: ............................... 81
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4.6. The Boston Consulting Group box (BCG matrix)................................................................... 84
4.7. Supply chain: ........................................................................................................................ 85
4.8. Price ..................................................................................................................................... 88
4.9. Promotion ............................................................................................................................ 89
4.10. Distribution ........................................................................................................................ 94
4.10.1. Booking Routes ............................................................................................................... 94
4.10.2. Distribution channels ...................................................................................................... 95
4.10.3. Cross Channel Marketing ................................................................................................ 95
4.11. Ecommerce ........................................................................................................................ 96
4.12. Conlusion for Marketing chapter ....................................................................................... 98
Chapter 5 Management and Organization: ..................................................................................... 98
5.1. Company Profile ................................................................................................................... 99
5.1.1. Company Background ........................................................................................................... 99
5.1.2. Company Scale ................................................................................................................ 101
5.1.3. Mission Statement .......................................................................................................... 101
5.3.4. Vision and Values: ........................................................................................................... 102
5.3.5. Sustainability Development and Social Responsibility .................................................... 103
5.2. Company Organization ....................................................................................................... 106
5.2.1. Organizational structures .................................................................................................... 106
5.3. Human Resources Management ........................................................................................ 109
5.3.1. Recruitment ........................................................................................................................ 109
5.3.1.1.TUI Travel plc .................................................................................................................... 109
5.3.1.2. Thomas Cook ................................................................................................................ 113
5.3.2. Job Selection ................................................................................................................... 114
5.3.2.1.Finland TUI .................................................................................................................... 114
5.3.2.2. Finland Thomas Cook ................................................................................................... 116
5.3.3.1.Germany TUI ................................................................................................................. 116
5.3.3.1. Germany (Thomas cook) .............................................................................................. 117
5.3.3.Emloyee engagement ...................................................................................................... 118
5.3.4. Personal expenses ........................................................................................................... 119
5.4. Conclusion .......................................................................................................................... 119
Chapter 6 Key Performance Indicators ............................................................................................. 120
6.1 Financial ..................................................................................................................................... 120
6.2 Marketing ................................................................................................................................... 123
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6.2.3 Marketing Key Performance Indicators.................................................................................... 124
6.2.3.1 Mission Statement ................................................................................................................ 124
6.2.3.2 SWOT Analysis ...................................................................................................................... 124
6.2.3.3 Strategic Objective ................................................................................................................ 127
6.2.4 Market Position........................................................................................................................ 128
6.2.4.1 Market Dynamics UK & Ireland ............................................................................................. 128
6.2.4.2 Market Dynamics Continental Europe .................................................................................. 129
6.2.4.3 Market Dynamic Northern Europe: ....................................................................................... 130
6.2.4.4 Market Dynamics North America .......................................................................................... 131
6.2.4.5 Market Dynamics Germany................................................................................................... 132
6.2.5 BCG MATRIX ............................................................................................................................. 133
6.2.6 Distribution Channels ............................................................................................................... 134
6.3 Management Key Performance Indicators .............................................................................. 135
6.3.3.1Company profile ............................................................................................................. 135
6.3.3.1.1Mission Statement ...................................................................................................... 135
6.3.3.1.2 Vision and Mission ..................................................................................................... 136
6.3.3.1.3 Sustainability Development ....................................................................................... 136
6.3.3.2Company Organisation ................................................................................................... 139
6.3.3.2.1 Organizational Structures........................................................................................... 139
6.3.3.2.1 Departmentalization .................................................................................................. 140
6.3.3.2.2 Recruitment Plan........................................................................................................ 141
Chapter 7. References....................................................................................................................... 142
FINANCIAL APPENDICES ................................................................................................................ 144
Appendixes 3 .................................................................................................................................... 153
Cooperation Agreement Group 6 (Period 4) ..................................................................................... 171
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Chapter 1 Introduction
In this semester, our task is to set a bench mark based on quick scan on two travel companies--UI
and Thomas Cook. Through the comparison of Key Performance Indicators (such as mission, strategy,
market share, turnover, export ability, financial conditions etc.), we will come to a conclusion which
one is “better”.
In our analyzing procedure, we are going to use the external and internal analysis where we have
much experience and interview method in real context. By those efficient tools, we will draw a full
picture of two selected companies. The main phrases consist of two steps. First of all, we will
measure them from each comparable aspect and then pose our constructive conclusions based on a
range of data analysis and interpreting.
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Chapter 2. European Travel Industry Overview
2.1What is travel industry? Travel (or Tourism) is going for entertainment, leisure or business purposes. The World
Tourism Organization defines tourists as people who "travel to and stay in places outside
their usual environment for more than twenty-four hours and not more than one consecutive
year for leisure, business and other purposes not related to the exercise of an activity
remunerated from within the place visited".
2.2 European Travel Industry
Geography
Conventionally, Europe is one of the world's seven continents. Comprising the westernmost
peninsula of Eurasia, Europe is generally divided from Asia to its east by the water divide of
the Ural Mountains, the Ural River, the Caspian Sea, the Caucasus Mountains (or the Kuma-
Manych Depression), and the Black Sea to the southeast. Europe is bordered by the Arctic
Ocean and other bodies of water to the north, the Atlantic Ocean to the west, the
Mediterranean Sea to the south, and the Black Sea and connected waterways to the southeast.
Yet the borders for Europe-a concept dating back to classical antiquity-are somewhat
arbitrary, as the term continent can refer to a cultural and political distinction or a
physiographic one.
Europe is the world's second-smallest
continent by surface area, covering about
10,180,000 square kilometers (3,930,000
sq mi) or 2% of the Earth's surface and
about 6.8% of its land area. Of Europe's
approximately 50 states, Russia is the
largest by both area and population, while
Vatican City is the smallest. Europe is the
third-most populous continent after Asia
and Africa, with a population of 731
million or about 11% of the world's
population. However, according to the
United Nations (medium estimate),
Europe's share may fall to about 7% by
2050. In 1900, Europe's share of the
world's population was 25%.
Europe, in particular Ancient Greece, is the birthplace of Western culture. It played a
predominant role in global affairs from the 16th century onwards, especially after the
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beginning of colonialism. Between the 16th and 20th centuries, European nations controlled
at various times the Americas, most of Africa, Oceania, and large portions of Asia. Both
World Wars were largely focused upon Europe, greatly contributing to a decline in Western
European dominance in world affairs by the mid-20th century as the United States and Soviet
Union took prominence. During the Cold War, Europe was divided along the Iron Curtain
between NATO in the west and the Warsaw Pact in the east. European integration led to the
formation of the Council of Europe and the European Union in Western Europe, both of
which have been expanding eastward since the fall of the Soviet Union in 1991.
Profile of European Market of Travel Industry
Through Europe is the world's second-smallest continent, European countries are attractive
destinations international tourists. Total outbound travel increased by an average of
2.7% per year between 2003 and 2006 to 327 million. Europe is the main destination
with a share of over 80%. Non-European destinations make up less than 20% of the
trips made by EU citizens. Between 2003 and 2006, the number of arrivals to European
destinations increased by an average of 1.7% per year. According to World Tourism
Organization, most of the top visited countries continue to be on the European continent.
The World Tourism Organization (WTO) predicts a total number international arrivals
are expected to reach 1 billion, and 1.6 billion of tourist arrivals from Europe in 2020.
This is a yearly increase of 6.1% starting from 2000. The most popular destinations will
be the Americas, followed by East Asia Pacific, the Middle East, Africa and South Asia.
Western Europe and Northern Europe are expected to be the most important
originating regions.
Common travel trends in Europe
Leisure travel
Rank Country UNWTO
Regional
Market
International
tourist
arrivals
(2008)[9]
International
tourist
arrivals
(2007)[3][9]
International
tourist
arrivals
(2006)[10]
1 France Europe 79.3 million 81.9 million 78.9 million
2 United States North
America
58.0 million 56.0 million 51.0 million
3 Spain Europe 57.3 million 58.7 million 58.2 million
4 China Asia 53.0 million 54.7 million 49.9 million
5 Italy Europe 42.7 million 43.7 million 41.1 million
6 United
Kingdom
Europe 30.2 million 30.9 million 30.7 million
7 Ukraine Europe 25.4 million 23.1 million 18.9 million
8 Turkey Europe 25.0 million 22.2 million 18.9 million
9 Germany Europe 24.9 million 24.4 million 23.5 million
10 Mexico North
America
22.6 million 21.4 million 21.4 million
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Leisure travel was associated with the Industrial Revolution in the United Kingdom –
the first European country to promote leisure time to the increasing industrial
population.
The British origin of this new industry is reflected in many place names. In Nice, France,
one of the first and best-established holiday resorts on the French Riviera, the long
esplanade along the seafront is known to this day as the Promenade des Anglais; in
many other historic resorts in continental Europe, old, well-established palace hotels
have names like the Hotel Bristol, the Hotel Carlton or the Hotel Majestic – reflecting the
dominance of English customers.
Winter tourism
Approximately 927 ski resorts are located in the various European countries (e.g.
Austria, Bulgaria, Czech Republic, France, Germany, Iceland, Italy, Norway, Poland,
Sweden, Slovakia, Spain, and Switzerland)
Mass tourism
Mass tourism could only have developed with the improvements in technology,
allowing the transport of large numbers of people in a short space of time to places of
leisure interest, so that greater numbers of people could begin to enjoy the benefits of
leisure time.
Adjectival tourism
For a more comprehensive list, see List of adjectival tourisms.
Adjectival tourism refers to the numerous niche or specialty travel forms of tourism
that have emerged over the years, each with its own adjective. Many of these have come
into common use by the tourism industry and academics. Others are emerging concepts
that may or may not gain popular usage. Examples of the more common niche tourism
markets include:
* Agritourism
* Culinary tourism
* Cultural tourism
* Ecotourism
* Extreme tourism
* Geotourism
* Heritage tourism
* LGBT tourism
* Medical tourism
* Nautical tourism
* Pop-culture tourism
* Poverty tourism
* Religious tourism
* Space tourism
* War tourism
* Wildlife tourism
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2.3. Business Model
Holidays and trips can reach the final consumer in various ways. Business model
present how travel industry produce the values for their customers in order to receive
profit in return.
Outbound tour operators
In general, an outbound tour operator offers a complete package to the inclusive tour traveller,
consisting of transport (airline seats), accommodation (hotel), excursions and more. The
outbound tour operator, therefore, cooperates with an inbound tour operator in the destination
country who selects elements such as accommodation, catering and excursions. The outbound
tour operator offers the product via travel agencies or directly to consumers through the
Internet. It is becoming increasingly common that packages can be composed of individual
modules that the traveler can select him or herself.
Major and specialized tour operators
In general, two kinds of tour operators can be found: major tour operators and specialist tour
operators. Major tour operators generate most of their volumes through popular, standardized
mass-market products (sun, sea, sand). In the EU, a small number of mainly German and
British players dominate the tour operator market. Some examples are TUI (http://www.tui-
group.com), Thomas Cook (http://www.thomascook.com), Rewe/LTU (http://www.rewe-
touristik.com), First Choice (http://www.firstchoice.co.uk) and Kuoni
(http://www.kuoni.com).
Specialized tour operators concentrate on niche markets currently not being served by the
major operators. However, the tourism market is changing and major operators realize that
they will have to meet individual consumer demand to keep their clients. Some large tour
operators have set up specialized branches as well, operating under separate trade names, to
serve special segments in the market. Big and smaller players are all fighting for their market
position, resulting in fierce competition and, moreover, an increasing number of consumers
are looking for lower prices.
Member organizations
Another potential channel consists of member organizations, acting as tour operators. There
is an increasing tendency among organizations, clubs, sporting teams and/or more organized
parties to organize holiday trips and offer them to their members. They book all foreign
accommodation themselves and act as tour operators for their members. Another possibility
is to cooperate with a tour operator specialized in their field of interest.
Examples are clubs of mountaineers that go climbing together, diving clubs that travel to the
Antilles and fishermen who organize foreign fishing holidays together. Loyalty organizations,
such as the Dutch „Airmiles‟, can also be included in this channel.
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Inbound tour operators (local agents)
Inbound tour operators are the vital link between DC tourism suppliers and EU outbound tour
operators. Inbound tour operators represent local tourism suppliers, like hotels, bus
companies and organizers of activities and promote and sell travel packages to outbound tour
operators and travel agencies. According to interviews with EU tour operators, almost all
bookings take place through the intervention of an inbound tour operator.
Thomas Cook Business Model
TUI Business Model
Page | 11
CAR RENTAL
COMPANIES
TRANPORT
BOAT
COMPANES
AIRLINE
FIRMS
TRAIN
COMPANY
MARKETING
MULTIMEDIA
COMPANIES
ADVERTISING
COMPANIES
PR
AGENCIES
ACCOMODATION
MOTELSHOTELS HOSTELSCAMPING
COMPANIES
CATERING
RESTAURENTSCATERING
COMPANIES
ENTERTAINMENT
VISTING
PLACESENTERTAIMENT
PLACES
ENTERTAINMENTAL
EVENT COMPANIES
INBOUND TOUR OPERATORS
OUTBOUND TOUR OPERATORS SPECIALISED TOUR OPERATERSMENBER
ORGANIZATIONS
TRAVEL AGENCIES
INCLUSIVE TOUR
TRAVELLERS
IDEPENDENT
TRAVELLERS
CLUBS
SPORT
TEAMS
ORGANIZED
PARTIES
Table 3.1: Travel Industry Business Model.
Page | 12
2.4. Business partners in Travel industry (European market)
5.1 Firms in European Travel Industry
Travel and Tourism Company
Central-Eastern Europe Western Europe
Travel agents, tour
operators
7401 5431
Tourism promotion offices 663 398
Tourist coach services 1313 1169
Tourism and recreational
consultants
728 706
Tourist, leisure and sports
centers
2932 1233
Meeting and people finder
services
656 78
Accommodation
Central-Eastern Europe Western Europe
Hotels and motels 7167 15231
Hotel reservation services 1323 290
Hotel, restaurant and bar
operators
863 1251
Hotel, restaurant and
leisure property owners
700 168
Restaurants 7594 2633
Catering services 2277 3575
Holiday camps and tourist
complexes
1714 400
Page | 13
Transportation
Central-Eastern Europe Western Europe
Airline companies 383 580
Coaches, buses, minibuses
hire & rent
426 1337
Ship. ocean-going
company
47 114
Travel Insurance
Central-Eastern Europe Western Europe
Travel insurance company 842 1082
2.5 Daughter companies of TUI and Thomas Cook TUI Travel PLC
TUI Travel has over 200 brands which are comprised of market- leading mainstream brands
and specialist travel businesses. Selections of our well-known brands include TUI, Thomson,
Fritidsresor, Nouvelles Frontières, The Moorings, Quark, LateRooms.com, Hotelbeds.com,
Hayes & Jarvis and Turchese.
Page | 14
Page | 15
Thomas Cook Group plc
Thomas Cook Group operates a portfolio of market-leading travel brands in 21 markets.
Page | 16
2.6 Competitors of TUI and Thomas Cook In general, two kinds of tour operators can be found: major tour operators and specialist tour
operators. Major tour operators generate most of their volumes through popular, standardized
mass-market products (sun, sea, sand). In EU, a small number of mainly German and British
players dominate the tour operator market. Some examples of their main competitors are
Rewe/LTU, First Choice and Kuoni.
Specialized tour operators concentrate on niche markets currently not being served be the
major operators. However, the tourism market is changing and major operators realize that
they will have to meet individual consumer demand to keep their client. Some large tour
operators have set up specialized branches as well, operating under separate trade names, to
serve special segments in the markets. Big and smaller players are all fighting for their
market position, resulting in fierce competition and, moreover, an increasing number of
consumers are looking for lower prices. Below it is a rough picture of their competitors.
Page | 17
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Chapter 3 Financial Analysis Introduction
In this chapter we are going to compare Thomas Cook Group PLC with TUI Travel PLC
from 2006 up to 2009. We will present a comparison of Key Figures from both companies
from 2006 to 2009. Which will present the significant differences between the two companies.
Then we will present a comparison of Profit and Loss Account of both companies, and we
will analyze deeper in matters of Profit Ratio, Liquidity Ratio, Leverage Ratio, Share Holder
Return Ratio, Revenue and Cost ratio, Underlying Revenue and Operating Profit compared to
the two company‟s Statutory Revenue and Operating Profit. An explanation of growth or
decrease of ratios or in variance between Underlying Revenue and / Underlying Operating
Profit compared to the Statutory Revenue and / Operating Profit will be given in each year.
We will also present a comparison between Thomas Cook Group PLC and TUI Travel PLC
Balance Sheet for 4 years from 2006 to 2007.
Please note that there will be some differences in value, and numbers from the data presented
and the analysis since some data were collected in different months and different sources.
Financial Performance Indicators
Profit Ratios
Profit ratios measure the efficiency with which the company uses its resources. The more
efficient the company, the greater is its profitability. It is useful to compare a company's
profitability against that of its major competitors in its industry. Such a comparison tells
whether the company is operating more or less efficiently than its rivals. In addition, the
change in a company's profit ratios over time tells whether its performance is improving or
declining. A number of different profit ratios can be used, and each of them measures a
different aspect of a company's performance. The most commonly used profit ratios are gross
profit margin, net profit margin, return on total assets, and return on stockholders' equity.
Liquidity Ratios A company's liquidity is a measure of its ability to meet short-term obligations. An asset is
deemed liquid if it can be readily converted into cash. Liquid assets are current assets such as
cash, marketable securities, accounts receivable, and so on. Two commonly used liquidity
ratios are current ratio and quick ratio.
Leverage Ratios A company is said to be highly leveraged if it uses more debt than equity, including stock and
retained earnings. The balance between debt and equity is called the capital structure. The
optimal capital structure is determined by the individual company. Debt has a lower cost
because creditors take less risk; they know they will get their interest and principal. However,
debt can be risky to the firm because if enough profit is not made to cover the interest and
principal payments, bankruptcy can occur.
Page | 21
3.1.1 Thomas Cook Group PLC and TUI Travel PLC Key Figures
Compared
KEY FIGURES1
Thomas Cook Group PLC
TUI Travel PLC
Year Ended 30 September 2009 2008 2007 2006 2009 2008 2007 2006
Earings Per Share Basic (p) 1.9 5.01 22 0.35 -1 -24.4 0.6 -37.48
Earings Per Share Diluted (p) 1.8 5.01 22 0.35 -1 -24.4 0.6 -37.48
Earings Per Share Adjusted (p) 26.4 26.26 39.9 0.25 23.8 20.4 14.4 17.16
Earnings Per Share Growth (%) n/a -34 60 n/a 17 42 -16 23
Total Dividend (p) 10.75 10.62 5 n/a 10.7 9.7 8.4 6.33
Operating Margin (%) 2 2 2 3 0 -1 0 -2
ROCE (%) -53 288 215 180 5 41 22 -20
Dividend Cover 2.46 2.47 7.98 n/a 2.22 2.1 1.71 2.71
Dividend Yield 4.6 4.8 1.7 n/a 4.2 4.5 3.3 3.2
Price / Earnings Ratio 8.8 8.4 7.5 n/a 10.7 10.6 17.5 11.6
Dividend Per Share Growth(%) 1 112 n/a n/a 10 15 33 -4
Comparison between the two key figures of the companies shows that Thomas Cook is
performing times better than TUI Travel PLC since after they are merged with MyTravel.
From the table TUI Travel PLC has earnings per share more than 400% lower than Thomas
Cook Group in 4 years in a row from 2006 to 2009. We can see that after both company are
merged, Thomas Cook is performing better in almost every aspect, except the price of the
stock in which TUI Travel PLC is higher than Thomas Cook Group PLC in several times of
the year, we can see the difference between the price in the graphs shown in the next page.
1 Source: http://www.redmayne.co.uk/
Page | 22
This is the value of Travel and Leisure Sector in Millions of Euros, as it shows the Travel and
Leisure Sector starts declining from 2007 to the lowest point in around December 2008, and
this is mainly caused by the recent recess in economics in which we have just recovered from.
From the two price per share graph we can see that Thomas cook suffers greatly in December
2008, although TUI Travel PLC price drops, it didn‟t go as low as Thomas Cook‟s, and this is
due to TUI AG large Capital which makes the Stock still afloat when Thomas Cooks seems
to be sinking in December 2008.
Page | 23
3.1.2 Profit & Loss Account Compared Profit & loss2 Thomas Cook Group PLC TUI Travel PLC
Year Ended 30 September 2009 2008 2007 2006 2009 2008 2007 2006
£ millions
Turnover 9268.8 8111.5 6404.5 7780.2 13863 13932 12839.9 12180.3
Operating Profit 164.2 134.7 151.8 239.5 28 -196 45.6 -252.3
Net Interest -102.1 -84.7 1.1 -25.4 -89 -83 -37.7 -25.8
Profit Before Tax 56.1 48.4 190.2 219 -52 -267 18.4 -268.6
Profit After Tax 18.3 43.6 150.7 179.8 -10 -267 6.9 -380.8
Total Dividend n/a n/a n/a n/a n/a n/a n/a n/a
Retained Profit / Loss n/a n/a n/a n/a n/a n/a n/a n/a
A quick comparison between the profit between both company we can see immediately that
Thomas Cook is more profitable than TUI Travel PLC in 2006 to 2009, we will analyze the
profit margin between these two company later in this chapter.
The turnover / revenue of TUI Travel PLC is significantly higher than Thomas Cook Group
PLC, but we can see that TUI Travel PLC operating Profit is not as High as Thomas Cook
Group PLC.
From both companies we can see that both companies are losing Revenue as well as
Operating profit in 2007, in which they have just merged; TUI Travel merged with First
Choice, and Thomas Cook merged with MyTravel PLC. Although in 2008 Thomas cook
managed to gain back the revenue and still making a profit of £ 134.7 million, TUI Travel
PLC loses £ 196 million after the merger, details of the profit and loss will be explained in
the profit margin Analysis.
2 Source: http://www.redmayne.co.uk/
Page | 24
3.1.3 Thomas Cook Group PLC and TUI Travel PLC Balance Sheet Compared
A quick summary from the 4 years Balance Sheet between TUI Travel PLC and Thomas
Cook Group PLC, we can immediately asses that Thomas Cook Group PLC has less Total
Assets compared to all TUI Travel PLC in 4 years. We will also analyze the Thomas Cook
strategy on Light Asset Operation in details in Return on Total Asset Analysis.
We will also analyze on TUI Travel PLC Fixed Investment such as new Boeing Planes the
company bought to anticipate the huge Increase in demand for long haul tourism , in which
the recession halt it.
3 Source: http://www.redmayne.co.uk/
Balance Sheet3 Thomas Cook Group PLC TUI Travel PLC
Year Ended 30 September 2009 2008 2007 2006 2009 2008 2007 2006
£ millions
Intangible Assets 3775.1 3438.1 2883.5 1214.3 4737 4429 4216.9 2463.4
Tangible Assets 975.4 897.1 835.3 875.4 964 926 1317.5 1522.7
Fixed Investments 56.3 72.1 62.3 63 189 170 145.5 92.9
Total Fixed Assets 5380.9 4943.3 4199.2 2508.9 6309 6005 6106.8 4720.9
Stocks 27 24.2 19.1 10.5 51 51 39.7 28.1
Debtors n/a n/a n/a n/a n/a n/a n/a n/a
Cash at Bank and in Hand 550.2 761.3 622.3 736 790 1130 1958.7 1160
Total Assets 7071.3 7021.5 5817.4 3942.3 9149 9327 9649.4 8048.8
Creditors Amount Within 1 year 5214.1 5067.2 2482.2 2025 4764 8729 3999 3520.7
Creditors Amount After 1 year 403.4 285.5 321.5 510.9 624 467 522.4 621.5
Total Liabilities 5344.1 5013.1 3696.8 3344.2 6863 6731 7018.6 6228.1
Net Assets 1727.2 2008.4 2120.6 598.1 2286 2596 2630.8 1820.7
Net Current Assets n/a n/a n/a n/a n/a n/a n/a n/a
Called Up Share Capital 57.7 59.8 66.1 303.7 112 112 111.8 n/a
Share Premium Account 8.9 8.9 6.8 539.7 n/a n/a n/a n/a
Other Reserves 2115.7 2192.4 1995.2 -22.7 2775 2749 2428.7 n/a
Profit and Loss Account -474 -265.4 44.2 -255.2 -604 -270 82.9 n/a
Shareholders’ Funds 1708.3 1995.7 2112.3 565.5 2283 2591 2623.4 1820.7
Minority Interests 18.9 12.7 8.3 32.6 3 5 7.4 n/a
Page | 25
3.2 Profit Margin Analysis
3.2.1 Gross Profit Margin
Gross profit margin. The gross profit margin simply gives the percentage of sales available to
cover general and administrative expenses and other operating costs. It is defined as follows:
Gross Profit Margin = Sales Revenue - Cost of Goods Sold
Sales Revenue
Gross Profit Margin
THOMAS COOK GROUP PLC
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Gross Profit Margin 23.65% 23.19% 23.64% 23.31%
Revenue £m 9,268.80 £m 8,754.20 £m 6,399.854 £m 5,244.245
Cost Of Providing Tourism Services £m 7,076.50 £m 6,724.30 £m 4,886.756 £m 4,021.857
Gross Profit Margin
TUI TRAVEL PLC Pro Forma
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Gross Profit Margin 8.35% (0.0835)
7.33% (0.0733)
7.02% (0.702)
Revenue £m 13,863.00 £m 13,932.00 £m 12,839.90
Cost Of Providing Tourism Services
£m 12,705.00 £m 12,911.00 £m 11,800.40
3.2.2 Net Profit Margin
4 Converted from €m 9439.3 based on Exchange currency on date from Apendix 2
5 Converted from €m 7780.2 based on Exchange currency on date from Apendix 2
6 Converted from €m 7207.6 based on Exchange currency on date from Apendix 2
7 Converted from €m 5966.7 based on Exchange currency on date from Apendix 2
0.24
0.17
0.24 0.23
0.08 0.07 0.08
-
0.05
0.10
0.15
0.20
0.25
Year Ended 30/09/09Year Ended 30/09/08Year Ended 30/09/07Year Ended 30/09/06
Gross Profit Margin
Thomas Cook TUI
Page | 26
Net profit margin. Net profit margin is the percentage of profit earned on sales. This ratio is
important because businesses need to make a profit to survive in the long run. It is defined as
follows:
Net Profit Margin = Net Income
Sales Revenue
Net Profit Margin
THOMAS COOK GROUP PLC
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Net Profit Margin 1.77% 1.22% 2.41% 2.82%
Net Income / Profit From operation £m 164.20 £m 107.10 £m 154.25 8 £m 147.94 9
Sales Revenue £m 9,268.80 £m 8,754.20 £m 6,399.85 10
£m 5,244.24 11
Net Profit Margin
TUI TRAVEL PLC
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Net Profit Margin 0.27% -1.32% 1.26% 0%
Net Income / Profit From operation £m 37.00 -£m 184.00 £m 161.90 £m 0
Sales Revenue £m 13,863.00 £m 13,932.00 £m 12,839.90 £m 0
8Converted from €m 227.5 based on Exchange currency on date from Apendix 2
9Converted from €m 218.2 based on Exchange currency on date from Apendix 2
10Converted from €m 9439.3 based on Exchange currency on date from Apendix 2
11Converted from €m 7780.2 based on Exchange currency on date from Apendix 2
0.00
(0.01)
0.01 0.02
0.01
0.02 0.03
(0.02)
(0.01)
-
0.01
0.02
0.03
0.04
Year Ended 30/09/09Year Ended 30/09/08Year Ended 30/09/07Year Ended 30/09/06
Net Profit Margin
Thomas Cook TUI
Page | 27
3.2.3 Profit Margin Analysis
From the Chart we can see that Thomas Cook has more gross profit margin compared TUI
travel PLC, in 4 years straight even though TUI travel has almost 4 times the revenue of
Thomas Cook in 2006, but Thomas Cook gross profit margin is still more than 15% higher
than TUI. We believe that the huge difference between TUI Travel PLC and Thomas Cook
Group PLC gross profit margin is mainly on the cost of providing tourism services. The cost
for providing Tourism services from both company reach almost more than 80% of their total
revenue.
2007
In 2007, Thomas Cook Group PLC have just been merged with MyTravel PLC has bring the
Group pro forma revenue for the year was €11,714.5 million, a decrease of 1.3 per cent on
the prior year. Revenue decreased year on year in the UK (down €22.3 million), Continental
Europe (down €90.4 million), North America (down €124.8 million) and Corporate (down
€34.9 million). These decreases were offset by increases in Northern Europe (up €42.9
million) and Airlines Germany (up €73.4 million).12
The shortfall in gross margin, however, was more than offset by reductions in overhead costs,
such that the pro forma profit from operations increased by €32.3 million year on year.13
2008
In 2008, Thomas Cook Group PLC pro forma revenue for the period was £8,809.8m, an
increase of 11.8% on the prior year period. However, excluding the impact of translation and
acquisitions, Group revenue was flat year on year, with an underlying decrease in UK
revenue of 3% being offset by an increase in Northern Europe of 9%. The pro forma profit
from operations increased by 49.8% to £365.9m.14
TUI travel PLC has had an excellent first year (in 2008) as a merged company with
underlying operating profit up 53% and significantly improved profitability across the
business. The integration is progressing well and TUI now targeting £175m of synergies,
which is £25m higher than our previous target.
12,2 Taken from Thomas Cook Group Annual Report and Accounts 2007 3 Taken from Thomas Cook Group Annual Report 2008 4 Taken from Annual Report and TUI Accounts 2008
Page | 28
TUI travel PLC delivered a £137m improvement in underlying operating profits to £398m in
2008, our first year as a fully merged business (2007: £261m). This has primarily been
achieved as a result of a strong performance in the UK driven by improved trading and the
delivery of synergies, a significant turnaround in France, further improvement in Nordics
from strong winter trading and improved summer trading in Germany and Austria. The
Specialist Sectors also contributed to the result through a combination of organic and
acquisition led growth.4
Even the underlying operating profit of TUI Travel PLC in 2008 after the merger raise up to
more than 58%, the company loss £m 184.00, and this is mostly due to :
• Restructuring expenses of £65.3m, which relate to restructuring programmes already in
progress prior to the merger, the integration of acquired businesses and further restructuring
activities to increase business efficiency.
• Merger-related integration costs of £164.3m, incurred as part of the integration programmes
across the UK Mainstream and Group and Global businesses affected by the merger.
As a result of its reclassification as a disposal group held for sale earlier in the year, a
goodwill impairment of 111.7m was recognised in respect of TUIfly, our airline in the
German source market. TUIfly has since been declassified as a disposal group held for sale.
Amortisation of business combination intangibles arising on the merger amounted to £80.0m
and is included within the 2008 total charge of £86.9m.15
2009
For the year 2009, Thomas Cook Group PLC revenue for the year was £9,268.8m, an
increase of 6% on the pro forma prior year. Excluding the impact of translation, Group
revenue was down 1%, reflecting reduced capacity in all our major markets, as we actively
managed the business through the global recession, offset by the year on year increase as a
result of acquisitions in this year and last. Profit from operations before exceptional items for
the year was £414.9m, an increase on the pro forma prior year of £49m, or 13%. As noted
above, capacity was reduced in all major markets as we sought to manage the Group through
the global recession. Trading was also adversely impacted by the swine flu outbreak,
increases in fuel prices year on year, and the weakening of sterling against the euro and dollar
which served to push up accommodation costs, particularly in our UK business. The adverse
15Taken from Annual Report and TUI Accounts 2008
Page | 29
impact of the above was more than offset, however, by strong cost control, a year on year
foreign currency translation benefit, the realization of additional merger synergies and
contributions from acquisitions made this year and last.16
Thomas Cook Group revenue for 2009 was slightly lower than the prior year at £13,863m
(2008: £13,932m). Capacity reductions reduced underlying revenue by 14%, partially offset
by 4% higher selling prices, resulting in an organic revenue decline of 10%. Foreign currency
translation increased revenue by 9% due to Sterling weakness and revenue from acquisitions
resulted in a 1% increase over the prior year. The Group achieved a £45m improvement in
underlying operating profits to £443m in 2009 (2008: £398m). This improvement has
primarily been achieved by the delivery of integration synergies and the recovery of
scheduled flying losses in the UK and Germany. The improvement was partially offset by the
adverse impact on our French business of weaker demand and socio-political events in the
French West Indies and Madagascar, and weaker demand and excess market capacity in
Canada.17
There are huge difference (more than 15%)from Thomas Cook Group PLC and TUI Travel
PLC gross profit margin in 4 years in a row, which we can assume that Thomas Cook is
doing better than TUI since they have a rather high gross profit margin and steadily in around
20% in the last 4 years despite their revenue is by far lower than TUI Travel PLC.
The graph also clearly stated that TUI Travel PLC net profit margin is lower than Thomas
Cook Group PLC in the last 4 year, and we conclude that Thomas Cook is more profitable
than TUI in the tourism industry.
16 Taken from Thomas Cook Group Annual Report 2009 17 Taken from Annual Report and TUI Accounts 2009
Page | 30
3.3 Return on total assets
Return on total assets. This ratio measures the profit earned on the employment of assets. It is
defined as follows:
Return on
Total Assets =
Net Income Available to
Common Stockholders
Total Assets
Return on total assets
THOMAS COOK
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Return on total assets 0.03 2.52%
0.05 5.09%
0.03 2.94%
0.05 4.81%
Net Income £m 178.10 £m 357.20 £m 166.15 £m 127.76
Total Assets £m 7,071.30 £m 7,021.50 £m 5,648.89 £m 2,657.31
Return on total assets
TUI
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Return on total assets 0.02 2.38%
0.04 3.98%
0.05 5.15%
0.07 7.17%
Net Income £m 218.00 £m 371.00 £m 497.00 £ m 119.30
Total Assets £m 9,149.00 £m 9,327.20 £m 9,649.40 £m 1,662.80
0.03
0.05
0.03
0.05
0.02
0.04
0.05
0.07
-
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
Year Ended 30/09/09Year Ended 30/09/08Year Ended 30/09/07Year Ended 30/09/06
Return On TotalAssets
Thomas Cook TUI Travel PLC
Page | 31
3.3.1 RETURN ON TOTAL ASSETS ANALYSIS
From The Graph we can see that the return of total assets from both companies are unstable,
unlike the revenue that raise in a stable rate over the years. We can also see that after Thomas
Cook Merged with MyTravel PLC in 2007 their Return On Total Assets drops quite
significantly, this is due to in September 2007, Thomas Cook Group PLC reached agreement
on the terms for Condor Flugdienst GmbH, the Group‟s German airline, to be merged into
Air Berlin plc. The merger is subject to approval by the Bundeskartellamt (Federal Cartel
Office), whose primary evaluation process is due to be completed by 7 April 2008. It is
intended that the merger will be completed in two stages – 75.1 per cent in February 2009
and 24.9 per cent in February 2010 or earlier. Thomas Cook Group will also receive new Air
Berlin shares with a value between €380 million and €475 million and a cash payment,
expected to be approximately €120 million, in respect of surplus cash held in Condor. The
deal is expected to be earnings-enhancing in 2008/09. Thomas Cook Group will experience
an estimated reduction in net financial debt of €185 million and in pension obligations of
€266 million.18
By looking at the graph we can assess that TUI Travel PLC Return on Total Asset trend is
going down from 7.17% in 2006 to only 2.53% in 2009. Thomas Cook Group PLC, managed
to climb up from 2.94% on 2007
to 5.09% in 2008, although the
margin drops back to 2.52% in
2009.
In 2007 Thomas Cook also has to
close 144 shops in UK and have
to rename 812 Shops into
Thomas Cook, which they
believe to meet their optimum
size.
Net assets at 31 October 2007
were €3,042.4 million (2006:
€598.1 million). The business combination of Thomas Cook AG and MyTravel has been
18, 2Taken From Thomas Cook Annual Report 2007
Page | 32
accounted for on the basis that Thomas Cook AG is the acquirer. Consequently, the
MyTravel acquisition balance sheet has been the subject of a fair value exercise under IFRS 3.
This fair value exercise resulted in the recognition of goodwill and purchased intangibles of
€2,903.1 million, of which goodwill was €2,396.3 million, brand names, customer
relationships and other intangibles were €457.3 million and order backlog was €49.5 million.
Net funds at 31 October 2007 were €357.0 million (2006: €65.9 million).19
In matters of total asset, we can see that TUI Travel PLC, owns a total asset of £m 9,649.40
in 2007, almost twice Thomas Cook Group PLC after the Merger with MyTravel Group PLC.
Also, as we can see in the Balance sheet that TUI before the merger with First Choice in 2006,
has already had £m8048.8, and they only retained less than 2 million poundsterling of asset
from First Choice. Unlike Thomas Cook, in which in 2006 before the merger with MyTravel
Group PLC, has only £m 3942.3 and after the merger Thomas Cook Group PLC total asset
raise drastically to £m 5817.4. Apart from that Thomas Cook announced their new “Light
Asset, Content Heavy” Model in 2007.
Thomas Cook Group PLC have a more premium margin4, in which they have more
differentiated products, not depend on ownership. They gain access to more differentiated
products through strategic partnership. We can also see that Thomas Cook is more flexible in
the recent economic recession, since they have a light asset, and they also have lower
maintenance cost of their asset20
.
TUI Travel PLC Trend Keep Declining from 2006 (before the merger) until 2009. In 2008,
their return on total asset declined rapidly, are mostly because:
• Aircraft-related costs of £151.1m, which are primarily attributable to the loss on disposal of
19 aircraft included in the June sale and leaseback transaction.5
•Further information on the separately disclosed items is included in Note 3 of the
consolidated financial statements. As a result of its reclassification as a disposal group held
for sale earlier in the year, a goodwill impairment of £111.7m was recognised in respect of
TUIfly, our airline in the German source market. TUIfly has since been declassified as a
20,2,3 See appendices 2.2 4 Taken From TC_Final Presentation 2007 5 Taken from Annual Report and TUI Accounts 2008 6 Taken from Annual Report And TUI Accounts 2007
Page | 33
disposal group held for sale. Amortisation of business combination intangibles arising on the
merger amounted to £80.0m and is included within the 2008 total charge of £86.9m.
Although Thomas Cook Group PLC maintains a Light Asset model, in 2008 Thomas Cook
Group PLC has Acquired 42 companies/ plants to be used as an asset and has been added to
the total asset. In the other hand, TUI Travel PLC has made 17 acquisition which cost
£220.0m in total3.
Although both companies has made quite a lot of Acquisitions in 2007, TUI Travel PLC
scores 5.15% in Return on total Assets compared to 2.94% of Thomas Cook Group PLC.
In 2008, TUI still on the way on finishing some acquisition in 2007, in which they still have
some equity adjustments for the remaining 50% shareholding in Société Polynésienne
Promotion Hotelière, a hotel operator within the Western Europe Mainstream sector and the
remaining 60% shareholding of Jet4You, a Moroccan airline. Both were previously equity
accounted entities for which a share of net liabilities had not been recognised under IAS 28
and IAS 316.
In conclusion, in Return on Total Assets Margin, Thomas Cook is performing better, and
more efficient than TUI Travel PLC, since the trend of TUI travel PLC continuesly declining
over the years, but Thomas Cook managed to get a significant incline due to their light asset,
in which cuts more cost of maintaining compared to TUI Travel PLC. Although in Overall
both companies trend are declining rapidly during the year, and if this continues to occur,
both companies may face bankruptcy.
Page | 34
3.4 Return on (stockholders') equity
Return on stockholders' equity. This ratio measures the percentage of profit earned on common stockholders' investment in the company. In theory, a company attempting to maximize the wealth of it stockholders should be trying to maximize this ratio. It is defined as follows:
Return on Stockholders' Equity
= Net Income
Stockholders' Equity
Return On Shareholder Equity
THOMAS COOK
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Return On Stockholder Equity 0.10 (10%)
0.18 (18%)
0.08 (8%)
0.34 (34%)
Net Income £m 178.10 £m 357.20 £m 166.15 £m 127.76
Stockholder's Equity £m 1,708.30 £m 1,995.70 £m 2,054.68 £m 381.18
Return On Shareholder Equity
TUI
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Return On Stockholder Equity 0.10 (10%)
0.14 (14%)
0.19 (19%)
0.42 (42%)
Net Income £m218.00 £m371.00 £m497.00 £m 119.30
Stockholder's Equity £m2,283.00 £m2,591.00 £m2,623.40 £m 281.10
0.10
0.14 0.19
0.42
0.10
0.18
0.08
0.34
-
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
Year Ended 30/09/09Year Ended 30/09/08Year Ended 30/09/07Year Ended 30/09/06
Return On Stockholder's Equity
TUI Thomas Cook
Page | 35
3.4.1 Return on Stockholder Equity Analysis.
As we can see from the graphs, Both TUI Travel PLC and Thomas Cook Group PLC,
RO(S)E trend is declining since the Merger. Although we can see that Thomas Cook Group
PLC manage to gain a margin of 0.18 after 2007, TUI Travel PLC trend seems to keep
declining, until they both meet at the same point of margin 0.10 in 2009. This trend certainly
does not look good, especially Investors are looking to invest in companies that have a high
ROE, which means they are high and growing.
There are quite significant changes in equity, in which we can see by the dividends paid by
both company to their shareholders each year.
2006
In 2006, before the merger between the tourism division of TUI AG and First Choice Limited
PLC, First Choice Limited PLC in 2006 The interim dividend in respect of the six-month
period to 30 April 2006 of 2.25p per share was paid on 1 November 2006 and this dividend
of £11.8m will be recognised as a deduction from equity in the year ending 31 October 2007.
Subsequent to the balance sheet date, the Directors have proposed a final dividend of 5.4p per
share (2005: 4.65p) payable on 10 April 2007 to the holders of relevant shares on the register
at 9 March 2007. The final proposed dividend amounts to £28.3m (2005: £24.4m) and will,
after approval by shareholders, be recognised in the financial statements for the year ended
31 October 2007. The final ordinary dividend of 5.4p per share, together with the interim
dividend of 2.25p per share, makes a total dividend of 7.65p per share relating to the year
ended 31 October 2006 (2005: 6.6p).21
21 Taken from First Choice PLC Annual Report 2006
Page | 36
With MyTravel PLC have just gone out of difficult times with loss more than Board was
unable to pay a dividend. Since then, we have taken the necessary measures to facilitate the
resumption of dividend payments. At an Extraordinary General Meeting on 26 May 2006, a
special resolution was passed by the Company‟s shareholders to reduce the Company‟s share
capital by way of a reduction in the share premium account. On 28 June 2006, this reduction
of capital was confirmed by an order of the High Court. The Company is now in a position to
pay dividends out of distributable profits earned from that date onwards. If the Board‟s
expectations for 2007 are achieved, the Board would expect to be in a position in December
2007 to propose the resumption of regular payments. Included within the above balances is
an amount of £66.8m (2005: £53.2m) held within escrow accounts in the United States and
Canada in accordance with local regulatory requirements. Also included within the above
balances is an amount of £55.4m (2005: £56.0m) of cash held by White Horse Insurance
Ireland Limited, the Group‟s captive insurance company. These balances are considered to be
restricted, however, regulatory approval is being sought for a loan of £11.6m and a dividend
of £3.2m to be paid in cash from
White Horse Insurance Ireland
Limited to MyTravel Group
plc.22
.
Before the merger with Thomas
Cook, My Travel PLC has was
not doing well in matters of
financial in the past 3 years
since 2003 until 2006 before the
merger23
.
In 2007 First Choice Directors have approved the company has paid an interim divdend of
24.643p per share (2006:5.4p) on
February 2008 to the company‟s parent company, TUI Travel PLC24
Also in2007, Thomas Cook „s basic and diluted earnings per share for
the year was € cents 33 (2006: € cents 35). To allow a more like-for-like comparison to the
prior year, earnings per share before exceptional items and amortisation of business
22 Taken from My Travel PLC Annual Report 2006 23 See appendices 2.3 24 Taken from First Choice PLC Financial Statement 2006
Taken From Thomas Cook Annual Report 2007
Page | 37
combination intangibles has also been calculated. This was € cents 54 for 2007 (2006: € cents
25). However, it should be noted that the earnings per share figures noted here are impacted
by the weighted average number of shares in issue which are significantly lower for the
comparative period due to the nature of the merger transaction. As a result, management
believes that the adjusted earnings per share figures included within the pro forma financial
results and performance review section of this report are a better measure of return. Thomas
Cook Group PLC‟s profit after taxation for the period ended 31 October 2007 amounted to
€225.5 million. The Directors recommend a final dividend of 5p per ordinary share. No
interim dividend was paid during the period.25
2008
Thomas Cook pro forma
adjusted earnings per share
for 2008 the period was
24.1 pence compared with
17.1 pence in the pro forma
prior year period. Pro
forma adjusted earnings
per share has been
calculated using the pro
forma profit for the period,
before exceptional items and
amortisation of business
combination intangibles, divided by the weighted average number of shares in issue. For the
prior year period, the number of shares in issue at the end of the period was taken due to the
distortion caused by the merger. Adjustments have been made to reflect a normalised pre-
exceptional tax charge. The Board is recommending a final dividend of 6.5 pence per share,
for payment after, and subject to shareholder approval at, the Annual General Meeting to be
held on 19 March 2009.
This, together with the interim dividend of 3.25 pence paid on 5 September 2008, brings the
total dividend in respect of the period to 9.75 pence. Based on the adjusted earnings per share
figure noted above, this equates to a 41% payout ratio for the full year.
25 http://www.tui-group.com/fp/en/management_report/highlights_of_2007.html
Taken From Thomas Cook Group PLC Annual Report 2008
Page | 38
In 2008, TUI Travel
PLC interim dividend
in respect of the 6-
month period to 31
March 2008 of 2.8p
was paid on the 1
October 2008 an d
this dividend of
£30.9m will be recognised as a deduction from equity in the year ending 30 September 2009.
Subsequent to the balance sheet date, the Directors have proposed a final dividend of 6.9p per
share (2007: initial interim dividend of 5.9p per share) payable on 6 April 2009 to the holders
of relevant shares on the register at 13 March 2009. The final proposed dividend amounts to
£76.3m and will, after approval by shareholders, be recognized in the consolidated financial
statements for the year ending 30 September 2009. The final ordinary dividend of 6.9p per
share, together with the interim dividend of 2.8p per share, makes a total dividend of 9.7p per
share relating to the year ended 30 September 2008. The dividend for the 9-month period
ended 30 September 2007 comprises an interim dividend of 2.5p per share, which taken
together with the dividend paid
prior to the business combination
would result in a total dividend for
the year ended September 2007 of
8.4p per share. A dividend
reinvestment plan is in operation.
Those shareholders who have not
elected to participate in this plan,
and who would like to participate
with respect to the 2008 final dividend, may do so by contacting Equiniti direct on 0871 384
2030. The last day for election for the final proposed dividend is 23 March 2009 and any
requests should be made in good time ahead of that date.26
2009
26 Taken From TUI Travel PLC Annual Report and Accounts 2008
Page | 39
In 2009, TUI travel PLC interim dividend in respect of the year ended 30 September 2009 of
3.0p per share was paid on 1 October 2009 and this dividend of £33m will be recognized as a
deduction from equity in the year ending 30 September 2010. Subsequent to the balance sheet
date, the Directors have proposed a final dividend of 7.7p per share (2008: final dividend of
6.9p per share) payable on 1 April 2010 to the holders of relevant shares on the register at 12
March 2010. The final proposed dividend amounts to £85m and will, after approval by
shareholders, be recognized in the consolidated financial statements for the year ending 30
September 2010. The final ordinary dividend of 7.7p per share, together with the interim
dividend of 3.0p per share, makes a total dividend of 10.7p per share relating to the year
ended 30 September 2009.27
In 2009, Thomas Cook board
is recommending a final
dividend of 7.0 pence per
share, which when combined
with the interim dividend of
3.75 pence per share paid on
4 September 2009, makes
atotal dividend for the year of
10.75 pence per share. This
recommendation reflects the
Group‟s financial achievement, the strength of our financial model and our commitment to
delivering value to shareholders. The total dividend for the year represents a payout of 41%
of adjusted diluted earnings per share and is in line with our policy, which remains to
increase dividends progressively, paying between 40% and 50% of adjusted earnings by way
of dividend. Once approved, the final dividend will be payable on 8 April 2010 to holders of
relevant shares registered on 19 March 2010.
The basic earnings per share before exceptional items (“adjusted earnings per share”) for the
year was 26.4p, an increase of 10% on the 2008 pro forma figure. The adjusted diluted
earnings per share for the year was 26.2p (2008 pro forma: 24.1p). The basic and diluted
statutory earnings per share was 1.9p and 1.8p respectively (2008 statutory: basic and diluted
of 4.6p). The Board is recommending a final dividend of 7.0p per share, for payment after,
27 Taken From TUI Travel PLC Annual Report and Accounts 2009
Page | 40
and subject to shareholder approval at, the Annual General Meeting to be held on 25 March
2010. This, together with the interim dividend of 3.75p per share, brings the total dividend in
respect of the financial year to 10.75p. Based on the adjusted diluted earnings per share figure
noted above, this equates to a 41.0% payout ratio for the full year compared with a payout
ratio of 40.5% in the prior year.28
Thomas Cook performs better in return on stockholder‟s equity, which means Thomas Cook
are really well on reinvesting earnings to generate additional earnings. We can conclude that
Thomas Cook Group is more efficient even only slightly than TUI Travel. Thomas Cook is
more attractive to investor than TUI, since Thomas Cook ROE is higher.
28 Taken From Thomas Cook Annual Report 2009
Page | 41
3.5 Liquidity Ratios
3.5.1 Current ratio
Current ratio. The current ratio measures the extent to which the claims of short-term creditors are covered by assets that can be quickly converted into cash. Most companies should have a ratio of at least 1, because failure to meet these commitments can lead to bankruptcy. The ratio is defined as follows:
Current Ratio = Current Assets
Current Liabilities
Current Ratio
THOMAS COOK Pro Forma
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Current Ratio 0.40 0.55 0.62 0.67
Current Assets £m 1,681.30 £m 2,078.20 £m 1,561.57 £m 934.37
Current Liabilities £m 4,166.30 £m 3,749.80 £m 2,534.30 £m 1,400.54
Current Ratio
TUI First Choice PLC
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Current Ratio 0.56 0.71 0.85 0.58
Current Assets £m 2,840.00 £m 3,322.20 £m 3,542.60 £m 572.00
Current Liabilities £m 5,091.00 £m 4,682.30 £m 4,151.00 £m 979.30
0.40
0.55 0.62
0.66
0.56
0.71
0.85
0.58
-
0.20
0.40
0.60
0.80
1.00
Year Ended 30/09/09Year Ended 30/09/08Year Ended 30/09/07Year Ended 30/09/06
Current Ratio
Thomas Cook TUI
Page | 42
3.5.2 Current Ratio Analysis
The current ratio of both Thomas Cook Group PLC, and TUI Travel PLC shows that both of
these two company is not a very “liquid” company, especially for a one year period. The
graph clearly shows that these two companies‟ current ratio are below one, and their current
liability for the year is far greater than their current assets, which means these two companies
are not so good in their short term financial standing.29
Between Thomas Cook Group PLC, and TUI travel PLC current ratio, TUI ratio is higher
than Thomas Cook‟s, which after the merger between TUI tourism division and First Choice,
which in 2007 the balance sheet between TUI Tourism Division and First Choice has to be
combined, and also the debt of the consolidated balance sheet of TUI has to be added with the
debt of First Choice Group PLC. There were € 694 million funds raised from convertible
bonds, with a further € 150 million raised through private placements, the objective of the
funds it to safeguard the framework liquidity of general corporate financing.
With TUI Tourism Division merged with First Choice PLC, financial risk management
system, also cash management that was managed by TUI AG has to be splitted. TUI Travel
PLC now performs these functions for the tourism division in line with the unchanged risk
policy of the Group, while TUI AG continues to hold this function for all other business
activities of the Group.30
2007
TUI Travel PLC Current Asset in 2007 was lower than the previous year before the merger,
this is because there are a significant decrease in current asset, especially in cash and cash
equivalents31
, there has been a major decrease from £ 298.9 million (2006) to only £ 11.9
million (2007).32 Other than that, other items in the 2007 current asset are increasing, a
notable increase from 2007 is in the trade and other receivables and also assets classified as
held for sale which raise significantly from £ 88.0 million to £156.8 million. This amount is
80% accounted from sale of aircraft from Jet4You, and also Budget Travel Limited5.
Total current liabilities of TUI Travel PLC also increased approximately £ 500 million from
2006 to 2007 which mainly from trade and other payables. The increase was highly on
29 Current Ratio Definition: http://www.investorwords.com/1258/current_ratio.html 30 http://www.tui-group.com/fp/en/management_report/highlights_of_2007.html 31,4,5,6 See appendices 2.3 7 Thomas Cook Annual Report 2007
Page | 43
creditors, which raise from only £ 79.8 million to £ 233.3 million in 2007, and TUI travel
PLC receives £ 240 million more from clients which received in advance6.
Thomas Cook in the other hand, has a huge increase of current asset in 2007 after the merger,
this is mainly due to Current asset securities of €366.7 million (2006: €72.7 million) include
€292.3 million (2006: nil) in relation to a managed investment fund established to optimize
the utilization of the Group‟s surplus liquidity. The fund is classified as held-for-trading
investments and includes corporate and government bonds (€239.4 million), quoted (€10.2
million) and unquoted (€37.6 million) securities and other assets (€5.1 million). Securities
also include money market deposits with a maturity of greater than three months of €74.4
million (2006: €72.7 million) which are also classified as held-for-trading investments.7
The average credit period taken on invoicing of leisure travel services is nine days (2006:
seven days). No interest is charged on the receivables. The credit risk in respect of direct
receivables from customers is limited as payment is required in full before the services are
provided. In the case
of travel services sold by third-party agents, the credit risk depends on the creditworthiness of
those third parties, but this risk is also limited because of the relatively short period of credit.
Deposits and prepayments include
amounts paid in advance to suppliers of
hotel and other services in order to
guarantee the provision of those supplies
and historically have covered periods
from one to 36 months in advance. The
Group‟s current policy is that deposits
and prepayments will normally only be
made for periods of up to 12 months in
advance. There is a credit risk in respect
of the continued operation of those
suppliers during those periods. Deposits and prepayments also include €78.4 million (2006:
€40.1 million) of deposits on aircraft lease arrangements which are primarily attributable to
the UK Airline.
Page | 44
Securities include money market securities amounting to €5.5 million (2006: €5.2 million)
purchased as collateral against liabilities arising from part-time retirement contracts at
Thomas Cook AG.
Current asset securities of €366.7 million (2006: €72.7 million) include €292.3 million (2006:
nil) in relation to a managed investment fund established to optimise the utilisation of the
Group‟s surplus liquidity. The fund is classifi ed as held-for-trading investments and includes
corporate and government bonds (€239.4 million), quoted (€10.2 million) and unquoted
(€37.6 million) securities and other assets (€5.1 million). Securities also include money
market deposits with a maturity of greater than three months of €74.4 million (2006: €72.7
million) which are also classified as held-for-trading investments.
Loans include advances of €2.6 million (2006: €2.6 million) to two hotel companies in which
the Group has a participating interest. These loans are interest bearing at rates based on
Euribor and are unsecured. The amounts presented in the balance sheet are net of allowances
for doubtful receivables of €73.2 million (2006: €54.1 million). An allowance for impairment
is made where there is an identified loss event which, based on previous experience, is
evidence of a reduction in the recoverability of the cash flows.33
.
Thomas Cook did not have any current assets for sale in 2007, in which TUI Travel PLC has
to sell quite a lot of asset.34
2008
In 2008, Thomas Cook current ratio dropped from 0.62 to 0.55, this is due to a slight raise of
the current liabilities of £ 1200 million, and only £ 500 million on asset. More than £ 200
million on current asset derived from Trade and Other receivable, and around £ 163 million
in financial derivative35
Although the changes in the liabilities is 90% affected by the raise of
the foreign exchange, which causes interest rate swaps raise drastically form £69.1 million to
£ 523.5 million, which is almost 10 times from 20074.
The average credit period taken on invoicing of leisure travel services is eleven days (2007:
nine days). No interest is charged on the receivables. The credit risk in respect of direct
33 Taken From Thomas Cook Annual Report and Accounts 2007, see appendices 2.3 34,3,4 see appendices 2.3
Page | 45
receivables from customers is limited as payment is required in full before the services are
provided. In the case of travel services sold by third party agents, the credit risk depends on
the credit-worthiness of those third parties, but this risk is also limited because of the
relatively short period of credit.
Deposits and prepayments include amounts paid in advance to suppliers of hotel and other
services in order to guarantee the provision of those supplies and historically have covered
periods from 1 to 24 months in advance. The Group‟s current policy is that deposits and
prepayments will normally only be made forperiods of up to twelve months in advance.
There is a credit risk in respect of the continued operation of those suppliers during those
periods. Deposits and prepayments also include
£63.3m (2007: £54.7m) of deposits on aircraft
lease arrangements which are primarily
attributable to the UK Airline.
Securities include money market securities
amounting to £3.7m (2007: £3.8m) purchased
as collateral against liabilities arising from part-
time retirement contracts at Thomas Cook AG,
which are classified as available-for-sale
financial assets. Current asset securities of
£129.2m (2007: £255.6m) include £129.2m
(2007: £203.8m) in relation to a managed
investment fund established to optimise the
utilisation of the Group‟s surplus liquidity. The fund is classified as held-for-trading
investments and includes corporate and government bonds of £129.2m (2007: £166.9m). In
the prior year there was also £7.1m quoted securities, £26.2m unquoted securities and £3.6m
other assets. Securities in the prior year also
included money market deposits with a maturity of greater than three months of £51.8m,
classified as held-for-trading investments.
Page | 46
Loans include advances of £2.1m (2007: £1.8m) to two hotel companies in which the Group
has a participating interest. These loans are interest bearing at rates based on Euribor and are
unsecured.36
2009
For the year 2009 we can see that both TUI Travel PLC and Thomas Cook Group PLC,
current ratio is declining. TUI Travel PLC Ratio in 2009 is 0.56 declined from 0.71 and also
Thomas Cook Group PLC declined from 0.55 to 0.40. Both TUI and Thomas Cook current
asset is declining, but both of their liabilities are raising. This makes the current ratio declined
drastically.
Thomas Cook‟s current asset in 2009 were lower than 2008, in which this was caused by a
decrease in cash and cash equivalent, which largely comprise bank balances denominated in
sterling, euro and other currencies for the purpose of settling current liabilities as well as
balances arising from agency collection on behalf of the Group‟s travel agencies.
Included within the above balances is an amount of £46.2m (2008: £56.4m) held within
escrow accounts in the United States and Canada in respect of local regulatory requirements.
Also included within the above balances is an amount of £13.6m (2008: £55.0m) of cash held
by White Horse Insurance Ireland Limited, the Group‟s captive insurance company, and
£0.4m (2008: £15.7m) held in other securities. These balances are considered to be
restricted37
.
Another decrease in trade and other receivables in 2009 which constitute of £ 90 million,
mostly from securities, which in 2007 was £129.2 million and in 2009 is none, and a decrease
of £50 million in other receivables.
The average credit period taken on invoicing of leisure travel services is 14 days (2008: 11
days). No interest is charged on the receivables. The credit risk in respect of direct
receivables from customers is limited as payment is required in full before the services are
provided. In the case of travel services sold by third-party agents, the credit risk depends on
the credit worthiness of those third parties, but this risk is also limited because of the
36 Taken from Thomas Cook Annual Report and Accounts 2008, see appendices 2.3 37 Taken from Thomas Cook Annual Report and Accounts 2009, see appendices 2.3
Page | 47
relatively short period of credit.
Deposits and prepayments include amounts paid in advance to suppliers of hotel and other
services in order to guarantee the provision of those supplies and historically have covered
periods from 1 to 24 months in advance. The Group‟s current policy is that deposits and
prepayments will normally only be made for periods of up to twelve months in advance.
There is a credit risk in respect of the continued operation of those suppliers during those
periods. Deposits and prepayments also include £65.0m (2008: £63.3m) of deposits on
aircraft lease arrangements which are primarily attributable to the UK Airline.
Securities include money market securities amounting to £4.0m (2008: £3.7m) purchased as
collateral against liabilities arising from part-time retirement contracts at Thomas Cook AG,
which are classified as available for sale financial assets.
In the prior period, current asset securities of £129.2m consisted of a managed investment
fund established to optimise the utilisation of the Group‟s surplus liquidity. The fund was
classified as held-for-trading investments and consisted of corporate and government bonds.
These securities were disposed of during the current year.
In the prior period, loans included advances of £2.1m to two hotel companies in which the
Group had a anticipating interest. These loans were interest bearing at rates based on Euribor
and were unsecured. The advances were settled in full during the year.38
In May 2008, the Group entered into a €1.8bn committed credit facility maturing in May
2011. The facility comprises term loan, revolving credit and bonding facilities. €320m of the
revolving credit facilities were originally made available for the Group in respect of the
proposed transaction between Condor and Air Berlin. During the year, the Group entered into
an agreement with its lenders to change the designation of this portion of the facility to enable
it to be used to meet the aircraft refinancing needs of the Group. This re-designation became
effective on 1 October 2009 and the facilities were fully available to the Group from this date.
Amounts are repayable under the term loan facility at fixed intervals with a final bullet
payment at maturity. As at 30 September 2009, the Group had repaid a total of €75m of term
loans.
38 Taken from Thomas Cook Annual Report and Accounts 2009, see appendices 2.3
Page | 48
The Directors consider that the fair value of the Group‟s borrowings with a carrying value of
£940.0m is £943.9m (2008: carrying value £772.1m; fair value £770.0m). The fair values
quoted were determined on the basis of the interest rates for the corresponding terms to
maturity or repayment as at the period end. For items maturing in less than one year, the
Directors feel that the fair value is equal to the carrying amount39
.
For TUI Travel PLC, in 2009 the current asset drops £ 500 million but the current liabilities
raise for more than £ 500 million. The drop in the current asset can be explained by a
decrease of £ 120 million in trade and other receivables, a decrease of £ 380 in cash and cash
equivalent. Cash and cash equivalents includes £60m (2008: £46m) that is not available for
immediate use by the Group. This is made up of monies held to meet regulatory requirements
plus cash balances on short term deposits held on a restricted basis by the Group‟s captive
insurance funds as part of their ongoing operations.
Other current investments disclosed on the consolidated balance sheet comprise deposit
balances held to meet regulatory requirements with a term exceeding three months40
.
TUI Travel PLC decrease in current liabilities is also because a significant decrease in asset
held for sale which in 2008 was more than £ 135 million to only £ 67 million, The disposal
group assets and liabilities held for sale comprise the Canadian Mainstream business at 30
September 2009 and Société d‟Investissement Aérien S.A. (Jet4You) at 30 September 2009
and 30 September 2008. Jet4You is included within the Western Europe segment and the
Canadian Mainstream Business
is included in the Northern
Region. The Canadian
Mainstream business is
classified as held for sale on
the basis of the announced joint
venture transaction with
Sunwing Travel Group Inc.
Jet4You is presented as held
for sale at the current and or
39 Taken from Thomas Cook Annual Report and Accounts 2009, see appendices 2.3 40,2,3 Taken from TUI Travel PLC annual Report 2009, see appendices 2.3
Page | 49
year end, based on the active disposal process for the business which is progressing and
which the Directors expect to complete within 12 months.
Aircraft held for sale relate to the Northern Europe and Central Europe Mainstream segments.
In the year ended 30 September 2009, an impairment charge of £1m (2008: £31m) has been
taken to record these property, plant and equipment assets at the lower of their carrying value
and fair value less costs to sell. The impairment charge is included within separately
disclosed restructuring expenses and aircraft items (Note 3).
During the prior year, four aircraft were purchased but were not sold and leased back until the
first quarter of the current year ended 30 September 2009. The four aircraft were therefore
classified as held for sale at 30 September 2008 until their disposal for a total of £90min the
current year. The disposal proceeds are included within „Proceeds from sale of property, plant
and equipment‟ on the consolidated cash flow statement2.
Beside of that, there is a huge increase in borrowings in 2009 in TUI Travel PLC is from £ 99
million to £ 327 million, which they have to increased their shareholding from 51% to 70%
on the exercise of part of one of the options. The remainder of this put option over 20% of the
shares may be exercised at any time until 2015. A further put option at a fixed price with no
time limit has been written by the Group during the year to the same minority shareholder for
the remaining 10% shareholding3.
In conclusion, both companies in 2009 are trying to cover the expenses they have made from
the years before by borrowing from banks, and from shareholders. Especially TUI Travel
have to cover the losses and pay the shareholders. We can see that in this case (current ratio)
TUI performs better than Thomas Cook Group PLC since Thomas Cook seems to be cutting
down on cash at hand, which make Thomas Cook‟s current asset decline drastically.
Although both companies have borrowings, Thomas Cook‟s loans is twice as much from TUI
Travel PLC for 4 years.
Page | 50
3.6 Leverage Ratios
3.6.1 Debt-to-assets ratio41
Debt-to-assets ratio. The debt-to-asset ratio is the most direct measure of the extent to which
borrowed funds have been used to finance a company's investments. It is defined as follows:
Debt-to-Assets Ratio = Total Debt
Total Assets
Debts-to-assets ratio
THOMAS COOK
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Debts-to-assets ratio 18.46% 17.68% 11.29% 12.78%
Total Debt £ 3,396.00 £ 3,480.00 £ 1,737.00 £ 1,518.00
Total Assets £6,639,500.00 £6,689,800.00 £5,500,386.00 £ 4,997,333.00
Debts-to-assets ratio
TUI
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Debts-to-assets ratio 12.62% 13.88% 23.16%
Total Debt £ 3,903.00 £m 6,845.00 £m 6,410.00
Total Assets £k 9,481,600.00 £k9,122,000.00 £k 8,938,000.00
41 Data from http://www.selftrade.co.uk/company-tui-travel---1uTT..L , http://www.selftrade.co.uk/quote-thomas-cook---1uTCG.L#
12.62%13.88%
23.16%
-
18.46%17.68%
11.29%12.78%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Year Ended 30/09/09Year Ended 30/09/08Year Ended 30/09/07Year Ended 30/09/06
Debts to Asset - Ratio
TUI Thomas Cook
Page | 51
3.6.2 Debt to Asset Ratio analysis
The debt to ratio sows the proportion of a company‟s assets which are financed through debt.
If the ratio less than one, most of the company‟s assets are financed through equity. If the
ratio is greater than one most of the company's assets are financed through debt. Companies
with high debt/asset ratios are said to be "highly leveraged," and could be in danger if
creditors start to demand repayment of debt.
The debt to asset ratio for Thomas Cook and for TUI Travel PLC for the last 4 years, is
rapidly changing. We can see that Thomas Cook Group PLC in 2006 to t2007debt to asset
ratio was declining slightly, but in 2008 the ratio drastically increase to 17.68% from 11.29%
and continuously grew to 18.46% in 2009. Unlike Thomas Cook Group PLC, TUI Travel
PLC Debt to asset ratio declined for 10% from 23.16% in 2007 to merely 13.88% in 2008,
and steadily declining to 12.62% in 2009, a significant change, in which the ratio were mostly
affected by the loans that TUI Travel PLC made, and paid, the major changes has been
explained in details in return on total asset analysis. The major changes that happens in terms
of total assets has been explained in return on total asset analysis for Thomas Cook Group
PLC.
In brief, both Thomas Cook and TUI Travel PLC investments on assets are financed through
debts, since the margin are quite high, we can say that Thomas Cook and TUI Travel PLC are
highly leveraged since most of the company‟s assets are financed through debts42
.Although
both companies are highly in debt, TUI Travel PLC still better than Thomas Cook in this
matter, since TUI has less debt than Thomas Cook. These companies will be in danger if their
creditors start to demand a repayment of debt.
42 http://www.investorwords.com/5497/debt_asset_ratio.html
Page | 52
3. 6.3 Debt-to-equity ratio43
Debt-to-equity ratio. The debt-to-equity ratio indicates the balance between debt and equity in a company's capital structure. This is perhaps the most widely used measure of a company's leverage. It is defined as follows:
Debt-to-Equity Ratio = Total Debt
Total Equity
Debts-to-equity ratio
THOMAS COOK
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Debts-to-equity ratio 0.72 71.74%
0.60 59.25%
0.29 29.47%
0.72 71.74%
Total Debt / Net Debt £m 3,396.00 £m 3,480.00 £m 1,737.00 £m 3,396.00
Total Equity £m 1,727.20 £m 2,008.40 £ m 2,062.75 £ m1,727.20
Debts-to-equity ratio
TUI
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Debts-to-equity ratio 0.49 49.41%
0.48 48.88%
0.83 83.71%
Total Debt / Net Debt £m 6,903.00 £m 6,845.00 £m 6,410.00
Total Equity £m 2,283,000.00 £m 2,591,000.00 £ m 2,623,500.00
43 Data from http://www.selftrade.co.uk/company-tui-travel---1uTT..L , http://www.selftrade.co.uk/quote-thomas-cook---1uTCG.L#
0.720.59
0.290.360.490.49
0.84
- 0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
Year Ended 30/09/09Year Ended 30/09/08Year Ended 31/10/07Year Ended 31/10/06
Debts to Equity - Ratio
Thomas Cook TUI
Page | 53
3.6.4 Debts to Equity Ratio Analysis
Debt to equity measures a company‟s financial leverage. Debt/equity ratio is equal to long-
term debt divided by common shareholders' equity. Typically the data from the prior fiscal
year is used in the calculation. Investing in a company with a higher debt/equity ratio may be
riskier, especially in times of rising interest rates, due to the additional interest that has to be
paid out for the debt44
.
From the graph we can see that after the merger (2007) TUI Travel PLC financed their
investment through debt, and Thomas Cook Group PLC uses more equity than debt to
finance their investment. In 2008, TUI reduces their debt until almost half (0.49 from 0.84)
but Thomas Cook debt has raised from 0.29 to 0.59 in 2008. This significant changes in the
debt is to complete some acquisition in the year, which we have explained in Return on
Stockholder Equity analysis.
In 2009, TUI Travel PLC managed to keep their margin to be stable, in which Thomas Cook
has earned more debt in the following year Thomas Cook raise on debt to equity margin is
mainly because of their total equity value drops, and there has been a significant decrease in
the cash at hand in their current ratio, which has been explained in detail in the return on total
asset analysis.
In brief, TUI Travel PLC performs better in debts to equity ratio, which TUI did not use as
much debt as TUI to invest on their assets. TUI Travel PLC uses their shareholder equity
more to invest on the assets they have, since TUI Travel PLC main objective is to retain
assets, and Thomas Cook‟s goal was to reach as high as possible on gross profit margin, but
in return, they have to pay debts and borrowings which will need to be paid in 1 to 10 years
time.
44 http://www.investorwords.com/1316/debt_equity_ratio.html
Page | 54
3.7 Financial Analysis Summary
Page | 55
TUI TRAVEL PLC THOMAS COOK GROUP PLC
Page | 56
Taken From : http://www.selftrade.co.uk/quote-thomas-cook---1uTCG.L#
TUI TRAVEL PLC THOMAS COOK GROUP PLC
Page | 57
3.7.1 Financial Analysis Conclusion From the financial point of view, our group has made a conclusion that Thomas Cook Group
PLC performs better than TUI Travel PLC in some very essential part. Thomas Cook scores
better in profit margin, both gross profit margin and net profit margin, which makes Thomas
Cook is more profitable than TUI Travel PLC.
We can also see that the profit that Thomas Cook made is much more than TUI Travel. TUI
Travel had not been very profitable since the last 4 years, in fact they are losing money each
year and more every year since they merged with First Choice.
Thomas Cook also performs slightly better than TUI Travel in terms of return on total assets,
in which TUI Travel return on total assets margin are declining steadily from 2007 to 2009.
Thomas Cook also performs better in return on stockholder‟s equity in which Thomas Cook
are really well on reinvesting earnings to generate additional earnings. We can conclude that
Thomas Cook Group is more efficient even only slightly than TUI Travel. Thomas Cook is
more attractive to investor than TUI, since Thomas Cook ROE is higher.
Although TUI Travel PLC is not profitable compared to Thomas Cook, and also the return on
Equity is lower, TUI Travel have a higher current asset ratio compared to Thomas Cook.
Thomas Cook also had quite a lot of debt, mainly long term, but Since this margin is
ignoring TUI Travel liabilities. And it also means that TUI Travel is more liquid than Thomas
Cook Group PLC, and is more efficient on meeting short term debt obligations, and TUI
Travel is relatively better in short term financial standing.
Although both companies are highly in debt, TUI Travel PLC still better than Thomas Cook
in this matter, since TUI has less debt than Thomas Cook. These companies will be in danger
if their creditors start to demand a repayment of debt.
TUI Travel PLC performs better in debts to equity ratio, which TUI did not use as much debt
as TUI to invest on their assets. TUI Travel PLC uses their shareholder equity more to invest
on the assets they have, since TUI Travel PLC main objective is to retain assets, and Thomas
Cook‟s goal was to reach as high as possible on gross profit margin, but in return, they have
to pay debts and borrowings which will need to be paid in 1 to 10 years time.
Page | 58
Chapter 4: Marketing
4.1. Mission statement:
“A Mission Statement of the organization’s purpose – what it wants to accomplish in the
larger environment”45. A mission statement also should be the guideline of the
company´s marketing orientation. In matter of Mission Statement, TUI Travel PLC and
Thomas Cook Group PLC have different perspectives.
Under the global vision “WE GO FURTHER TO MAKE DREAMS COME TRUE”, Thomas
Cook states itself with four different missions based on five main divisions: UK & Ireland,
Continental Europe and Airlines Germany, Northern Europe, North America. The
differences in the Thomas Cook ´s Mission Statements in different divisions are related
on its flexible business models and concentrated marketing strategy for every different
geography market.
Conversely, TUI travel plc does not public any mission statement. Being confident about
the reputations as one of the market leaders in Tourism industry, the Leader of TUI
believed it is not essential to have a sentence to describe company's function, markets
and competitive advantages; and state its business goals and philosophies, which have
already become the famous concepts. “TUI Travel PLC does not have a Mission Statement.
We have a stated strategy which is to create superior shareholder value by being the
world’s leading leisure travel group providing customers with a wide choice of
differentiated and flexible travel experiences to meet their changing needs To enable us to
achieve this goal we have identified four key strategic imperatives which are linked to our
KPIs.”46
In our group opinion, a mission statement is the fundamental guideline of the company.
A mission statement defines what an organization is, why it exists, its reason for being.
At a minimum, a mission statement should define who primary customers are, identify
the products and services the company produce, and describe the geographical location
in which company operate. Specializing mission statement for each business divisors,
45 TUI Travel Annual Report 2009 46 FAQS. TUI Travel plc. Retrieved from http://www.tuitravelplc.com/tui/pages/investors/shareholderinfo/faqs
• Exceptional Service From Exceptional People
UK & Ireland
• To perfect the personal leisure experience.
Continental Europe and
Airlines Germany
• Further we go to make dreams come trueNorthern Europe
• To be the best travel company in the world to travel with, work for, and
invest in North America
Page | 59
Thomas Cook creates itself more advantages in communication with not only customers,
investors but also the company´s employees. All of these elements are extremely critical
in strengthen the firms ‘position in the core markets, and expand and develop business
in the new markets.
4.2. SWOT Analysis:
TUI Travel plc
Thomas Cook
Strengths Market leader in the tourism industry. Be a part of TUI AG, an international cooperation, which is operating business in Travel, Hotels and Resorts, Cruises, and major share holder in Container shipping (43.33% holding in Hapag-Lloyd). Unique media methods in marketing (TUI song: Let´s make people smile). Strong multi-channels distribution focusing on online sales. Delivering high quality customers services. Stable and management-friendly shareholders.
Scale (22m passengers out of 21 source markets). Portfolio of strong brands
Speed of decision making and implementation
Industry leading margins
Tailored business model in each market Strong multi-channel distribution capability Asset light model Strong and improving financial position Positive customer feedback: 97% customer satisfaction; 96% would recommend TCNE. Unique concept hotels. No1 market share of Canaries, Majorca, Turkey, Egypt and Rhodes. 25years average industry experience.
Strong partnerships.
Weakness Company registered a net loss of EUR 142 million in 2008 (Annual Report 2008) Major reduction in the
Has no customer retention policy. Has little or no scope outside of Europe.
Page | 60
volume of holiday packages because of recession and financial uncertainties Heavy Fixed Assets lead to the lack of flexibility and reduce the competition ability when the economic climate has high level of uncertainty. (Fixed assets cover 34% of total assets) Maintaining too many different brand names makes the company’s marketing and management expenses become too high.
Lack of service, flexibility and business focus (such as frequent flyer programmes) make the low-cost model unappealing for most business travelers. The two drivers of growth, the focus on price and the focus on convenience (frequent flights, few connections, more nearby airports) are reaching their natural limits. Differentiation from there remains to be difficult. Easy Jet’s own success makes it difficult to recruit and train staff quickly enough
Opportunities Expansion in developing markets such as India and China. Business expansion through further acquisition and mergers. Recovery signs of the world economic after economic recession.
Experts predict great potential for future growth in the next years. The current recession is favorable as people and businesses are more cost-conscious.
More full-service airlines may withdraw from the regional market to focus on more profitable long-haul routes leaving the market to the low-cost operators.
Page | 61
Threats Changing consumer behavior in his global economic recession can influence company’s strategy. Threat of losing consumers who want a low-cost packagers because company’s focus on luxury hotels. Competitors, such as Thomas Cook, are more flexible in business models and strategies.
Competition is likely to intensify, given the saturated market and the shortage of other options. Increased competition is likely to lead to greater difficulties in demanding incentives from communities. Companies cut on business travel in times of economic downturn and because of new time-consuming security measures travel substitutes like videoconferencing are introduced.
4.3. Strategic Objectives:
The company’s statement needs to be turned into the Strategic Objectives, which
include business objective and marketing objective to guide management. Based on the
company global vision, both Thomas Cook and TUI set up the clear clear strategic goals.
Thomas Cook’s strategic goals are built around our vision of going further to make dreams come true. The strategic objective: “STRENGTHENING OUR BUSINESS AND INVESTING FOR GROWTH” is developed in four growth drivers: Maximize value of
mainstream, Become leading independent travel provider, Become the leading UK travel-related financial services provider, and Capture growth and value through mergers & acquisitions and partnerships.
Maximize value of mainstream:
• Product mix
• Leverage brands
• Multi-channel distribution
• Capacity reduction
• Reduced costs via flexibility
• Maximize consolidation
benefits
• Further consolidation
Leading independent travel
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provider:
• Substantial business today
• ‘One-stop-shop’ proposition
• E-commerce led via website, but multi-channel
• Wholesale and retail distribution
• Emerging markets growth
Leading UK travel-related financial services provider:
• Network expansion UK
• TC brand
• FX, Insurance & Credit Card
• Cross selling
• High street led, but multi-channel
• FX price proposition
• Insurance regulatory environment
M&A opportunities in the following areas:
• Developing markets
• Consolidation in mature markets
• Capture further value in profitable products
• Independent travel
• Financial Services
TUI travel plc builds up itself a more specific strategic goal, which is emphasized on the
values of the shareholders and customers. “Creating superior shareholder value by being
the world’s leading leisure travel group providing customers with the widest choice of
differentiated and flexible travel experiences to meet their changing needs.”
TUI’s strategy is focused on four areas – Product & Content, Distribution & Brands, People & Operational, Effectiveness and Growth & Capital Allocation
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Imperative 1: Product & Content
• Different products to our competitors and unique in the marketplace: developing a
portfolio of exclusive products that no competitor can match or replicate and which is
tailored to include additional services and facilities that customers want on their
holiday.
• High customer retention and repeat booking rates.
• Earlier booking trends: increases yields and removes pressure in the late market,
while customers also benefit from a more added-value, unique experience.
Imperative 2: Distribution & Brands • Highly trusted brands that provide value and quality: highly trusted brands
provide excellent value for money and drive customer loyalty and repeat
bookings.
• Broadening customer choice: provide customers with a wide choice of holiday
options that meet their preferences, and a convenient range of booking options,
• Building our customer relationships: the distribution of products, in each
source market,
is tailored to reflect different customer preferences and market dynamics. Each
source market has its own distribution strategy, which aims to reduce costs by
building controlled distribution through the efficient operation of retail shops,
the use of the internet as a research and booking tool and by the utilisation of call
centres.
Imperative 3: People & Operational Effectiveness • People are key to success. • Flexible business model that can react to demand changes. • Development of sophisticated capacity and yield management systems. • Underlying operating profit margin up 30 basis points from 2.9% to 3.2%. • Integration progressing well with total synergies upgraded to £200m.
Imperative 4: Growth & Capital Allocation
• Acquired 11 niche high-growth businesses in Specialist Sectors. • Growth plans are progressing well in Russia & CIS. • Consolidation of the Canadian market through a proposed strategic venture with Sunwing. • Underlying operating profit up 11% to £443m. • Increase in return on invested capital to 9.2%.
In matter of Strategic Objectives, we think that TUI have better customer oriented image.
Due to the fact, TUI considers the customers values and relationships as the critical
element. It means the company concerns more about market place understandings and
customer’s needs; design value creating marketing strategies, deliver customer
satisfaction, and build strong customer relationship. In return, TUI can improve its sale
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profit and earn customer loyalty. TUI “creates value for customers and shareholders in
order to capture value form customers in return”47.
4.4. Market position:
TUI and Thomas Cook operate in the five five geographic segments UK & Ireland,
Continental Europe and Airlines Germany, Northern Europe, North America, and
Emerging Markets ( Eastern Europe, Japan,China and India). They both
are the market leaders in these markets.
TUI is doing business in a larger market, which includes 27 Source Markets48:
Australia
Austria
Belgium
Canada
China
Czech
Republic
Denmark
Finland
France
Germany
Hungary
Italy
India
Ireland
Luxembourg
Netherlands
Norway
New Zeleand
Poland
Russia
Slovenia
Spain
Sweden
Switzerland
United
Kingdom
United States
Ukraine
Compare with the number of Thomas Cook operating markets is 21 countries49
Market dynamics:
While the outlook remains
challenging there are signs of
recovery in consumer confidence.
However, the weakness of sterling
versus the euro and US dollar is
expected to increase input costs
and to continue to affect consumer
sentiment.
Before the mergers in 2007,
TUI Thomson and First Choice) and
Thomas Cook had already been the leading players of UK travel leisure market,
who held the biggest market shares.
47 48 49
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TUI Travel plc
Thomas Cook
Passengers50 5.687m 7.6m (Including UK, Ireland, Middle East, and India)
Controlled distribution51
2009 78%
2008 75%
2009 68.6%
2008 67.4%
Market position
Mainsteam sector: #1 (34% market share)52
Mainsteam sector: #2
Financial services (Foreign Exchange market): #4 (7% market share)
Financial services (Foreign Exchange market): #3 (15% market share)
Strategy Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to
• Target further mainstream margin improvement through product and haul mix. • Develop our e-commerce strategy and move into the online travel agency market.
50 51 52
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align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management.
• Continue to grow travel-related financial services, notably foreign exchange. • Build on our strong performance in key medium haul destinations outside the Eurozone.
Key Brands
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Market dynamic:
Following tough trading conditions in the
2009 financial year, GDP forecasts for
2010 are ahead of previous expectations
helping to improve consumer sentiment.
TUI Travel plc
Thomas Cook
Passengers53 9.73m (Including Germany) 7 m Controlled distribution54
2009 46%
2008 40%
2009 38.3%
2008 37.7%
Strategy Expanding the tour operator business in growth markets like Russia and Ukraine. Expanding the market share in the German-speaking volume market for cruises. Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management.
• Increase sales of exclusive and differentiated product to maintain margin advantage. • Continue to grow online distribution channels and improve dynamic packaging capabilities. • Increase sales to medium haul destinations such as Turkey and North Africa.
Key Brands
53 54
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Market Dynamic:
• The UNWTO expects oral customer
spending to decline by 4-6%.
• 3 major players; consolidated market
•Limited dependency on third party
travel agents
•High online penetration
•Most local LCCs¹ regional only or loss making Kuoni buying smaller players
• Thomas Cook5: 2010 is likely to be challenging as the weakness of the Swedish krona
puts significant pressure on margins, and on long haul holidays.
• TUI: adding capacity recently, during 2009, the level of differentiated product offered
by the Nordics business increased by four percentage points to 41%. This was driven by
the opening of a new eco-friendly Blue Village in Rhodes and the creation of a new
concept, Blue Unique, with 20 small unique hotels in several charter destinations.
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Tour operator market share:
TUI Travel plc
Thomas Cook
Passengers55 5.687m 1.5m Controlled distribution56
2009 85%
2008 79%
2009 82.7%
2008 79.4%
Strategy Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management.
•Further expand internet sales. • Increase the proportion of customers who book our exclusive, concept hotels. • Continue to build on the success of our world class, in-flight sales. • Consolidate our position in the major Nordic outbound destinations of Spain, Greece, Cyprus, Turkey and Thailand.
Key Brands
Market share:
55 56
http://www.thomascookgroup.com/downloads/pdf/Investor_Day_FINAL_Website.pdf
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Market dynamics
• Thomas Cook: The outlook is more positive
in the independent segment and, while there
is still over capacity in the mainstream travel
market, consolidation is possible with the
proposed Sunwing merger with TUI.
• Destinations: USA, Europe, Mexico,
Caribbean
Winter focus Mex/ Carib, summer focus Europe
• Overcapacity in mainstream and no entry barriers
• Highly fragmented retail distribution
• Independent larger more stable market
• Three major players in the overall leisure market Thomas Cook, Transat, Sunwing/
TUI
• Transat and Sunwing/TUI mainstream focused
TUI Travel plc
Thomas Cook
Passengers57
0.54m (Including Mainstream and Specialists and Activity sectors)
1.1m
Controlled distribution58
2009
2008
2009 14.1%
2008 15.7%
Strategy Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management.
• Pursue flight and accommodation cost savings and strengthen hotel exclusivities. • Grow independent travel through dynamic packaging technology and improved product line. • Strengthen controlled distribution, especially online. • Grow newly launched Financial Services division and expand product range.
57 58
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Key Brands
Canada Leisure Market:
With more than 1.1 million (compare with 0,54 m passengers of TUI ) passengers and
hold up to 17% of Canadian Independent wholesale and Mainstream Market share (TUI :
3%), Thomas Cook is a leading player in North America leisure travel market.
Market dynamic
Market conditions have not changed
significantly in the German airlines market.
Highly competitive market.
German tour operator market less
integrated than UK
Stimulation of demand for travel products.
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Demand for flexibility & price transparency but growth is levelling out following consolidation.
Market position before the merges:
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Market position after the merges:
TUI Travel plc
Thomas Cook
Passengers59
8.775 million (Including Mainstream and Specialists and Activity sectors)
5.9m
Number of aircraft
48 34
Retail Estate
Own shop: 428 Franchise: 974
Ownshop: 166 Franchise: 395
Product Focus
Strong focus on mainstream Highest brand equity in the
Market
Strong focus on mainstream market
Well positioned with Neckermann brand in lower/ budget segment.
Controlled distribution60
2009 46%
2008 40%
2008
2009
Strategy Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management. Expanding the market share in the German-speaking volume market for cruises.
• Focus on cost-saving, especially fuel related efficiencies. • Drive synergies and other benefits through greater co-ordination of activities with other Thomas Cook Group airlines. • Enhance benefits from cooperation with other external airlines.
Key Brands
59 60
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Market Share:
In Germany, TUI performs better than Thomas Cook based on the fact that TUI not only
focuses on airline, but also is the market leader in leisure travel market with 8.775
million customers (2009) 61 and achieves revenue of £ 4,144 (2009) which has an
increase 3% over the prior year.
In 2007, TUI fly faced problem because of the heavy assets. Number of 48 air craft was
too big As a consequence TUIfly was sub scale to operate a mixed model effectively and
too big to optimise tour operator margin.
TUIfly also improved its result by cutting capacity in its loss-making scheduled flying
routes. Capacity was cut by 16% in summer 2009, which led to a two percentage point
improvement in load factors for its summer 2009 programme and resulted in a £10m
improvement in margins over the prior year. During the year, TUI also announced that
they entered into a strategic venture with Air Berlin, which will further de-risk the
TUIfly business through an exit of the scheduled flying operation and will secure
optimal capacity for the German tour operator.62
Operating in the same markets, having many similarities in marketing strategy, TUI and
Thomas Cook are the direct competitors of each other. From our group prospective, we
see that TUI has higher market positions in the core market (UK & Ireland, Continental
Europe and Airlines Germany, Northern Europe, North America). Capturing the
advantages from the merges with Fist Choice, TUI travel plc achieve the biggest share
holder in UK market. Across the core markets in Europe, TUI is successful at
maintaining the market leading player.
61 62
29%
17%
16%6%
40%
Germany Core Market Share
TUI
Thomas Cook
Rewe
Alltour
Others
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4.5. Product and Service:
Both focus on leisure travel63 Thomas Cook and TUI travel plc have many commons in
products and services. However, it is not mean that the ways they segment their
product and service are the same.
4.5.1. TUI travel plc
TUI has four main business sectors: Mainstream Sector64, Specialist and Emerging
Markers Sector, Activity Sector and Accommodation & Destinations Sector.
63 See Appendix 1 64 See Appendix 1
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Mainstream Sector
Mainstream is the largest Sector in terms of size (65%), financial performance and
employee numbers. It comprises leading tour operators and ‘power’ brands and
operates a fleet of 146 aircraft and circa 3,500 retail shops. It has three divisions;
Northern Region, Central Europe and Western Europe.
Mainstream sector includes various package holidays65:
It operates within two key segments of the leisure travel market: Mainstream holidays - which include the sale of differentiated and exclusively
available products, long haul travel as well as more traditional package holidays: Sun holiday
Winter holiday
Family holiday
Adult holiday
All inclusive holiday
Luxury holiday
Component - which includes the sale of flights, accommodation, car hire, transfers and excursions either as separate components or together as part of customer assembled holidays
Specialist & Emerging Markets Sector
65 Appendix 1
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The Specialist & Emerging Markets Sector is an international portfolio of travel
businesses focusing on specific destinations, premium travel experiences or particular
customer demographic segments often with differentiated and exclusive product.
The sector consists of 40 businesses operating from North America, Europe and, most
recently, emerging markets such as Russia and Ukraine. Specialist travel experiences
include around-the-world private jet expeditions, student educational tours and tailor-
made trips to the Far East, Africa or Australia. Top selling brands include Mostravel,
Turchese and Hayes & Jarvis.
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Activity sector
This Sector has over 40 activity travel businesses that operate under five divisions -
Marine, Adventure, Ski, Student and Sport. Each of these divisions has market-leading
positions.
The Adventure businesses take more customers to iconic adventure destinations than
any other operator. The Sport businesses are leaders in supporter-led cricket and rugby
tours in Australia and the UK, while the Student businesses encompass everything from
the traditional school trip to France, to trek holidays for groups of young adults in the
Himalayas. This Sector also includes the leading yacht brands in Europe and the US and
the world’s largest ski operator. Top selling brands include Crystal Ski, Moorings and Le
Boat.
Accommodation & Destinations Sector
The Accommodation & Destinations Sector sells and provides a range of services in destination to tour operators, travel agents, corporate clients, and direct to the consumer worldwide.
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Services include hotel accommodation, transfers, excursions, round trips, organising meetings, incentives, conferences and events (MICE), cruise handling as well as integrated website solutions for our customers. A&D is structured along key business lines - Business to Business (B2B) and Business to Consumer (B2C). Top selling brands are TUI (used by a number of incoming agencies including TUI España, TUI Hellas),
Hotelbeds.com and LateRooms.com.
4.5.2. Thomas Cook
Thomas Cook operates business in four sectors: Mainstream, Independent66, Travel
related to Financial Services67 sector, and Emerging Markets.
66 See Appendix 3 67 See Appendix 3
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Mainstream
In mainstream sector, Thomas Cook provides their
customers a wide range of choices for package holidays:
Beach Holiday
Clubbing Holiday
Faraway Holiday
Snow Holiday
All inclusive holidays.
Independent travel
With Independent travel products, travellers have changes to
build their travel plans themselves from multiple
components which Thomas Cook offers.
Independent travel products include:
Tailor- make :
Flights
Flights + Hotel
Hotels
Cruises
City Break
Extra services (car hire, cheap calls abroad, smart
box, booking lounges and parking)
4.5.3. Financial Services related travel of TUI travel plc and Thomas Cook:
Both Thomas Cook and TUI have many offer their customers many convenient financial
Services related travel.
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TUI Travel plc Thomas Cook Travel Insurance
Overview Thomas cook and TUI both teamed up with Mondial Assistance to offer clients flexible travel insurance options.
Products - Individual and Family Travel Insurance Winter Sport Cover (Optional) Excess Waiver(Optional) - L'TUR travel insurance package Travel Cancellation insurance Travel Interruption insurance Travel health insurance RundumSorglos Service Baggage Insurance Curtailment Protection
- Family Travel Insurance - Single Parent Family - Couple - Individual - Special packages: ELVIA years 365-Full Protection Package ELVIA year-cancellation-Full Protection Plus ELVIA years - cancellation-Full protection ELVIA annual travel medical protection ELVIA Full Protection Package ELVIA cancellation-Full Protection Plus ELVIA cancellation-Full protection
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Travel Card - TUI focus on debit card product such as TUI card in Germany(Visa) and TUI UK's Travel Money Cards - The cards are known as Thomson and First Choice Travel Money Cards and each have their own branding, available in Euro or US Dollar currencies. - The Travel Money Card programme is managed by Prepay Solutions and issued by MasterCard, ensuring global acceptance. - Benifits: Much easier to manage
available balance Linked to travel
insurance services Bonus for travellers
Apply through phone and mail
Thomas Cook offers their customers Credit card services such as Thomas Cook Credit Card in UK (visa) and in Germany Neckermann Reisen MasterCard. - Available in many currencies. - Online card application - Benifits: Earn Travel Pounds
everywhere you shop and save money at Thomas Cook and Going Places.
0% interest for the first 3 months from account opening on all card purchases.
0% commission on holiday money with no cash handling fee at Thomas Cook and Going Places.
0% interest on balance transfers for 9 months made within 60 days of account opening (2.99% fee applies).
Special offers for card holders.
Foreigner currencies services and Travel Cheque
Buy currency and travellers' cheques online or in store
Buy currency and travellers' cheques online or in store Transfer money online or in store. Currency Card.
Other Products Travel voucher Moblie banking
In the matter of financial services related to travel, Thomas Cook and TUI have many
similarities in services. However, Thomas Cook shows more concern about that area
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than TUI. Thomas Cook offers their clients more choices for financial services financial
with the unique products such as Currency Card, Travel voucher, Mobile baking.
Different with Thomas Cook, TUI concentrates on develop their debit card product,
which is considered as new using trend. "More and more consumers are choosing to put
their holiday money onto a prepaid card over more traditional options such as
travellers cheques or foreign bank notes. Prepaid travel money cards make budgeting
easier - travelers can only spend up to the value of funds that they load onto your Travel
Money Card - and unlike a credit card, travelers don't need to pass a credit check to get
one, nor is it linked to their bank account. Prepaid cards make it much easier to manage
their available balance whilst away, and of course, the cost of use of the Travel Money
Card when compared to most credit/debit cards is significantly lower."68
4.6. The Boston Consulting Group box (BCG matrix)69
The BCG matrix method is based on the product life cycle theory that can be used to
determine what priorities should be given in the product portfolio of a business unit. To
ensure long-term value creation, a company should have a portfolio of products that
contains both high-growth products in need of cash inputs and low-growth products
that generate a lot of cash. It has 2 dimensions: market share and market growth. The
basic idea behind it is that the bigger the market share a product has or the faster the
product's market grows the
better it is for the company.
Placing products in the BCG
matrix results in 4
categories in a portfolio of
a company:
1. Stars (=high growth,
high market share)
- Use large amounts of cash
and are leaders in the
business so they should
also generate large
amounts of cash.
- Frequently roughly in
balance on net cash flow. However, if needed any attempt should be made to hold share,
because the rewards will be a cash cow if market share is kept.
2. Cash Cows (=low growth, high market share)
68 http://www.scluk.com/scl-powers-tuis-new-travel-money-cards 69 valuebasedmanagement. Retrieved 2010, from http://www.valuebasedmanagement.net/
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- Profits and cash generation should be high, and because of the low growth,
investments needed should be low. Keep profits high.
- Foundation of a company
3. Dogs (=low growth, low market share)
- Avoid and minimize the number of dogs in a company.
- Beware of expensive ‘turn around plans’.
- Deliver cash, otherwise liquidate
4. Question Marks (= high growth, low market share)
- Have the worst cash characteristics of all, because high demands and low returns due
to low market share
- If nothing is done to change the market share, question marks will simply absorb
great amounts of cash and later, as the growth stops, a dog.
- Either invests heavily or sells off or invests nothing and generates whatever cash it
can. Increase market share or deliver cash.
Based on the products of TUI and Thomas Cook mentioned above, we can fill them in 4
categories of BCG matrix.
TUI Travel plc Thomas Cook Star Activity Sector
Specialist & Emerging Extra services (renting car)
Component holiday, Extra (car hire), Activity Sector.
Cash Cows Package holiday
Independent holiday (city breaks),
Financial services (foreign currencies services and Money card, Travel insurances)
Accommodation and Destination (organising meetings, incentives, conferences and events (MICE))
Accommodation Package holidays Specialist Financial services related
to travel
Question Marks
Hotels, resorts Airlines.
Hotels Airlines
Dogs Cruisers Cruisers
4.7. Supply chain:
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TUI and Thomas Cook have the same basic supply chain. They both use the product
source such as Hotels, Transportation Services, and Ancillaries from suppliers or from
their own company, and then they delivery products and services for customers. Retails
and agents play the role as the bridges between the travel company and the customers,
will provide the company the market and client’s information and demands.
Though TUI and Thomas Cook share the same basic supply chain, there are still some
differences:
Thomas Cook Group_nov strategy presentation - web version - final.pdf
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TUI Travel PLC
TUI is address as direct supplier in travel industry. As we mentioned earlier in chapter 4
(Management and Organisation), TUI travel plc is a part of TUI AG, which also includes
TUI hotel and Resorts and TUI Cruise. This fact gives TUI the advantages to offer their
customers hotels and services with high levels of quality and standards.
Beside have their own airlines, TUI also have a stronger cooperation with the biggest
European airlines, for example Garman companies, KLM and Turkish Airline.
The payment of products and services are in Euro.
With the offices are mainly located in Germany, so their main target markets are Europe,
especially Germany.
Thomas Cook
Thomas Cook is more like Travel intermediaries, so they has wider range of hotel offers
for their customers from luxury to cheaper price hotels.
Like TUI, beside have their own airlines, Thomas Cook also cooperates with some big
airlines such as British Airway, KLM.
The payments are in Pound.
Thomas Cook has a better reputation in UK. They targets mainly on customers are UK.
http://www.thomascookgroup.com/downloads/pdf/Investor_Day_FINAL_Website.pdf
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4.8. Price
As a Travel intermediary, Thomas Cook offers the cheaper prices for the same services
than TUI. Cooperating with other hotels and airline companies, Thomas Cook forces on
low cost travel market with flexible choice for customers. In contract, TUI as a direct
supplier, targets on high level services standards, which will be definitely more
expensive.
In order to
compare the
services prices
between Thomas
Cook and TUI,
our group have
carried out a
small research.
We went to
website of TUI
and Thomas Cook,
book a same
holiday (2
persons) for the
same time:
Destination:
Turkey
Type: All
Inclusive
Hotel: Titanic Beach Rst (4 stars)
As we can see, with a same package holiday, Thomas Cook´s price is £ 1904.78, about
£140 cheaper than the price that TUI (£2046 offers). This fact also reflects their aims to
reduce the service costs, especially accommodation cost in Thomas Cook pricing
http://www.thomascookgroup.com/downloads/pdf/Investor_Day_FINAL_Website.pdf
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strategy.
TUI has a higher service´s price, but also they offer more value for customers such as
more baggage allowance (20kg per person) than Thomas Cook (15 kg per person).
4.9. Promotion
Thomas Cook and TUI travel are both such the big travel companies, who own hundreds
of brand names. Brands are more than names and symbols; they represent consumer´s
perceptions and feelings about the products, services and its performance. This
requires the specific promotion strategies for each of their brand name. In common,
their promotion methods are quite similar with the basic ways:
• Travel Brochures
• Agencies including through posters, flyers
• Advertisements including in newspapers, magazines, trade publications for the travel
industry
• Direct mailings to current customers
• E-mails
• Banners and links on the Internet
• Flyers
• Radio and Television commercials
• Joint Promotions and Sponsorship
• Scholarships
The TUI.com Reisemagazin (TUI Travel magazine) Magazine has been implementing the TUI.com Reisemagazin since November 2008. The goal is the production of a regular, multimedia magazine that speaks to the reader's emotions using all of their senses. This is something that is usually not possible for conventional travel
Thomas Cook Travel Magazine Thomas Cook Travel Magazine has a quarterly readership of over two million. The magazine is distributed on all Thomas Cook Group flights including Airtours, Club 18-30, Direct Holidays and Signature. The editorial content is topical, travel-related and aimed at holiday goers. It incorporates destination specific content alongside
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catalogues. The monthly, online page turning travel magazine surprises the reader with travel videos, large multimedia picture galleries, inciting sounds and spectacular flash effects. The reader goes on digital trips, discovers new places and holiday trends and can access travel offers with the click of a mouse and book his holiday directly online.
lifestyle features. The magazine also features the duty free products and menu available onboard. The readers are affluent holidaymakers, with core ages between 25 and 54, and are evenly split between male and female.
Thomas Cook
Thomas Cook promotion focus on: - Aviation and climate change
- Supporting destination communities
- Protecting children
- Partnering with suppliers
- Quality
- Animal welfare
Aviation and climate change:
They are hunting for travel industry climate changing; this is to help decreasing CO2
flying. The travel industry also contributes to climate change. While aviation currently
accounts for less than 3% of the world’s carbon dioxide emissions (or CO2, the principal
gas responsible for climate change), travel is a rapidly-growing industry and
improvements in fuel efficiency will be insufficient to offset this rise. Some customers
have started to avoid flying so as to reduce their carbon footprint. At the same time,
governments are regulating to reduce emissions through taxes and carbon trading
schemes, thus increasing carbon-related costs for business and consumers. And
increased volatility in fuel prices represents a threat to our airlines. This is clearly a
pressing issue requiring sustained and substantial action from the travel industry, and
one it can play a significant part in tackling.
Supporting destination communities:
Sustainable tourism is about holidaying with respect for local communities: preserving
natural resources, buying local and paying fair, honouring local cultures, protecting
wildlife and preserving destinations for the future enjoyment of others. Thomas Cook
UK & Ireland has been particularly active in this area and is spearheading this work
through their partnership with the Travel Foundation, such as: Sponsoring education in
Turkey, Working with hotels, The Travel Foundation
Protecting children:
The sexual exploitation of children in tourism includes the production of child
pornography and the buying and selling of children for prostitution. Many tourist
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destinations do not have the infrastructure to protect these children or offer them a way
out. And when the law is enforced in one destination, the sex offenders move to the next.
It is therefore vital that the tourism industry gets involved and works to drive out the
exploiters who use hotels, bars and other tourist facilities to do their trade.
Partnering with suppliers:
Travelife supports hoteliers to implement sustainability measures and to help
customers reduce their impacts. By training our employees as Travelife auditors, we can
encourage the hotels to win Travelife awards. And by including the award logos in our
brochures, we enable customers to make informed decisions and drive business to the
more sustainable hotels. This creates an incentive for more hotels to adopt sustainable
business practices.
Quality:
A key part of quality management is being open to complaints and seeing how valuable
they are to the company. A complaint is someone telling us how we can make our
customers happier, and that is indispensable business intelligence. What is more, by
responding to a complaint promptly, we can transform a customer’s dissatisfaction into
a view of Thomas Cook Group as a company that cares.
Animal welfare:
Examples of how these freedoms can be denied to animals as a result of tourist activity
include:
inappropriate use of animals, including being made to perform in ways not
natural to them or being used as photographic props
when whale watching, tourist boats can get between a mother and her young,
resulting in a separation that is disastrous for the baby
Large numbers of tourists getting too close can disrupt hunting and feeding
patterns for wild animals, and some can become very ill if exposed to human
conditions like colds or diarrhoea.
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TUI Travel plc
As a part of TUI AG, TUI travel plc develop promotion strategy based on social
responsibility:
Futouris; promoting education, protecting the environment and nature
Sport sponsoring
TUI Foundation; supporting in education and training for children and young
people
TUI Sponsorship
ECPAT
Futouris:
Futouris is a non-profit association operating under the aegis of DRV, the German Travel
Association. It supports projects to improve living conditions, promote education,
protect the environment and natural resources and preserve biodiversity in our
destinations.
Sport sponsoring:
Sport, whether on grass, ice or track, provides us with a bit of a break in our everyday
lives. TUI, Germany’s leading tourism group, has found its mission here to put a smile on
people’s faces. For several years now, the Hannover travel group has not only been a
partner of many professional teams but has also been supporting several sporting
events in Germany and abroad. Such as: Hannover 96, Hannover Scorpions, the
international marathon on the Spanish island of Majorca, Marathon Hanover, Eagles
Charity Golf Club.
TUI Foundation:
The TUI Foundation supports projects with financial or material resources allocated
within the framework of an application-based system. However, it also undertakes its
own projects. As a service-oriented and international group, at the same time we try to
promote initiatives established with a basic principle compatible with our own
everyday operations.
TUI Sponsorship:
Since 1995, employees at TUI in Hanover have been annually supporting a charitable
welfare project.
On an annual basis one charitable project is chosen and supported. At the end of the
year, management then presents the amount collected as a cheque to the institutions.
To date a sum of around 410,000 euro has been collected for direct help on the ground.
The projects receiving support range from life-help groups and all-day schools and
lunch clubs for disadvantaged children, through to help for children with cancer and
their families.
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ECPAT:
Throughout the Group the TUI corporate companies are united in fighting against child
prostitution. In the majority of cases this is carried out in cooperation with the
international child protection organization ECPAT.
Follow the new promotion trends; both Thomas Cook and TUI are changing their
strategy to have the better image about green travel companies. The two companies
concern on activities which are high concerned topics such as climate changing,
protecting children and animal welfare. Delivery friendly environment messages, TUI
and Thomas Cook aim to sustainable marketing strive for the long run survival of
customers and the business that provide for them.
Highlight promotion:
TUI has a bigger budget for marketing.
The Budget allows them to develop
many media campaigns, which build an
impressive image in the customer´s
mind. Beside design company logo as a
smile, to emphasise more on the
message of customer oriented
company, TUI have their own songs,
such as the song “Let´s make people
smile” or “Touch the sky”.
Focus on cheap price holidays, flights
and hotels, Thomas Cook have other special way to promote their services with a
smaller marketing budget. For instance, they offer special promotion flight program for
journalists, especially with British airways.
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4.10. Distribution
4.10.1. Booking Routes
TUI and Thomas Cook have the same basic distribution channel with same basic
Booking Routes
Advantages and Disadvantages of the Booking Routes:
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4.10.2. Distribution channels
TUI Thomas Cook
Travel
Agencies
Own retail shops
Franchises
Third- party distributions
Own Travel agencies
Franchises
Third- party distributions
Ecommerce All most every brands have the brand website for customers to book services online
http://www.firstchoice.co.uk/
http://www.thomson.co.uk/
http://www.arke.nl/wintersport.aspx
http://www.tuifly.com/de/
Thomascook.com: Each country
has one website for online
booking.
http://www.thomascook.com/
http://www.thomascook.de/
http://www.thomascook.pl/
http://www.thomascook.fr/
http://www.neckermann-
reisen.de/
Telephone
Selling
Call Centers Call Centers
4.10.3. Cross Channel Marketing
TUI and Thomas Cook both use same distribution channels: E-Mail, Direct Booking, (Re-)
Auctions, and Service Hotline. As we can see on the booking chart, Thomas Cook and
TUI use “cross channel marketing”, which means use of one marketing channel (such as
direct mail or internet) to support or promote another channel (such as retailing)70 .
Basically, customers are given some sensations about travel services, and invite the
customer’s curiosity by offer the links go to the website, or the numbers to call for the
further information. That also means that customers often use various channels for
information procurement and product/ services purchasing.
The various channels are dedicated to different customer segments in order to reach the full
market potential. In some cases an individual channel can compensate drawbacks of other
channels. For example, the lack of face-to-face communication experienced in online tourism
channels can be compensated by calling the customers attention on available service hotlines
for supporting him on specific questions. Most consumers notice the variety of information
and distribution channels while switching between them. Based on this number of perceived
channels the customer measures the size of the company which is an important issue. For the
70 http://www.businessdictionary.com/definition/cross-channel-marketing.html https://ie-wiki.uni-muenster.de/index.php?title=Multi-Channel_Marketi
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market leaders like Thomas Cook and TUI, in order to maximize their market power, that
again increases the trust level of a customer towards the company.
With approximately 3,500 retail shops in continental
Europe, the UK & Ireland and approximately 30
million customers per year, TUI have wider
distribution channel than Thomas Cook (3400
owned and franchised travel stores). Apply Cross
Channel Marketing, the website of TUI additionally
offers a complete online version of their print catalogue
which can be browsed for offers by thumbing through
the pages .The online catalogues like the printed
versions are assorted by holiday destinations, seasons
and the separate operators of the TUI group. The „TUI
Reisemagazin‟ provides interested parties with multimedia information on selected holiday
offers in form of an attractive online magazine. It contains photo galleries and videos and
links to the relevant partners. The website furthermore integrates a regular newsletter
subscription in order to inform potential customers about news and special offers. The front
page directly links subsidiary companies of the TUI group like TUI Cruises and TUIfly.
Thomas Cook flyers and e- magazine also
provide customers links to thomascook.com
or the telephone numbers to contact their call
center.
4.11. Ecommerce
Nowadays, Internet has an increasing impact to human life. Ecommerce become a new
business trend. Both Thomas Cook and TUI Thomas Cook are now moving into the online
channel in a serious way.
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TUI is successful at building a unified customer database that helps it compete effectively
with established rivals like Thomson and First Choice.
Thomas Cook was faster in UK online market when in1997, www.thomascook.com was
launched, making it the first U.K. retail travel agency to offer customers a way to request
flight availability and buy vacations, travelers checks, foreign currency and travel guides over
the Internet. Since then, thomascook.com has become a business in its own right.
Both Thomas Cook and TUI booking websites is user friendly. It is really easy for customers
to search for information about the holidays, book and do payment online. Both companies‟
websites are designed to allow clients approach easily with wide range of travel options.
Thomas Cook has series of booking website “thomascook.com”, while TUI has different
websites for different brand names. So it will be easy for customers when they want to
book a product or service of Thomas Cook in different countries, they can just go to
Thomas Cook website with different domains, such as thomascook.de for Germany,
thomascook.fr for France.
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We can see both TUI and Thomas develop ecommerce activities by the same strategies:
• Use strong brands to attract customers online and offline
• Build on our already leading travel site
• Use travel expertise
• Develop a multi-channel customer proposition
• Use customer insights to optimise offering and pricing
• Increase sales of ancillaries
• Invest significantly in systems
Through being the first U.K.online retail travel agency, Thomas Cook still have to stand
behind TUI website about number of weekly visits in UK.
4.12. Conlusion for Marketing chapter
In the matter of marketing, in our group´s opinion, TUI is performing better than
Thomas Cook. TUI operates in more market sources, and they are the leading player in
almost of the core markets. The advantages from the bigger scale and heavier assets
allow TUI has more budgets for marketing, which is really helpful in building a stronger
image with customers. However, maintaining too many brand at same time is higher the
expenses for marketing of TUI. This will definitely lower the company’s net profit, and
keep the services in the high prices.
As direct competitor with TUI in every core market, Thomas Cook also has their own
marketing strategies to compete. Marketing with the smaller budget, Thomas Cook
develop the unique promotion offers, focus on special groups of customers. Offering the
cheaper prices and effective promotion strategies, Thomas Cook is strengthening their
market position.
Chapter 5 Management and Organization:
Thomas Cook Group_nov strategy presentation - web version - final.pdf
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5.1. Company Profile
5.1.1. Company Background
TUI Travel PLC
TUI Travel PLC is a part of TUI AG, which is Europe‟s leading travel group comprising a
controlling stake in TUI Travel (tour operating, online and high street distribution, airlines,
incoming agencies), TUI Hotels & Resorts and the cruise ship business. In addition, the
group holds a 43,33 per cent stake in the container shipping line Hapag-Lloyd. In the short
financial year 2009 the turnover of TUI AG was €13.1 billion with total earnings of €656.6
million (underlying EBITA).1 On 30 September 2009 the headcount totalled 65,000
employees.
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TUI Travel PLC is a FTSE 100 international leisure travel group listed on the London Stock
Exchange. It was formed on 3 September 2007 by the merger of First Choice Holidays PLC
and the Tourism Division of TUI AG, which owns 43% of the company, operating in over
180 countries and serving 30 million customers in 27 key source markets. It is headquartered
in Crawley, West Sussex, England. It is a constituent of the FTSE 100 Index, with around
157aircraft and circa 3500 retail outlets in Europe and employs 60,033 people worldwide.
The company mainly serves the leisure travel customer and is organized and managed
through four business sectors: Mainstream, Specialist and Emerging Markets, Activity and
Online Destination Services.
Thomas Cook Group PLC
Thomas Cook is the world‟s best-known name in travel, thanks to the inspiration and
dedication of a single man. Thomas Cook began his international travel company in 1841,
with a successful one-day rail excursion at a shilling a head from Leicester to Loughborough
on 5 July. From these humble beginnings Thomas Cook launched a whole new kind of
company devoted to helping Britons see the world.
In February 12, 2007,The leading German retailer KarstadtQuelle AG is to merge its Tourism
subsidiary, Thomas Cook, with the leading British travel company MyTravel. The newly
established company will be named Thomas Cook Group plc and will be traded on the
London Stock Exchange. KarstadtQuelle will hold 52 percent in the new company and will
consolidate it fully.
Thomas Cook Group plc is one of the world's leading leisure travel groups with sales of
around £9 billion (€12 billion), 22.3 million customers, 31,000 employees, a fleet of 93
aircraft and a network of over 3,400 owned and franchised travel stores and interests in 86
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hotels and resort properties.
It operates under five segments: UK & Ireland; Continental Europe (Germany, Austria,
Belgium, France, the Netherlands, Poland, Hungary, Slovenia and Slovakia); Northern
Europe (Sweden, Norway, Denmark, Finland), North America (Canada and USA); and
German airlines operating under the Condor brand.
5.1.2. Company Scale
TUI Travel plc Thomas Cook
Employees 60,033 31,000
Operating countries 180 93*
Aircrafts 157 95
Customers 30.000.000 22.300,000
* 73 of the countries Thomas Cook operates are under the daughter company Condor and in
the rest of the 20 companies Thomas Cook plc operates by itself.
TUI has a bigger scale and operates business in wider market. They have heavier assets
with180 air craft (Thomas Cook 95) also have larger distribution channel.
5.1.3. Mission Statement
“A Mission Statement of the organization’s purpose – what it wants to accomplish in the
larger environment”71. A mission statement, in management prospective, guides the
strategies and structure of company
marketing orientation. In matter of
Mission Statement, TUI Travel PLC and
Thomas Cook Group PLC have different
perspectives.
Under the global vision “WE GO FURTHER
TO MAKE DREAMS COME”, Thomas Cook
states itself with four different missions
based on five main divisions: UK & Ireland,
Continental Europe and Airlines Germany,
Northern Europe, North America. The
differences in the Thomas Cook ´s Mission
Statements in different divisions are related on its flexible business models and
concentrated marketing strategy for every different geography market.
Conversely, TUI travel plc does not publish any mission statement. Being confident
about the reputations as one of the market leaders in Tourism industry, the Leader of
TUI believed it is not essential to have a sentence to describe company's function,
markets and competitive advantages; and state its business goals and philosophies,
which have already become the famous concepts. “TUI Travel PLC does not have a
Mission Statement. We have a stated strategy which is to create superior shareholder
71
•Exceptional Service From Exceptional People
UK & Ireland
• To perfect the personal leisure experience.
Continental Europe and Airlines Germany
• Further we go to make dreams come true
Northern Europe
•To be the best travel company in the world to travel with, work for, and invest in
North America
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value by being the world’s leading leisure travel group providing customers with a wide
choice of differentiated and flexible travel experiences to meet their changing needs To
enable us to achieve this goal we have identified four key strategic imperatives which are
linked to our KPIs.”72
5.3.4. Vision and Values:
TUI Travel plc
Their common vision and values unite their across the Group and they call this their TUI
Spirit. Their vision is Making Travel Experiences Special and their four values are:
• Responsible leadership
• Customer obsessed
• Value driven
• Playing to win
Winning behaviours have been developed to help embed these values in every day working
life in a number of ways. These behaviours allow them to truly engage in their work and
optimize their performance – as individuals and as a business.
Thomas Cook
These values are the focus for ensuring that every Thomas Cook employee embraces what
they stand for and are PROUD to work with us delivering customer service that‟s second to
none.
72 FAQS. TUI Travel plc. Retrieved from http://www.tuitravelplc.com/tui/pages/investors/shareholderinfo/faqs
TUI Travel and Thomas cook plc have the vision, which is quite similar. As customer oriented
companies, customers are very important for both companies, because the more customers they
have the better for the company. TUI and Thomas Cook wants to make sure that their customers
come back every time when they think of travelling. As already mentioned in the table above,
the vision of Thomas Cook is that „they go further to make dreams come true‟. Thomas Cook
tries to do something extra for the customers. In long-term both companies want to grow and be
the biggest travel agency in the world.
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5.3.5. Sustainability Development and Social Responsibility
Sustainability development becomes more important for companies specially for transport
companies. We can say that TUI Travel and Thomas Cook are also transport companies
because the offer their customers a service with aircraft. Nowadays more people want to
travel environmentally conscious, because the environment is a big issue for us and the next
generation. Companies like TUI and Thomas Cook have to take in account the environment.
TUI Travel and Thomas cook plc have the vision, which is quite similar. As customer
oriented companies, customers are very important for both companies, because the more
customers they have the better for the company. TUI and Thomas Cook wants to make sure
that their customers come back every time when they think of travelling. As already
mentioned in the table above, the vision of Thomas Cook is that „they go further to make
dreams come true‟. Thomas Cook tries to do something extra for the customers. In long-term
both companies want to grow and be the biggest travel agency in the world.
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TUI Travel
Throughout the year, sustainable development has continued to be an important part of the
business agenda for TUI Travel. They aspire to lead in sustainable development within the
leisure travel industry. In the long term, they believe this goal will help build shareholder
value for TUI Travel and contribute to operating a strong business now and in the future.
• TUI Travel is listed on the FTSE4Good Index in recognition of its transparency and for
meeting strict social, environmental and governance standards.
• It is the highest placed travel company, at 16, in the 2008 Good Companies Guide – The
Observer‟s annual ethical ranking of FTSE350 companies.
• TUI Travel‟s first full Sustainable Development Report was published in July 2009, with
independent verification of their targets by Bureau Veritas.
• For the second consecutive year, they have been included in the Carbon Disclosure
Leadership Index, which highlights the top 10% of FTSE350 companies that have displayed
the most professional approach to climate change disclosure.
Sustainable development strategy of TUI Travel Plc
During 2008/2009, they developed a Group sustainable development policy in conjunction
with key colleagues, articulating their vision and approach to sustainable development. The
Group Code of Conduct covers a wide range of sustainability issues, including human rights,
business ethics and transparency and commits TUI Travel to upholding the principles of the
UN Global Compact.
TUI Travel‟s sustainable development strategy is based on consideration of the key issues
affecting the Company, now and in the future. It has been developed in consultation with
internal and external stakeholders. They encourage all TUI Travel businesses to develop their
own sustainable development strategy, aligning with Group priorities. At the end of
2008/2009, 73% of TUI Travel businesses had their own sustainable development strategy.
Policy and mitigation for Groupwide risks relating to sustainability are facilitated by the
Group Risk Management and Sustainable Development Departments, with responsibility for
managing such risks also shared by the businesses themselves.
Thomas Cook plc
The last year has proved a testing time for all areas of business, not least the travel industry.
The global economic downturn brought with it a decline in international tourism in 2009,
intensified by many other factors including consumer confidence, terrorism incidents,
fluctuating exchange rates and the outbreak of swine flu.
At Thomas Cook Group, their response to challenging market conditions is to work harder
and go further to make dreams come true for their customers. They recognize the many
virtues of travel, the positive cultural exchange and the boost to local economies, but they are
also aware of the potential impact on the environment, societies and local cultures. The travel
and tourism industry has a responsibility to operate in a sustainable way and Thomas Cook,
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which founded its business with clear social and educational intentions, is proactive in this
area.
They aim to have sustainability at the core of their business and feature it as an integral part
of their strategy, particularly when it comes to the environment. These responsibilities no
longer sit on the periphery; their importance represents a genuine business risk. Society,
customers, investors, governments and communities no longer look for, but demand that both
time and money be invested in the preservation and protection of the incredible people and
places they come into contact with.
Over 160 years ago a former preacher, Thomas Cook, devised the first package holiday.
Since then, the business he founded has helped millions of people to relax, unwind – and
broaden their horizons. Thomas Cook didn‟t just want people to have fun. He believed
affordable travel could change working people‟s lives for the better. His company was
inspired by a strong sense of social justice and moral responsibility: what today they call
corporate social responsibility (CSR).
Today, they‟re still inspired by their founder‟s values. They believe they make a world of
difference – not only to their customers, but to all the people whose lives they touch. Their
mission is to perfect the personal leisure experience. And that includes managing their
activities in a morally and socially responsible manner.
We compare the two companies by these two points; we can say that both of the companies
are trying to work on a very sustainable way. However, TUI Travel is working more on
sustainability and Thomas Cook concerns more about the responsibility for the people in the
area‟s they are cooperating.
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5.2. Company Organization
5.2.1. Organizational structures Both operating in travel industry, however, TUI and Thomas Cook are using different form of
departmentalization, which means: “the basic on which job are grouped together73
”
TUI Travel plc Organizational structures
TUI is using Geographical Departmentalization, which means groups jobs according to
Geographical Region.
Adv
antages and disadvantages of Geographical Departmentalization74
Advantages Disadvantages
More effective and efficient handling
of specific regional issues that arise
Serve needs of unique geography
market better
Duplication of functions
Can feel isolated from other
organization areas
Broad of Directors:
The Company is controlled through its Board of Directors –the Directors at the date of this
report are:
Director’s name Title
1. Horst Baier Non-Executive Director
2. Dr Volker Böttcher Managing Director, Central Europe
3. Paul Bowtell Chief Financial Officer
4. Tony Campbell Non-Executive Director
5. Clare Chapman Non-Executive Director
6. Bill Dalton Non-Executive Director
7. Rainer Feuerhake Non-Executive Director
8. Dr Michael Frenzel Non-Executive Chairman
9. Jeremy Hicks Non-Executive Director
10. Sir Michael Hodgkinson Non-Executive Deputy Chairman and Senior
Independent Director
11. Peter Long Chief Executive
73 Robbins, S. P., & Coutler, M. (2009). Management. (tenth ed.). New Jersey: Pearson Education, Inc. 74 Robbins, S. P., & Coutler, M. (2009). Management. (tenth ed.). New Jersey: Pearson Education, Inc.
Page | 107
12. Johan Lundgren Managing Director, Northern Region
13. Dr Erhard Schipporeit Non-Executive Director
14. Dr Albert Schunk Non-Executive Director
15. Harold Sher Non-Executive Director
16. Giles Thorley Non-Executive Director
17. William Waggott Commercial Director
TUI Travel plc Organizational structures chart:
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Thomas Cook Organizational structures
Thomas Cook has a more flexible organization structure, which is combined by Geographical
Departmentalization and Functional Departmentalization (Groups Jobs according to function).
Advantages and disadvantages of Geographical Departmentalization75
Advantages Disadvantages
More effectives from putting together
people with common skills,
knowledge, and orientations.
Coordination with function areas
In depth specialization.
Poor communication across
functional areas
Limited view of organizationalngoals
Broad of Director
The Board is chaired by Non-Executive Chairman, Michael Beckett. In addition to the
Chairman, the Board currently includes three Executive Directors and five Non-Executive
Directors. Each of the committees of the Board is chaired by an Independent Non-Executive
Director.
The Group Chief Executive Officer chairs the Group Executive Board, which oversees the
strategic development and operational management of the Group's businesses. The Group
Chief Financial Officer and the Chief Executive Officer, Northern Europe & Deputy to the
Group Chief Executive Officer are also members of the Group Executive Board.
75 Robbins, S. P., & Coutler, M. (2009). Management. (tenth ed.). New Jersey: Pearson Education, Inc.
Page | 109
Thomas Cook Organizational structures chart:
5.3. Human Resources Management
5.3.1. Recruitment
5.3.1.1.TUI Travel plc Apprenticeship programme
There is extremely high demand for the Apprenticeship programme at TUI, with over 40,500
website enquiries and 15,000 applicants each year.
Due to the high volume of applicants, an extensive and rigorous selection process is in place
for the 450-500 positions. This includes an online assessment focusing on literacy and
numeracy skills, an interview and a „taster day‟ in a branch which allows them to experience
the real working environment and understand what the role entails. “We always use a taster
day. So what we do is we bring people into the location and see how they get on with the
tasks which are typical of the day. And what we do find is that lots of people will either
immediately realise it‟s for me or it‟s not for me.” (Andy Smyth, Accredited Programmes
Manager)76
In addition to looking for people with literacy and numeracy skills, TUI also look for people
with strong personal attributes such as motivation and personality. “In order to get onto the
apprenticeship programmes, we‟re actually looking for people who do have strong numeracy
and literacy skills and we‟re looking for people with personality. What we want are people
who are motivated. We want people who are driven to succeed." (Andy Smyth, Accredited
Programmes Manager)77
Content and delivery
76http://www.people1st.co.uk/webfiles/Research/Case%20Studies/Travel%20Training%20Case%20Studies/TUI_Case_Study_Oct_08.pdf 77http://www.people1st.co.uk/webfiles/Research/Case%20Studies/Travel%20Training%20Case%20Studies/TUI_Case_Study_Oct_08.pdf
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To successfully complete their apprenticeship, apprentices must complete an NVQ, three
technical certificates (providing the knowledge and understanding which underpins the NVQ)
and two key skills as shown in the table below:
Apprentices receive all the normal training a non-apprentice receives such as a first day
induction in store, health and safety training, daily store briefings and an hour of training
each week where the store is closed. In addition to this, TUI provides the following support to
help apprentices complete their programme:
• A two day „Welcome Event‟
• Five hours of study time per week
• E-learning
• Six formal off-the-job training days per year, with a focus on completing the technical
certificates
There is a strong support network available to ensure the apprentice receives all the help they
require. This includes an Apprenticeship Expert in each region whose role is to coordinate
training and ensure that the apprentices are progressing in line with the programme. There are
a number of Shop Managers in each region who are responsible for the delivery of training to
apprentices.
Each apprentice is also allocated a workplace mentor based in the same shop as them. Most
mentors are ex-apprentices themselves and are there to provide support, inspiration and to
help them progress. Apprentices are assigned an assessor to guide them through the
framework and support them with action planning. They visit on a monthly basis and ensure
that learning is taking place.
An important element of the programme is that the content has been designed to meet the
needs f their own organisation and all materials and workbooks are bespoke to TUI.
Benefits of the apprenticeship programme
Research carried out by People1st has highlighted the main benefits of the apprenticeship as
being:
• Increased recruitment, retention and motivation of staff
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• A demonstration of an organisation‟s commitment to training
• Supporting performance and career development
• Providing cost effective training
• A programme that is consistent and structured
• A programme which complements in-house training
• Supporting the development of skills
• Increased loyalty to the business
At TUI the key business benefits of apprenticeships have been higher staff retention rates and
greater sales performance. This is illustrated for example, by ex-apprentices who regularly
featuring in their „top-sellers‟ lists. An example was
also given of an ex-apprentice who achieved £1.3
million in sales in one financial year. The average is
£350k. This individual became a shop manager at
18.TUI has examined how ex-apprentices performance
compares to non-apprentices in relation to sales
revenue generated. The table below shows clearly that
the apprenticeship programme helps improve sales
performance with ex-apprentice Travel Advisors
achieving over 16% more sales than non-apprentices.
In short, TUI is an organisation which has a reputation
for offering a first class apprenticeship programme.
They have aimed to make it the programme of choice
and this is demonstrated in the opportunities and
career development available for apprentices. It is
unsurprising then, that demand for Apprenticeship
places greatly exceeds supply.
For TUI the return on investment of the apprenticeship programme is a clear increase in sales
performance and greater staff retention for those who have been through the programme,
compared to those who haven‟t. Looking to the future, TUI intends to build on their
successful apprenticeship programme by increasing places by up to 50% in the coming year.
TUI Horizons78
TUI Horizons is a development programme for middle managers who have been identified as
management talent with the potential to take up senior general management positions across
the Group. TUI Horizons is run as a virtual business school, using a number of external
experts and internal specialists from across the Group covering business topics including
Tourism and the Business Environment, Strategy and Finance. During 2009, the programme
ran three times, with 65 managers participating. In 2010, they plan to extend the scope of TUI
Horizons. In addition to the core modules, they will offer a number of one-day master classes
on specific subjects that will provide ongoing opportunities for learning and networking.
78 ). Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/
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Recruiting for their long term success79
Their International Graduate Management Scheme is part of their strategy to recruit and
develop the right people to ensure the long term success of their business. Over 18 months,
trainees take on assignments in different parts of the Group lasting three/four months and also
receive additional personal training and support during this time.
At the end of the scheme, their trainees are offered permanent positions where possible.
Twelve trainees from nine countries – Belarus, China, France, Germany, Hungary, India, the
Netherlands, Sweden and the UK – participated in the International Management Trainee
scheme in 2009. This included seven trainees who were recruited into the scheme in 2009 and
five trainees who joined the scheme in 2008. This year, three trainees have joined the Group
in permanent roles, as Sales & Retail Manager in Germany, Staff Incentives Manager in UK
& Ireland Mainstream and Project Manager for Specialist & Emerging Markets in Russia.
Organisation effectiveness80
They support organisation effectiveness through talent management and recruitment
processes. Talent across the Group is reviewed regularly at Board level and they are focused
on retaining and developing individuals to drive the business forward. To meet seasonal
demands, they move their topperforming frontline colleagues between retail, overseas
representation and airline cabin crew roles where possible. This develops a multi-skilled
workforce with year-round experience of delivering service to their customers. they use the
most effective recruitment methods in the countries in which they operate and encourage the
sharing of skills and knowledge to suit both the business and their colleagues. As part of their
recruitment approach, they actively promote career opportunities across the Group to enhance
the mix of professional and general management skills.
Reward programmes81
They operate competitive reward programmes to reinforce and support their overall colleague
engagement strategy. In addition, variable compensation in the form of annual and longer
term incentives helps drive the high performance that their results demonstrate. This year
they introduced an aligned incentive programme for their most senior leaders throughout the
Group. The programme rewards financial performance of the business in which the
individual works. In 2010, the programme will also take into account how that performance
was achieved by mapping the individual leader‟s actions to their winning behaviours. To aid
retention of talent and ensure focus on longer term shareholder value creation, at least one-
quarter of the annual bonus achieved is deferred into TUI Travel PLC shares for three years
or more. The majority of their colleagues participate in local benefit programmes including
retirement benefit schemes and generous holiday discounts. In the UK, colleagues are able to
purchase shares in the Group through their Share Incentive Plan that provides one free share
for every four shares purchased.
79
). Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/ 80 . Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/ 81 . Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/
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5.3.1.2. Thomas Cook
“There‟s a clear progression path for every employee overseas” (Elinor Carr, Learning and
Development).
As well as receiving regular training throughout the season, staff are offered a range of
development opportunities. One such opportunity is STARS – Senior Training and
Recognition Scheme - which has three levels and provides staff with training opportunities
which are clearly linked to career progression.
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The recruitment process onto STARS is
rigorous and the required standard must be
reached. Staff are expected to complete a range
of tasks which have direct links to the company
PROUD values. The tasks can be small (such as
controlling the airport) or large (like organising
a fund raising event in resort). Staff are
expected to achieve a pass grade for each task
and only when they have achieved the pass
grade for all tasks set will they have passed the
STARS in resort stage. A key benefit of
STARS is that it assists with succession
planning, enabling suitable employees to be
identified and trained for the next level. This in
turn can help ensure staff are retained and promoted from within the business.
STARS also provides a clear career progression route for staff wish to develop and move up
the career ladder. “The main benefit of the STARS programme is that it‟s very clear to every
member of staff who starts working with Thomas Cook that there is the opportunity for
career progression and for development.” (Elinor Carr, Learning and Development).
5.3.2. Job Selection
As the international company with hundreds of brand names, TUI and Thomas have different
to recruitment requirements to hire different kind of people working under different brands
name.
5.3.2.1.Finland TUI
Finnmatkat children's and sports / activity leader
Bamsekerho director and Sports, and Super Kids Guide - infectious joy of life!
Itching to spread joy through the busy children and adults with a Finnmatkat Blue Village,
Exotic-Blue Village or Blue Star -In different parts of the world?
Bamsekerho-director provide 3-6 years of age referred to Bamsekerhoissa. Finnmatkat
children's smallest clubs, our customers can play, and experience the adventure of any kind
and get new friends. You are responsible for the quality of the implementation of the agreed
program.
Blue Star hotels in replying to Finnmatkat 7-12 years old children Super Kids -Clubs,
exciting and fun sports activities for the planning and implementation.
Sport & Super Kids-guide and are planning to pull all kinds of shallow water exercise in the
morning and beach volley tournaments and After Beach quizzes. Take care of the Super
Kids-lastenkerhostamme, which offers sports and adventures from 7 to 12 years of age for a
few hours a day.
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Enthusiasm and service agreement
Energi September, and a genuine enthusiasm are the most important tools. You are also
service-oriented and know how to treat and help every kind of travel according to the
situation.
A unique team spirit
Finn Voyage is a unique spirit of service, known as the Blue Spirit. As soon as the first part
of your day since you're the team that solves the challenges together and whose members
support each other always. You'll also get a sense of belonging, much experience and often
life-long friends.
Not thrive in
Also holidays in resorts, which are other get paid large sums of money, are the work benefits.
However, you must also be prepared for hard work, stay helpful and stressful conditions of
service as a spiritual and, of course, also spend long periods away from another culture
intimately.
Blue Academy Gran Canaria
If you recognize the description of yourself and you meet the basic requirements presented
below, you can search for Blue Academy Travel School. Successfully passed the course
guarantee you a permanent job, and you will experience the Blue Spirit, in fact.
Basic Requirements
high school diploma or equivalent
Finnish language excellent oral and written communication skills
good knowledge of English
experience
Children's Director
child or youth groups working with the training
Sports Guide
Coaching, or exercise control of experience / education
The benefit is calculated
Swedish or other Nordic language skills or any other language
previous stay abroad
esiintymisvarmuus / habit microphone
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5.3.2.2. Finland Thomas Cook
Children’s guide
Children & Youth as a director you must ensure that children feel comfortable and have
something fun to do - variety of activities and games, pulikointia swimming pool as well as
spiritual adventure racing. A bit older kids, organized activities such as crafts, play & chat,
football and water sports. You are responsible for all these activities for the organization and
inspiring in their own way with you are also children and young people excited about and
participate in them. The work is carried Sunwing-hotels.
Requirements
Experience in working with children is needed for this job. We require that you have
experience working with children. Benefit shall be, if you are not trained kindergarten teacher,
recreation supervisor, nurse or teacher. You need to be social, outgoing and interested in
children and young people's work. It is also good if you are interested in the creative or
sporting duties, such as crafts, painting, football and / or water sports. We assume you are
holding high school certificates as well as oral and written fluent in Finnish and Swedish
language skills. You speak also fluent English, Other languages are calculated advantage.
5.3.3.1.Germany TUI
Clerk / in Front Office Sales & Customer Support.
Responsibilities
• Settlement of sales and consultations on the phone for tui.com, 1-2, Fly.com,
robinson.com and discount-travel.com
• Handling of inquiries and reservations by e-mail
• Quotations
• Cross-selling and up
• Process management and accounting control
• Ensuring the quality
• Support for user questions and posting questions to redirect the client
• Careful editing of complaints and maintenance of simple complaints talks
Requirements
• Training as a travel clerk
• Extensive experience in dealing with relevant system applications (especially
Amadeus, IRIS.plus, Toma, Inexso, Midoco)
• Extensive knowledge of MS Office systems
• Geographic knowledge and sound local knowledge
• Sales force, communication skills and counseling skills
• Good knowledge of English
• Experience, knowledge and joy in dealing with Web-based applications
• Consistent quality and Servicedenken
• Enthusiasm and joy in dealing with people
• Willingness to flexible working hours and adopting weekend shifts
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Benifits
... A modern workplace, and an interesting and versatile use in a motivated team.
It is a part-time 20-30 hours / week (50% -75%) for full flexibility.
The World of TUI - is made of people. Are you ready to discover this world?
The diversity is the wealth of the World of TUI.
5.3.3.1. Germany (Thomas cook)
Job dicription
• Release of the tourist information on the regulation calculated under examination at
specified dates and the release of the correct automatic Kosteneinbuchung and data available
to the audit and credit creation for Handling-/Transferkosten and tours
• Read and interpret contracts target for regulation as well as archiving and organization
of the contracts
• Monitoring and control of operations such as the assessment of contract interpretation
for the accuracy of the automatic setting regulation
• Regular quality control of the calculated and shared travel orders to regulate the basis
of predetermined control evaluations
• Data provision for parts of the department reporting
• Read and interpret the appropriate department reports and independent control to meet
given objectives
• Clarification of Regulierungsunstimmigkeiten on a contractual basis, data entry and
correction of data regulierungsrelevanten
• Data supply and maintenance of reporting in Excel files or other data tables
• Communication with hotel and shopping destination management to ensure regulatory
• Participation in monthly, quarterly, annual work of the Settlement Area Hotel
• Regular communication with its associated Shared Service Centers in the English
language to clarify inconsistencies in the connected part of regulatory process and carried out
there
Requriements
• completed commercial training, ideally in the travel and tourism sector
• Knowledge of accounting
• Good English language skills
• Reliable knowledge of MS Office applications (Winword, Excel)
• Self-employed and responsible way of working
• Strong ability to complex and process-oriented thinking
• High operating and service readiness, resilience and self-confident and
communicative occurrence
• Willingness to travel
• Read and interpret UML processes
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Advantage
Thomas Cook offer an exciting work environment with
international contacts, extensive social benefits and new
challenges every day.
5.3.3.Emloyee engagement
TUI
TUI shared one vision and one set of values across the
Group and have developed winning behaviours to support
them. They involve their colleagues in business matters
that affect them and respond to feedback received through employee surveys, employee
forums and as part of the performance review cycle. The performance review cycle gives
every colleague the opportunity to meet their line manager at least once annually to discuss
their performance and to make plans for development in the coming year.
Thomas Cook
Thomas Cook places a great deal of importance on internal communications to create
universal understanding of the Group‟s agenda. The Group Chief Executive Officer visits the
business segments throughout the year and communicates on a monthly basis to update
Group employees on the Company‟s progress and performance. Regular communications
within the segments keep our people up-to-date on the latest business and market
developments. In addition, their key markets also host annual conferences to review the
previous year‟s performance and set out the priorities for the coming year.
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5.3.4. Personal expenses
We want to compare the expenses of the employees to see how much money the companies
spend on their personal expenses.
Thomas Cook
TUI Travel
5.4. Conclusion
Since Both TUI and Thomas Cook are international travel company which have a very
complex organizational structure. TUI Travel and Thomas Cook have training programs with
a wide range of variety, but TUI Travel Trains their employee better. This is because TUI has
a more specialized division, and more detailed Training Programs than Thomas Cook Group
PLC. However, Thomas Cook gains more on employee job satisfaction compare to TUI.
TUI Travel invests more money in their people and the training programs more than Thomas
Cook. This makes TUI performs better in managerial aspect, since TUI invests more in their
Training Programs, which are more detailed and specific compared to TUI.
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Chapter 6 Key Performance Indicators
6.1 Financial 6.1.1 KPI Rationale
Our group believe that to measure and to compare two companies performance, financial
analysis is crucial. With making a benchmark on specific data we can use to compare both
companies, and we can see which company is performing better. Financial benchmark only
will not be able to judge the overall performance of a company, but financial performance are
most important when we are judging how well a company manage their resources.
6.1.2 Performance/Target
To measure TUI Travel PLC and Thomas Cook Group PLC, we have three financial KPIs
with 7 PI :
Profit Ratios
o Gross Profit Margin
The gross profit margin simply gives the percentage of sales available
to cover general and administrative expenses and other operating costs.
o Net Profit Margin
This number is an indication of how effective a company is at cost
control. The higher the net profit margin is, the more effective the
company is at converting revenue into actual profit. o Return on Total Assets
82
A measure of how effectively a company uses its assets83.
o Return on Stockholder‟s Equity
A measure of how well a company used reinvested earnings to
generate additional earnings, equal to a fiscal year's after-tax income84
Liquidity Ratios
o Current Ratio
An indication of a company's ability to meet short-term debt
obligations; the higher the ratio, the more liquid the company is85
.
o Quick Ratio
A measure of a company's liquidity and ability to meet its
obligations86
.
Leverage Ratios
o Debt-to-assets ratio
82 http://www.investorwords.com/3260/net_profit_margin.html 83 http://www.investorwords.com/5776/ROTA.html 84 http://www.investorwords.com/4315/ROE.html 85 http://www.investorwords.com/1258/current_ratio.html 86 http://www.investorwords.com/4008/quick_ratio.html
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shows the proportion of a company's assets which are financed through
debt. If the ratio is less than one, most of the company's assets are
financed through equity. If the ratio is greater than one, most of the
company's assets are financed through debt. o Debt-to-equity ratio
A measure of a company's financial leverage. Debt/equity ratio is equal
to long-term debt divided by common shareholders' equity.
6.1.3 Key Performance Indicators
Profit Ratios
o Gross Profit Margin
Gross Profit Margin
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Thomas Cook Group PLC 23.65% (0.2365)
23.19% (0.2319)
23.64% (0.2364)
23.31% (0.2331)
TUI Travel PLC 8.35% (0.0835)
7.33% (0.0733)
7.02% (0.702)
Gross Profit Margin
o Net Profit Margin
Net Profit Margin
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Thomas Cook Group PLC 1.84% 2.37% 0.55% 0.17% TUI Travel PLC 0.89 % -1.94 % 0.08% 0.89 %
o Return on Total Assets87
Return on total Assets
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Thomas Cook Group PLC 0.24% 0.80% 2.90% 0% TUI Travel PLC -0.12% -2.91% 0.00% -
o Return on Stockholder‟s Equity
Return on stockholder equity
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Thomas Cook Group PLC 0.85% 2.38% 7.80% 0% TUI Travel PLC -0.45% -10.38% 0.00% -
Liquidity Ratios
o Current Ratio
87 http://www.investorwords.com/3260/net_profit_margin.html
Page | 122
Current Ratio
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Thomas Cook Group PLC 0.40 0.55 0.62 0.57 TUI Travel PLC 0.56 0.71 0.85 -
o Quick Ratio
Quick Ratio
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Thomas Cook Group PLC 0.40 0.55 0.61 0.56 TUI Travel PLC 0.55 0.70 0.84 -
Leverage Ratios
o Debt-to-assets ratio
Debt-to-assets Ratio
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Thomas Cook Group PLC 18.46 17.68 11.29 12.78 TUI Travel PLC 12.62 13.88 23.16 -
o Debt-to-equity ratio
Debt-to-equity Ratio
Year Ended 30/09/09
Year Ended 30/09/08
Year Ended 30/09/07
Year Ended 30/09/06
Thomas Cook Group PLC 71.74 59.25 29.47 35.67 TUI Travel PLC 49.41 48.88 83.71 -
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6.2 Marketing 6.2.1 KPI Rationale
Our Team believed that through marketing benchmarking we can see who is a better player
in presenting their product. Who is better on delivering the value to the customers, which
Company scores more customer satisfaction. We do the Marketing benchmarking also in
order to see who is the leading player, Who have the best SWOT for the Tourism Business
6.2.2 Performance / Target
To measure TUI Travel PLC and Thomas Cook Group PLC, we have seven marketing KPIs
with 5 PI :
Mission Statement
“A Mission Statement of the organization’s purpose – what it wants
to accomplish in the larger environment”88.
SWOT Analysis
SWOT analysis is a strategic planning method used to evaluate the
Strengths, Weaknesses, Opportunities, and Threats involved in a
project or in a business venture. It involves specifying the objective of
the business venture or project and identifying the internal and external
factors that are favorable and unfavorable to achieve that objective89
.
Strategic Objective
The company’s statement needs to be turned into the Strategic
Objectives, which include business objective and marketing
objective to guide management.
Market Position
o Market Dynamics UK & Ireland
o Market Dynamics Continental Europe
o Market Dynamic Northern Europe o Market Dynamics North America
o Market Dynamics Germany
BCG MATRIX
The BCG matrix method is based on the product life cycle theory
that can be used to determine what priorities should be given in
the product portfolio of a business unit. To ensure long-term value
creation, a company should have a portfolio of products that
contains both high-growth products in need of cash inputs and
low-growth products that generate a lot of cash. It has 2
dimensions: market share and market growth. The basic idea
behind it is that the bigger the market share a product has or the
88 TUI Travel Annual Report 2009 89 http://en.wikipedia.org/wiki/SWOT_analysis
Page | 124
faster the product's market grows the better it is for the
company90.
Supply Chain
The network of retailers, distributors, transporters, storage facilities
and suppliers that participate in the sale, delivery and production of a
particular product91
.
Distribution Channels
Cross Channel Marketing
E-Commerce
6.2.3 Marketing Key Performance Indicators
6.2.3.1 Mission Statement Thomas Cook Group PLC : Under the global vision “WE GO FURTHER TO MAKE DREAMS
COME TRUE”, Thomas Cook states itself with four different
missions based on five main divisions: UK & Ireland, Continental
Europe and Airlines Germany, Northern Europe, North America.
The differences in the Thomas Cook ´s Mission Statements in
different divisions are related on its flexible business models and
concentrated marketing strategy for every different geography
market.
TUI Travel PLC : “TUI Travel PLC does not have a Mission Statement. We have a
stated strategy which is to create superior shareholder value by
being the world’s leading leisure travel group providing customers
with a wide choice of differentiated and flexible travel experiences
to meet their changing needs To enable us to achieve this goal we
have identified four key strategic imperatives which are linked to
our KPIs.”92
6.2.3.2 SWOT Analysis
TUI Travel plc
Thomas Cook
Strengths Market leader in the tourism industry.
Scale (22m passengers out of 21 source markets).
90 valuebasedmanagement. Retrieved 2010, from http://www.valuebasedmanagement.net/ 91 http://www.investorwords.com/4823/supply_chain.html 92 FAQS. TUI Travel plc. Retrieved from http://www.tuitravelplc.com/tui/pages/investors/shareholderinfo/faqs
Page | 125
Be a part of TUI AG, an international cooperation, which is operating business in Travel, Hotels and Resorts, Cruises, and major share holder in Container shipping (43.33% holding in Hapag-Lloyd). Unique media methods in marketing (TUI song: Let´s make people smile). Strong multi-channels distribution focusing on online sales. Delivering high quality customers services. Stable and management-friendly shareholders.
Portfolio of strong brands
Speed of decision making and implementation
Industry leading margins
Tailored business model in each market Strong multi-channel distribution capability Asset light model Strong and improving financial position Positive customer feedback: 97% customer satisfaction; 96% would recommend TCNE. Unique concept hotels. No1 market share of Canaries, Majorca, Turkey, Egypt and Rhodes. 25years average industry experience.
Strong partnerships.
Weakness Company registered a net loss of EUR 142 million in 2008 (Annual Report 2008) Major reduction in the volume of holiday packages because of recession and financial uncertainties Heavy Fixed Assets lead to the lack of flexibility and reduce the competition ability when the economic climate has high level of uncertainty. (Fixed assets cover 34% of total assets)
Has no customer retention policy. Has little or no scope outside of Europe. Lack of service, flexibility and business focus (such as frequent flyer programmes) make the low-cost model unappealing for most business travelers. The two drivers of growth, the focus on price and
Page | 126
Maintaining too many different brand names makes the company’s marketing and management expenses become too high.
the focus on convenience (frequent flights, few connections, more nearby airports) are reaching their natural limits. Differentiation from there remains to be difficult. Easy Jet’s own success makes it difficult to recruit and train staff quickly enough
Opportunities Expansion in developing markets such as India and China. Business expansion through further acquisition and mergers. Recovery signs of the world economic after economic recession.
Experts predict great potential for future growth in the next years. The current recession is favorable as people and businesses are more cost-conscious.
More full-service airlines may withdraw from the regional market to focus on more profitable long-haul routes leaving the market to the low-cost operators.
Threats Changing consumer behavior in his global economic recession can influence company’s strategy. Threat of losing consumers who want a low-cost packagers because company’s focus on luxury hotels. Competitors, such as Thomas Cook, are more flexible in business models and strategies.
Competition is likely to intensify, given the saturated market and the shortage of other options. Increased competition is likely to lead to greater difficulties in demanding incentives from communities. Companies cut on business travel in times of economic downturn and because of new time-consuming security measures travel substitutes like videoconferencing are introduced.
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6.2.3.3 Strategic Objective Thomas Cook Group PLC :STRENGTHENING OUR BUSINESS AND INVESTING
FOR GROWTH
TUI Travel PLC : “Creating superior shareholder value by being the world’s
leading leisure travel group providing customers with the
widest choice of differentiated and flexible travel experiences to
meet their changing needs.”
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6.2.4 Market Position
6.2.4.1 Market Dynamics UK & Ireland
TUI Travel plc
Thomas Cook
Passengers93 5.687m 7.6m (Including UK, Ireland, Middle East, and India)
Controlled distribution94
2009 78%
2008 75%
2009 68.6%
2008 67.4%
Market position
Mainsteam sector: #1 (34% market share)95
Mainsteam sector: #2
Financial services (Foreign Exchange market): #4 (7% market share)
Financial services (Foreign Exchange market): #3 (15% market share)
Strategy Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management.
• Target further mainstream margin improvement through product and haul mix. • Develop our e-commerce strategy and move into the online travel agency market. • Continue to grow travel-related financial services, notably foreign exchange. • Build on our strong performance in key medium haul destinations outside the Eurozone.
Key Brands
93 94 95
Page | 129
6.2.4.2 Market Dynamics Continental Europe
TUI Travel plc
Thomas Cook
Passengers96 9.73m (Including Germany) 7 m Controlled distribution97
2009 46%
2008 40%
2009 38.3%
2008 37.7%
Strategy Expanding the tour operator business in growth markets like Russia and Ukraine. Expanding the market share in the German-speaking volume market for cruises. Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management.
• Increase sales of exclusive and differentiated product to maintain margin advantage. • Continue to grow online distribution channels and improve dynamic packaging capabilities. • Increase sales to medium haul destinations such as Turkey and North Africa.
Key Brands
96 97
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6.2.4.3 Market Dynamic Northern Europe:
TUI Travel plc
Thomas Cook
Passengers98 5.687m 1.5m Controlled distribution99
2009 85%
2008 79%
2009 82.7%
2008 79.4%
Strategy Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management.
•Further expand internet sales. • Increase the proportion of customers who book our exclusive, concept hotels. • Continue to build on the success of our world class, in-flight sales. • Consolidate our position in the major Nordic outbound destinations of Spain, Greece, Cyprus, Turkey and Thailand.
Key Brands
98 99
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6.2.4.4 Market Dynamics North America
TUI Travel plc
Thomas Cook
Passengers100
0.54m (Including Mainstream and Specialists and Activity sectors)
1.1m
Controlled distribution101
2009
2008
2009 14.1%
2008 15.7%
Strategy Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management.
• Pursue flight and accommodation cost savings and strengthen hotel exclusivities. • Grow independent travel through dynamic packaging technology and improved product line. • Strengthen controlled distribution, especially online. • Grow newly launched Financial Services division and expand product range.
Key Brands
100 101
Page | 132
6.2.4.5 Market Dynamics Germany
TUI Travel plc
Thomas Cook
Passengers102
8.775 million (Including Mainstream and Specialists and Activity sectors)
5.9m
Number of aircraft
48 34
Retail Estate
Own shop: 428 Franchise: 974
Ownshop: 166 Franchise: 395
Product Focus
Strong focus on mainstream Highest brand equity in the
Market
Strong focus on mainstream market
Well positioned with Neckermann brand in lower/ budget segment.
Controlled distribution103
2009 46%
2008 40%
2008
2009
Strategy Increasing the proportion of differentiated holidays and strengthening web- based sales. Engaging in pro-active capacitive management in Travel Mainstream business by adjusting flight and hotel commitments to align supply and demand. Focusing on flight-yield differentiated hotel portfolio in TUI Hotel and Resorts Pursuing restrictive cash and working capital management. Expanding the market share in the German-speaking volume market for cruises.
• Focus on cost-saving, especially fuel related efficiencies. • Drive synergies and other benefits through greater co-ordination of activities with other Thomas Cook Group airlines. • Enhance benefits from cooperation with other external airlines.
Key Brands
102 103
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6.2.5 BCG MATRIX TUI Travel plc Thomas Cook Star Activity Sector
Specialist & Emerging Extra services (renting car)
Component holiday, Extra (car hire), Activity Sector.
Cash Cows Package holiday
Independent holiday (city breaks),
Financial services (foreign currencies services and Money card, Travel insurances)
Accommodation and Destination (organising meetings, incentives, conferences and events (MICE))
Accommodation Package holidays Specialist Financial services related
to travel
Question Marks
Hotels, resorts Airlines.
Hotels Airlines
Dogs Cruisers Cruisers
Page | 134
6.2.6 Distribution Channels
TUI Thomas Cook
Travel
Agencies
Own retail shops
Franchises
Third- party distributions
Own Travel agencies
Franchises
Third- party distributions
Ecommerce All most every brands have the brand website for customers to book services online
http://www.firstchoice.co.uk/
http://www.thomson.co.uk/
http://www.arke.nl/wintersport.aspx
http://www.tuifly.com/de/
Thomascook.com: Each country
has one website for online
booking.
http://www.thomascook.com/
http://www.thomascook.de/
http://www.thomascook.pl/
http://www.thomascook.fr/
http://www.neckermann-reisen.de/
Telephone
Selling
Call Centers Call Centers
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6.3 Management Key Performance Indicators
6.3.1 KPI Rationale
In order to determine TUI Travel PLC or Thomas Cook Group PLC is better, we have to make a
benchmark on their Human Resources. Since management are about the people of the company and
how they work and communicate with each other, we believe that the management is the most
essential part from a company. Since both TUI Travel PLC and Thomas Cook Group PLC is an
International Tourism Company, both of them has hundreds of brands and but has specific needs of
each brands, and specialization in each department, who trains their employees better, that is what
we are going to benchmark in this management key performance indicator.
6.3.2 Performance/Target
Company profile
o Mission Statement
o Vision and Mission
o Sustainability Development and Social Responsibility
Company Organization
o Organizational Structures
o Departmentalization
Human Resources Management
o Recruitment Plan
o Selection
6.3.3 Performance/Target
6.3.3.1Company profile
6.3.3.1.1Mission Statement
Thomas Cook Group PLC: Under the global vision “WE GO FURTHER TO MAKE DREAMS
COME TRUE”, Thomas Cook states itself with four different
missions based on five main divisions: UK & Ireland, Continental
Europe and Airlines Germany, Northern Europe, North America.
The differences in the Thomas Cook ´s Mission Statements in
different divisions are related on its flexible business models and
concentrated marketing strategy for every different geography
market.
Page | 136
TUI Travel PLC : “TUI Travel PLC does not have a Mission Statement. We have a
stated strategy which is to create superior shareholder value by
being the world’s leading leisure travel group providing customers
with a wide choice of differentiated and flexible travel experiences
to meet their changing needs To enable us to achieve this goal we
have identified four key strategic imperatives which are linked to
our KPIs.”104
6.3.3.1.2 Vision and Mission
TUI Travel plc
Their common vision and values unite their across the Group and they call this their TUI
Spirit. Their vision is Making Travel Experiences Special and their four values are:
• Responsible leadership
• Customer obsessed
• Value driven
• Playing to win
Winning behaviours have been developed to help embed these values in every day working
life in a number of ways. These behaviours allow them to truly engage in their work and
optimize their performance – as individuals and as a business.
Thomas Cook
These values are the focus for ensuring that every Thomas Cook employee embraces what
they stand for and are PROUD to work with us delivering customer service that‟s second to
none.
6.3.3.1.3 Sustainability Development
TUI Travel
Throughout the year, sustainable development has continued to be an important part of the
business agenda for TUI Travel. They aspire to lead in sustainable development within the
leisure travel industry. In the long term, they believe this goal will help build shareholder
value for TUI Travel and contribute to operating a strong business now and in the future.
104 FAQS. TUI Travel plc. Retrieved from http://www.tuitravelplc.com/tui/pages/investors/shareholderinfo/faqs
Page | 137
• TUI Travel is listed on the FTSE4Good Index in recognition of its transparency and for
meeting strict social, environmental and governance standards.
• It is the highest placed travel company, at 16, in the 2008 Good Companies Guide – The
Observer‟s annual ethical ranking of FTSE350 companies.
• TUI Travel‟s first full Sustainable Development Report was published in July 2009, with
independent verification of their targets by Bureau Veritas.
• For the second consecutive year, they have been included in the Carbon Disclosure
Leadership Index, which highlights the top 10% of FTSE350 companies that have displayed
the most professional approach to climate change disclosure.
Sustainable development strategy of TUI Travel Plc
During 2008/2009, they developed a Group sustainable development policy in conjunction
with key colleagues, articulating their vision and approach to sustainable development. The
Group Code of Conduct covers a wide range of sustainability issues, including human rights,
business ethics and transparency and commits TUI Travel to upholding the principles of the
UN Global Compact.
TUI Travel‟s sustainable development strategy is based on consideration of the key issues
affecting the Company, now and in the future. It has been developed in consultation with
internal and external stakeholders. They encourage all TUI Travel businesses to develop their
own sustainable development strategy, aligning with Group priorities. At the end of
2008/2009, 73% of TUI Travel businesses had their own sustainable development strategy.
Policy and mitigation for Groupwide risks relating to sustainability are facilitated by the
Group Risk Management and Sustainable Development Departments, with responsibility for
managing such risks also shared by the businesses themselves.
Thomas Cook plc
The last year has proved a testing time for all areas of business, not least the travel industry.
The global economic downturn brought with it a decline in international tourism in 2009,
intensified by many other factors including consumer confidence, terrorism incidents,
fluctuating exchange rates and the outbreak of swine flu.
At Thomas Cook Group, their response to challenging market conditions is to work harder
and go further to make dreams come true for their customers. They recognize the many
virtues of travel, the positive cultural exchange and the boost to local economies, but they are
also aware of the potential impact on the environment, societies and local cultures. The travel
and tourism industry has a responsibility to operate in a sustainable way and Thomas Cook,
which founded its business with clear social and educational intentions, is proactive in this
area.
They aim to have sustainability at the core of their business and feature it as an integral part
of their strategy, particularly when it comes to the environment. These responsibilities no
longer sit on the periphery; their importance represents a genuine business risk. Society,
customers, investors, governments and communities no longer look for, but demand that both
Page | 138
time and money be invested in the preservation and protection of the incredible people and
places they come into contact with.
Over 160 years ago a former preacher, Thomas Cook, devised the first package holiday.
Since then, the business he founded has helped millions of people to relax, unwind – and
broaden their horizons. Thomas Cook didn‟t just want people to have fun. He believed
affordable travel could change working people‟s lives for the better. His company was
inspired by a strong sense of social justice and moral responsibility: what today they call
corporate social responsibility (CSR).
Today, they‟re still inspired by their founder‟s values. They believe they make a world of
difference – not only to their customers, but to all the people whose lives they touch. Their
mission is to perfect the personal leisure experience. And that includes managing their
activities in a morally and socially responsible manner.
Page | 139
6.3.3.2Company Organisation
6.3.3.2.1 Organizational Structures
TUI Travel plc Organizational structures
TUI Travel plc Organizational structures chart:
Page | 140
6.3.3.2.1 Departmentalization
TUI is using Geographical Departmentalization, which means groups jobs according to
Geographical Region.
Advantages and disadvantages of Geographical Departmentalization105
Advantages Disadvantages
More effective and efficient handling
of specific regional issues that arise
Serve needs of unique geography
market better
Duplication of functions
Can feel isolated from other
organization areas
Thomas Cook Organizational structures
Thomas Cook has a more flexible organization structure, which is combined by Geographical
Departmentalization and Functional Departmentalization (Groups Jobs according to function).
Advantages and disadvantages of Geographical Departmentalization106
Advantages Disadvantages
More effectives from putting together people with common skills,
knowledge, and orientations.
Coordination with function areas
In depth specialization.
Poor communication across functional areas
Limited view of organizationalngoals
105 Robbins, S. P., & Coutler, M. (2009). Management. (tenth ed.). New Jersey: Pearson Education, Inc. 106 Robbins, S. P., & Coutler, M. (2009). Management. (tenth ed.). New Jersey: Pearson Education, Inc.
Page | 141
6.3.3.2.2 Recruitment Plan
TUI Travel plc
Apprenticeship programme
Content and delivery
TUI Horizons107
Recruiting for their long term success108
Thomas Cook
The recruitment process onto STARS is rigorous and the required standard must be reached.
Staff are expected to complete a range of tasks which have direct links to the company
PROUD values. The tasks can be small (such as controlling the airport) or large (like
organising a fund raising event in resort). Staff are expected to achieve a pass grade for each
task and only when they have achieved the pass grade for all tasks set will they have passed
the STARS in resort stage. A key benefit of STARS is that it assists with succession planning,
enabling suitable employees to be identified and trained for the next level. This in turn can
help ensure staff are retained and promoted from within the business.
107 ). Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/ 108 ). Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from https://homeaccess.saxion.nl/NetStorage/
Page | 142
Chapter 7. References
1. (2010). IBMS Course Guide. Deventer, The Netherlands: Saxion University of
Applied Sciences.
2. 2.Kotler, Armstrong, Wong and Saunders (2008). Principles of Marketing. (5th
European edition .). Prientice Hall.
3. Saunders, Lewis and Thotnhill (2009). Research Methods for Business Students. (5 th
ed.). Prientice
4. Berenson, M. L., Levine, D. M., & Krehbiel, T. C. (2006). Basic Business Statistic.
(tenth ed.). New Jersey: Pearson Education, Inc.
5. Robbins, S. P., & Coutler, M. (2009). Management. (tenth ed.). New Jersey: Pearson
Education,Inc.
6. Gowthorpe, C. (2005). BUSINESS ACCOUNTING AND FINANCE. (2nd ed.).
Italy: Thomson.
7. (2009). PrelimannouncementThomasCook. Saxion University G-Drive. Retrieved
from https://homeaccess.saxion.nl/NetStorage/
8. (2009). annual report Thomas Cook 2008-4. Saxion University G-Drive. Retrieved
from https://homeaccess.saxion.nl/NetStorage/
9. (2009). Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from
https://homeaccess.saxion.nl/NetStorage/
10. (2009). AnnualReportand TUI Accounts08. Saxion University G-Drive. Retrieved
from https://homeaccess.saxion.nl/NetStorage/
11. valuebasedmanagement. Retrieved February 2010, from
http://www.valuebasedmanagement.net/
12. THE ROLE OF FINANCIAL ANALYSIS. Cengage Learning. Retrieved February
06, 2010, from
http://college.cengage.com/business/resources/casestudies/students/financial.htm.
Page | 143
13. Industry Profiles: Travel Agencies and Services Travel Agencies and Services. First
Research. Retrieved February 06, 2010, from http://www.firstresearch.com/Industry-
Research/Travel-Agencies-and-Services.html
14. http://www.etoa.org/Directory.aspx
15. http://en.wikipedia.org/wiki/Tourism
16. http://www.cbi.eu/?pag=84&doc=3116
17. http://www.wikitravel.org
18. http://www.wikitravel.org
Page | 144
FINANCIAL APPENDICES
Thomas Cook 2009
Thomas Cook 2008
Property, Plant & Equipment
Thomas Cook 2007 Aircraft and Freehold Land
Short Other Total
Aircraft Spares and Buildings Leaseholds Fixed Assets Cost
At 1 November 2005 1091.18772 243.91584 121.46841 187.69212 553.07637 Additions 3.77622 0.76923 6.15384 12.51747 19.44054
Exchange differences 0.34965 0.27972 0.76923 0.41958 1.46853 Disposals -16.43355 -6.993 -5.03496 -4.61538 -16.64334
Disposal of subsidiary undertakings – -83.35656 -6.08391 -31.95801 -121.39848 Transfer to non-current assets held for sale – -22.93704 – -10.55943 -47.9 At 31 October 2006 1,078.88 131.67819 117.27261 153.49635 402.44715
Additions 4.40559 2.30769 5.94405 12.72726 20.979
Acquisitions (note 18) – MyTravel 203.77602 54.26568 14.26572 38.67129 107.20269 – other – – – 0.06993 0.06993 Exchange differences -8.25174 -0.48951 -3.28671 -3.35664 -7.13286 Transfer from non-current assets held for sale – – 2.37762 5.38461 7.76223 Reclassifi cation – 0.48951 -0.06993 -0.41958 -
Disposals -27.76221 -0.34965 -0.34965 -3.28671 -9.37062 At 31 October 2007 1,251.05 187.90191 130.7691 203.28651 521.95752
Page | 145
EUR/GBP 31 October 2007 0.6993
Thomas Cook 2007 Converted to Poundsterling
TUI Travel PLC 2008
Page | 146
TUI Travel PLC 2009
Page | 147
Appendices 2.2
Acquisitions Thomas Cook Group PLC 2008
Acquisitions TUI Travel PLC 2008
Page | 148
Appendices 2.3
TUI Current Asset 2008
TUI Cash & Cash Equivalent 2008
TUI Assets Classifieds as held for sale 2008
TUI Current Trade and other payables 2008
Page | 149
Thomas Cook Current asset 2007
Thomas Cook Cash and Cash Equivalent 2007
Thomas Cook Trade and Other Payables 2007
Page | 150
Thomas Cook Current Asset 2008
Thomas Cook Liabilities 2008
Thomas Cook Derivative Financial Instrument
Thomas Cook‟s 2008 Trade and Other Receivables
Page | 151
Thomas Cook Current Asset 2009
Thomas Cook Current Liabilities 2009
Thomas Cook Financial Derivative 2009
Thomas Cook Borrowings 2009
Page | 152
TUI Travel PLC Current Asset 2009
TUI Travel PLC Current Liabilities 2009
TUI Travel PLC Cash & Cash Equivalent
TUI Travel PLC Asset Classified as held for sale
Page | 153
Appendixes 3
Page | 154
Project Organizational Analysis
Page | 155
Table of Contents
1. Introduction.................................................................................................... 3
2. Objective of the assignment........................................................................ 4
3. Central research question............................................................................ 5
4. Sub questions............................................................................................... 6
5. Procedures and methods............................................................................. 7
6. Project organisation..................................................................................... 8
7. Quality control............................................................................................... 9
8. Time Planning................................................................................................ 10
9. Preconditions................................................................................................ 14
10. Literature....................................................................................................... 15
11. Cooperation Agreement Group 7................................................................ 17
12. Declaration of approval................................................................................ 20
13. Feedback Form Milestones......................................................................... 22
Page | 156
1. Introduction
For the coming the second periods, we are going to set up a bench mark. It is based on
benchmarking Key Performance Indicators (KPI‟s) of the two representative firms of the
travel industry, TUI and Thomas Cook. As a group of 5 international IBMS students we are
going to analyze and find out the best way about the objective.
In the first period of the project we will hand in a report in which about our project. In
addition to this, we will clear every trend and development with current and factual data.
Next to this, we will make interviews to improve our project.
In the second period, we will analyze information which we have collected. We will focus on
several separate aspects: Project organization, Quality control, marketing and Accounting.
The aim is to find information necessary to make our first report complete and to find more
information about the several aspects mentioned above.
For deeper insights, we are going to do desk research with one in-depth interview. Further we
will use the knowledge of last, and the books of this school year. Most of the information will
be secondary data, but we will also look for primary data like scientific articles and annual
reports.
Page | 157
2. Objective of the project Organizational analysis:
Set up a bench mark based on quick scans of two representative firms of the travel industry,
TUI and Thomas Cook by identifying and comparing the Key Performance Indicators of the
firms in order to find out “who is best in class”.
Page | 158
3. Central Research Question:
Among TUI and Thomas Cook, which travel firm is better in business process and
performance according to benchmarking the Key Performance Indicators?
Page | 159
4. Sub Question:
Travel Industry Analysis
What is travel industry?
How does the travel industry produce value and profit?
What is the Business model of travel firms in European market?
How much profit dose the whole travel industries generate?
How is the Tourism market divided?
What are the roles of TUI and Thomas Cook in European travel industry?
Case Financial Analysis
What are the financial position of TUI and Thomas Cook?
In order to determine their financial positions, which are their financial performance
ratios should be based on?
How are the profit ratios of TUI and Thomas Cook?
How are the liquidity ratios of TUI and Thomas Cook?
How are the activity ratios of TUI and Thomas Cook?
How are the leverage ratios of TUI and Thomas Cook?
How are the shareholder-return ratios of the two firms?
What are the financial forecasts of TUI and Thomas Cook?
Case Management & Organisation Analysis
What are the structure of TUI and Thomas Cooks‟ Organisations?
How do they manage their human resources?
What are personnel training programs in the two firms?
What do TUI and Thomas Cook do to control their service quality?
How do they develop their management strategies?
Case Marketing Analysis
What are the marketing models of TUI and Thomas Cook?
What are their marketing objectives?
What are the target market of TUI and Thomas Cook?
How do they position and segment their target markets?
How are their marketing performances?
How they promote their products?
Who are their competitors?
In order to compete, which is their pricing strategy?
Which strategies TUI and Thomas Cook apply to improve their marketing
performances?
Page | 160
Case E-commerce UPS
What is e-commerce?
Which are common applications related to e-commerce activities of TUI and Thomas
Cook?
How much profit do e-commerce activities create for the two firms?
Key Performance Indicators
What are the Key Performance Indicators?
Which parts of the firms need to look at in order to identify their Key Performance
Indicators?
What are the Key Performance Indicators to compare TUI and Thomas Cooks?
What are the similarities between TUI and Thomas Cook?
What are the differences between the two travel firms regarding to business domains?
Which firm is scored better about Key Performance Indicators?
Page | 161
5. Procedures, methods
In this project our task is to set up a bench mark based on quick scans of two representative
firms of the travel industry to find out “who is the best in class”, depending on this objective,
we will get our information through internet, newspaper and magazines. Due to primary data
is costly and difficult to gain access, so most of our source will be secondary data.
According to our research questions and objectives, we decide to conduct different types of
research methods in different phrases. In the first phrase, we will collect data on each aspect
of these two companies and then make objective conclusions about the current condition. It is
descriptive research we are going to apply in this stage. In the second phrase, the explorative
methods play the dominant role in analyzing the interpreting the data. Because we need to
explore the reason why we think the chosen company is “better” than the other one. In
addition, interviews are needed to gain more reliable and valid data. And we will negotiate
with organizations in a proper way; carefully design our individual questions on
questionnaires.
Page | 162
6. Project organization
We have 4 nationalities in our group, namely Indonesia, Vietnam, Iraq and Rumania. So
according to different strong point of each other, after discussion, we divide our task as this
frame: Ivander is good at organizing and creative thinking, so he will be the people who
make an overall plan for us. Duong will take care of the layout of each deliverables. Mo and
Dan will in charge of examining quality of group work. And Gework will do the job of
summaries our weekly questions before our supervision time.
Page | 163
7. Quality control
We have reached an agreement that high quality of our deliverables is the most important part
of our performance. In case of misunderstandings which are caused by incorrect grammar and
spellings, an effective way of quality control has been made. First, after we finish our
assigned parts, the special spelling check system in WORD will be used to help with
grammar. Then we put up our parts on the public igoogle account, everyone in our group can
comment others work by direct edit. After that, Ivander and Duong will check all of the work
and set a final version of deliverable. We are going to do our best to make our performance
without grammar, spelling as well as logical mistakes.
Page | 164
8. Time Planning
Week Deliverables are in
bold below Activities Person
in
charge
Time Group
Deadli
ne
Deliverables
final
deadlines
Meeting with
Supervisor
Comment
3.1 Milestone 1: Plan
of Action Making
groups, preparation
cooperation
agreement.
Mind mapping and
pre-research
Group meeting 01.02
03.02
05.02
Meeting with our supervisor (Mr. Tartarin) every Friday afternoon to discuss about the milestones and project group process.
Discuss
questions
Cooperation
Agreements
Introduction 06.02at 12AM
Time Planning
Preconditions
Declaration
Procedures
Project
Organization
Quality Control
Objective of the
assignment
Central research
question
Sub question
Literature
3.2 Group Meeting
About Milestone2
All
group
member
s
08.02
12.02
Dispense
personal
working
Making a plan and
divide tasks to
search data about
Travel Industry
Profile
Hand in
Milestone 1 on
08.02. at 5 PM
Travel industry
overview
13.02
at 12
AM
Development
trends
Challenges
Financial
information
Industry forecasts
Questions about
milestone2
All
Group
member
s
3.3 Milestone 2
Travel Industry
analysis
Group Meeting +
Questions
All
group
member
s
15.02
17.02
19.02
Dispense
personal
working
Analyzing the
collected data to
20.02
at 12
Page | 165
make Travel
Industry Profile AM
Questions about
milestone2
Spring Holiday Break
3.4 Group Meeting +
Questions
All
Group
member
s
22.02
24.02
26.02
27.02
at 12
AM
Hand in
Milestone 2 on
01.03 at 5 PM
Meeting with our
supervisor every Friday
afternoon to discuss about the
milestones and project
group process.
Dispense
personal
working
Making a plan and
divide tasks about
milestone3
Search for financial
performances of 2
firms
3.5 Milestone 3.
Case Financial
analysis
Group Meeting +
Questions
All
group
member
s
01.03 06.03
at 12
AM
Dispense
personal
working
Analyzing the
collected data
about Financial
information.
Profit ratio
liquidity ratios
activity ratios
leverage ratios
shareholder-return
ratios
3.6 Group Meeting +
questions about
Milestone4
All
group
member
s
08.03
10.03
12.03
Hand in
Milestone 3 on
08.03 at 5 PM
Dispense
personal
working
Making a plan and
divide tasks
Collecting data
about Management
and Organization
performances of 2
firms
13.03
at 12
AM
3.7 Milestone 4
Case:
Management &
Organization
Group Meeting +
questions
All
group
member
s
15.03
17.03
19.03
Dispense
personal
working
Analyzing the
collected data
about Management
and Organization
performances of 2
firms
18.03
at 12
AM
3.8-
3.9 Study week/ retake exams period 2 Exam period
Page | 166
4.1 Group Meeting +
questions about
Milestone5
Making a plan and
divide tasks
All
group
member
s
05.04
07.04
09.04
Hand in
Milestone 4 on
05.04 at 5 PM
Collecting data
about Marketing
performances and
strategies of TUI
and Thomas Cook
10.04
at 12
AM
4.2 Milestone 5: Case
Marketing
Group Meeting +
questions
All
group
member
s
12.04
14.04
16.04
Analyzing the
collected data
about Marketing
performances and
strategies of TUI
and Thomas Cook
17.04
at 12
AM
4.3 Group Meeting +
questions about
Milestone6
All
group
member
s
19.04
21.04
23.04
Hand in
Milestone 5 on
19.04 at 5 PM
Making a plan and
divide tasks
Collecting data
about Case E-
commerce UPS
24.04
at 12
PM
Analyzing the
collected data
about Case E-
commerce UPS
May holiday Break
4.4 Milestone 6:
Case E-
commerce UPS
Group Meeting +
questions about
Milestone 6 and 7
All
group
member
s
26.04
28.04
30.04
Hand in
Milestone 6 on
03.05
at 5 PM
Making a plan and
divide tasks about
milestone7
01.05
at 12
PM
Collecting data about
Key Performance
Indicators
4.5 Milestone 7: Key
Performance
Indicators
Group Meeting +
questions about
Milestone7
All
group
member
s
03.05
05.05
07.05
Hand in
Milestone 7 on
07.05 at 1 PM
Analyzing the
collected data
about KPI of 2
firms
05.05at 12
AM
4.6-
4.7
Writing the
Benchmark report Group Meeting +
questions about the
Benchmark report
All
group
member
s
10.05
12.05
15.05
17.05
Hand in Report
Benchmark
travel industry
on Thursday 12
Making a plan and
Page | 167
divide tasks about
the Benchmark
report
19.05
21.05
PM
Writing the
Benchmark report 20.05
at 12
AM
Checking the
report draft
Checking and
printing out final
report
21.05
4.8 Study week en
retake Period 3 Group meeting to
divide tasks about
Presentation.
Prepare the slides
Presenters
4.9 Exam period
Peer evaluation
Presentation
Benchmark Travel
Industry Oral defense
+
Peer evaluation
4.10 Exam week
Retake project
report (when/if
necessary)
Retake oral
defense (if
necessary)
Retake project report
Retake oral defense
Page | 168
9. Precondition:
There are several possible limitations may emerge during the project, and only stick to the
time planning and finish our report on time are not enough to make our project perfect. We
only have 20 weeks to make a complete and high-quality report. Since we are all the new
student of IBMS, so we are lack of practical experience about management and organisation,
we need ask advices from our project supervisors and teachers in order to accomplish our
project objective.
First of all, we are working in a group within three different nationalities. It is very important
to communicate with each other in a proper way and keep our group moving on.
Secondly, in the second phrase, before the interview conduct in the real context, we have to
design a questionnaire in a logical layout, which is very difficult to achieve. After discussion,
we regard pilot test a best way out.
In addition, our group members should not be shy to present their ideas. We can only
improve ourselves by exchanging ideas with each other.
Page | 169
10. Literature
1. (2010). IBMS Course Guide. Deventer, The Netherlands: Saxion University of
Applied Sciences.
1. 2.Kotler, Armstrong, Wong and Saunders (2008). Principles of Marketing. (5th
European edition .). Prientice Hall.
2. Saunders, Lewis and Thotnhill (2009). Research Methods for Business Students. (5 th
ed.). Prientice
3. Berenson, M. L., Levine, D. M., & Krehbiel, T. C. (2006). Basic Business Statistic.
(tenth ed.). New Jersey: Pearson Education, Inc.
4. Robbins, S. P., & Coutler, M. (2009). Management. (tenth ed.). New Jersey: Pearson
Education,Inc.
5. Gowthorpe, C. (2005). BUSINESS ACCOUNTING AND FINANCE. (2nd ed.).
Italy: Thomson.
6. (2009). PrelimannouncementThomasCook. Saxion University G-Drive. Retrieved
from https://homeaccess.saxion.nl/NetStorage/
7. (2009). annual report Thomas Cook 2008-4. Saxion University G-Drive. Retrieved
from https://homeaccess.saxion.nl/NetStorage/
8. (2009). Annual report TUI 2009-1. Saxion University G-Drive. Retrieved from
https://homeaccess.saxion.nl/NetStorage/
9. (2009). AnnualReportand TUI Accounts08. Saxion University G-Drive. Retrieved
from https://homeaccess.saxion.nl/NetStorage/
10. valuebasedmanagement. Retrieved February 2010, from
http://www.valuebasedmanagement.net/
Page | 170
11. THE ROLE OF FINANCIAL ANALYSIS. Cengage Learning. Retrieved February
06, 2010, from
http://college.cengage.com/business/resources/casestudies/students/financial.htm.
12. Industry Profiles: Travel Agencies and Services Travel Agencies and Services. First
Research. Retrieved February 06, 2010, from http://www.firstresearch.com/Industry-
Research/Travel-Agencies-and-Services.html
Page | 171
Cooperation Agreement Group 6 (Period 4)
Contact information:
Names (Student Number)
Class
Telephone numbers
E-mail addresses
6. Name: Pham ThuyDuong,(2430318)
Class: DIM1VC
Email: [email protected]
Telephone: 0684103949
7. Name: Ivander Laurentius Atmojo (2430243)
Class: DIM1VA
Email: [email protected]
Telephone: 0681103403
8. Name: Corhana Dan Andrei (2430403)
Class: DIM1VA
Email: [email protected]
Telephone: 0634456259
9. Name: Gework Petrosjan (2431488)
Class: DIM1VB
Email: [email protected]
Telephone: 0634456259
10. Name: Mohammed Ababakar (2431451)
Class: DIM1VB
Email: [email protected]
Telephone: 0614575660
Foundation for cooperation and
basic rules
- Have a sense of responsibility for our project work
- Attend all meetings
Page | 172
- Be on time for meetings, or notice your absence
- The language that will be spoken is English
- Follow the planning as discussed and stick to it
- Show initiative and be open for ideas
- Be polite to each other
Rules of presence and absence.
Part of these rules is about the
way in which the group members
address one another in the case of
failures.
- Have 2 official group meetings per week.
- Be on time for each meeting (if you cannot come, please
contact other members before at least 2 hours in advance,
or you will be get a warning, and 2 warning means that you
are kicked out)
- Each group member will be assigned as chairman once.
So always be prepared to be a chairman, send the agenda
one day before the meeting.
Rules of participation
- The whole group is equal so everyone has to show their
best and to work as a team
- Everybody agrees on taking each other seriously and
help each.
Rules of reporting - Upload your task on our public igoogle account
- Everyone is going to use the same layout which is
Times New Roman 12
- Always use the British Spell Check before sending your
work
- Our deadline for each week will be 12:00 am on
Saturday!
- The work of any member will be checked by the other
group members and improved if necessary
Agreements as to how to interact
with one another
- The language that will be spoken is English
Page | 173
- Everyone should give his own opinion
- Act as a group (teamwork!!!)
- If there are any problems or worries just talk about it so
it won‟t stay in the way of our work
Intercultural - Show respect to each other‟s culture and be aware of
cultural difference
- Always communicate each other in English but not
your mother tongue
- Try your best to achieve cultural synergy
I agree with all the group rules and targets in this agreement and I will do my best to
achieve a better result.
Pham Thuy Duong Ivander Laurentius Atmojo
Corhana Dan Andrei Gework Petrosjan
Mohammed Ababakar
Page | 174
Declaration of approval
11. Name: Pham Thuy Duong,(2430318)
Class: DIM1VC
12. Name: Ivander Laurentius Atmojo (2430243)
Class: DIM1VA
13. Name: Corhana Dan Andrei (2430403)
Class: DIM1VA
14. Name: Gework Petrosjan (2431488)
Class: DIM1VB
15. Name: Mohammed Ababakar (2431451)
Class: DIM1VB
Hereby declare that:
1. The Report is our own work and no author‟s rights/copyrights have been violated.
2. All sources (inclusive Internet/WebPages) used have been mentioned source
indications as footnotes.
3. The following work does not contain more than 5% work of other people or
sources.
Place: Deventer, the Netherlands
Date:
Signatures
Pham Thuy Duong Ivander Laurentius Atmojo
Corhana Dan Andrei Gework Petrosjan
Mohammed Ababakar
