Why such a giant like Thomas Cook have failed and what could they have done better ?

In 2019, the world oldest travel company went bankrupt letting more than 600 000 Thomas Cook’s customers around the world by their own. This repatriation will cost more than £100m. The consequences are a disaster, but what had led to such a failure ?

        Picture from BBC.com showing the downfall of Thomas Cook over the years.

The first problem is technology (Internet) : over the years, the success of company like Airbnb and Trivago have moved the travel business online by changing customers behaviors, but Thomas Cook didn’t. Even if they partner with Expedia, they relied most of their business on physical stores : they have over 600 physical stores worldwide.

The second problem is the lost of interest to package tours. The rise of the Internet has created new interests and new needs. Now, package tours are less and less interesting and people prefer independence and flexibility over all plan trip. Even if Thomas Cook worked on their flexibility by creating a customized offer according to their clients needs. They still based their entire business on package tours, they have failed to adapt their strategies to the new needs creating by the rise of the Internet.

There are also external factors that lead to the disaster, competitors like Jet2Holidays and Tui have jeopardized Thomas Cook’s profits by proposing cheaper package tours and investing in their assets.

Picture from https://www.ft.com showing the differences in term of assets from Thomas Cook and Tui (a competitor)

Political factors (Brexit) and weather have also contributed to the fall : in 2016, Turkey (one of the top destinations of Thomas Cook) got hit by a heat wave and it highly discouraged their customers to go there.

So what could have Thomas Cook did better ? First they should have invest more money on their online websites than their physical stores. Their website is really basic and have nothing to stand out. Then they could have created a community through their social media using influencers to stand out from their competitors.

Vincent TIENG

Source :

https://www.theguardian.com/business/2019/sep/23/thomas-cook-as-the-world-turned-the-sun-ceased-to-shine-on-venerable-tour-operator

https://time.com/5683934/thomas-cook-travel-collapse/

https://www.independent.co.uk/travel/news-and-advice/thomas-cook-collapse-travel-abta-corporate-finance-failure-mark-tanzer-a9146851.html

https://www.ft.com/content/702e3a48-f48c-11e8-9623-d7f9881e729f