Key Factors in Thomas Cook’s Collapse
The rise of Airbnb and budget, yet hyper-personalised holidays has seen a shift in consumer behaviour, but Thomas Cook still managed to sell 11 million package holidays last year. It also had a partnership deal with Expedia to try to attract the online crowd and was attempting, like TUI to own more of its own hotels and generate loyalty through “differentiation”. However, owning these parts of its value chain only added to its long list of liabilities and high debts.
The plan was, on paper, sensible but reinvention of the business model was needed above all else. The company paid £124m in interest charges to its lenders last year, far more than it could spend on investment. Hence, it would of been wise of them to pursue new low-cost innovations which created unique value for it’s customers, and subsequently increased at least one of the following key performance metrics — the volume of holidays booked, the variety of holidays available to book and the viability of uniquely packaged holidays.
A new model has emerged which creates a wider variety of viable tours on which holiday-makers can either shape or partake in. Travamigos adopts a new model in the travel space by enabling users of its app to build their own group holiday tours, tailor-made to their requirements, and as such making customers feel in control. Through this value co-creation, Travamigos and other travel and accommodation platforms will continue to disrupt the industry for the time-being. These platforms understand where the true value lies within the customer travel experience, and are subsequently leading the innovation within this space with their business models, leaving larger corporates such as Thomas Cook, looking stale and unable to adapt in comparison.
If you would like to access further in depth-analysis on why Thomas Cook failed as well as key business model and value innovation trends which contributed to their decline, click on the link below to listen to the latest Growth-Hacking Podcast Episode on this case study, led by entrepreneur, educator and investor, Dr Xiao Ma.
