TUI says it will keep its ‘strong focus’ on retail, despite plans to aggressively drive customers to a single global platform being progressively rolled out to all markets.
Announcing an increase in its pre-tax earnings to almost £472m for the year to the end of September, TUI said capturing customer data in one app will allow it to ‘significantly’ reduce its distribution costs, give it closer access to customers, and increase spend by cross-selling more products.
However, Chief Financial Officer Mathias Kiep TUI was still planning to work with independent retailers.
“We are very happy to work with third parties, it is the core of our business and they justify it every day because of their higher margin because they sell higher products,” he said.
“Due to what they do for their customers, they are able to sell products with a higher margin but it is so important for us that we bring our web traffic into the app because we can communicate with the customer whenever it is important.”
CEO Sebastian Ebel added that retailers bring a ‘higher value’ customer. In response to a question from Travel Gossip about the future of TUI’s relationship with independent agents, he said: “When I came into office, I said I’m a fan of retail because I look at numbers and what you can see is that the customer value from a retailer is significantly higher than from an online customer.
“That is why in the UK we went back into retail and we do see now a significantly higher share of retail customers in TUI. It is very clear, it is not without reason that we work with retail. Yes, we have to pay more, but the benefit we get is compensating it all.
“This strong focus on retail, we will keep a lot.”
He said ancillaries will also be made available to agents to sell. “There is nothing that we will sell exclusively on one channel that we wouldn’t sell on another.”
He said it would be ‘pretty ludicruous’ for the app to take business away from retailers ‘because the quality of the retail customer is so much better’.
Instead, it wants to drive online traffic to the app, he said, to avoid paying the increasingly expensive search engines, such as Google.
“We want to bring the web customers into the app and we want to get even stronger with the third party retailer,” he added.“We know we have to pay the higher commission, we know we get the better customer from retail.”
He said support from retailers for TUI was ‘far stronger’ than it was 12 months ago, and he insisted agents are ’95 percent happy with us’.
“For the other 5%, it is always good to learn where they are unhappy, systems, product issues, then we work very much to reduce unhappiness. In the past 12 months we have made huge progress, so I offer if there are any issues a retailer has they come back to us, we really want to learn where we have not good enough.
“We want to be as fair as we can be because the value is in retail.”