Thomas Cook Group has seen positive results from China so far but doesn’t plan to abandon its core European business. Pictured is Thomas Cook Group CEO Peter Fankhauser at the group’s Shanghai office. Thomas Cook Group
Less than a year after kicking off operations in China, European tour operator Thomas Cook Group is looking to a key partnership, sports tourism, and underserved travelers as it tries to avoid the missteps that many other Western travel brands made in the country.
The group, headquartered in the UK, is going after both the Chinese outbound market, with its 130 million travelers, and inbound travelers in a variety of ways.
In an interview with Skift at the World Travel & Tourism Council’s Global Summit in Bangkok last month, CEO Peter Fankhauser detailed those approaches and explained why its Chinese business is becoming more relevant to the group’s story.
To help it succeed, Thomas Cook China is relying on partnerships with European and Chinese brands and sports teams, for example.
The company is targeting many Chinese travelers’ love of European football to grow its outbound Chinese business, Fankhauser said. Thomas Cook has partnered with European football teams such as Manchester United to promote inbound and outbound Chinese travel and act as an incoming agent for European football clubs touring China for summer pre-season tournaments.
Thomas Cook China’s outbound, long-haul itineraries for Europe, Africa and Americas focus on sports travel packages while its short-haul packages for Southeast Asia are marketed to sun and beach lovers.
The company is still learning which products will resonate in the Chinese market, but it has already noticed a trend towards individual travel in China.
Group tours still account for the majority of the outbound market, Fankhauser said, but it’s seeing increased volume with Chinese travelers wanting to go without a group.
“That is probably the biggest opportunity for us in China,” he said. “More Chinese consumers are turning away from these big groups where they go with other tour operators in Europe through different cities.”
Fankhauser believes individual Chinese travel is a niche that hasn’t been sufficiently addressed by competitors. “For example, almost 50 percent of our arrivals in the Maldives are individual Chinese couples,” he said. “It’s massive but they have nothing to do with the expectations we have of Chinese tourists coming to Europe.”
The company’s outbound Chinese market is projected to grow 15 to 20 percent each year during the next five to 10 years. Thomas Cook began booking Chinese itineraries in September 2016 and has already booked more travelers during the first five months of this year than the September to December 2016 period, a representative said.
Bringing Europeans to China
With inbound Chinese itineraries, the company initially plans to send about 2,500 to 3,000 European travelers to China per year, much smaller than other long-haul destinations such as Australia or Thailand. Product offerings in China include hotel packages, sporting events and show tickets.
Since September, Thomas Cook’s inbound Chinese itineraries — mainly bringing Europeans to China — have generated most of its China business’ revenues and cash flows, Fankhauser said.
While the operator increasingly views China as important to the group’s growth — Fankhauser said it is already the company’s fastest growing market “by a long way” — it’s not certain if that market will become one of Thomas Cook’s long-term, core growth opportunities.
For one, Thomas Cook doesn’t want to divert attention from its mainstay European business. Of its 16 source markets, most are in Europe.
And strong growth aside, China still represents a new and uncertain market for the group. Many Western travel brands have overpromised on China’s potential and later pulled out or cut back. Thomas Cook’s executive team, though pleased with China thus far and excited about the potential, acknowledges that it is still relatively unknown there.
A Long (and Recent) History
Even though Thomas Cook only started operating in China in September, its history there is longer — and somewhat complex. Sir Thomas Cook, the company’s founder, originally visited China in the mid-1800s and spent 250 days traveling throughout the country. The company’s more recent Chinese business dates to October 2015 when it opened offices in Shanghai and Bejing.
But China ties were formed before even before those offices were established. In March 2015, Fosun, a Chinese conglomerate, took a five percent stake in Thomas Cook Group; it has since upped its ownership to 11 percent. Before the deal with Thomas Cook, Fosun had just acquired all-inclusive resort company Club Med in February 2015 in a separate transaction.
Thomas Cook China works with Club Med in China to promote and distribute Club Med resorts through Alibaba’s Fliggy platform and China’s Spring Airlines. “I have to say without Fosun, we would have never been so fast in getting all the applications and licenses,” said Fankhauser. “You need a lot of licenses in China.”
Thomas Cook is counting on Fliggy and Spring to help the brand become more familiar to Chinese consumers. A spokesperson said the operator also attributes the early growth in its outbound Chinese business to its work with Fliggy and Spring.
“We expect this part of the business to be the key driver of growth for China in the future,” the spokesperson said.
PRC Time Shares
Author: Ryan Wolkov
Powered by WPeMatico