Speaking to analysts, TUI co-chief executive Friedrich Joussen admitted that ending the Thomson brand could be seen as a “risk,” but insisted the group is embarking on the “right strategy.”
Over the next two to three years, the TUI brand will first replace Arke in the Netherlands before being introduced in markets such as France and Belgium. It will then be rolled out across the rest of the group, with rebranding in the UK market part of the second phase.
Ahead of the UK rebranding, the Thomson website is set to be converted to www.tui.com/uk and airlines will start to carry TUI branding in order to slowly raise awareness of the brand among British holidaymakers, for which Thomson is an established force.
Joussen explained: “We are confident this is the right strategy and that this will really pay off, with the TUI smile becoming an icon for all of our markets.”
The decision to wipe out Thomson, which ranks 10th on the UK’s 55 biggest travel agents and above fierce rival Thomas Cook, according to YouGov’s BrandIndex, comes at a time of positive growth for the brand.
Its brand index score, which combines consumer’ perception of quality, value, satisfaction, reputation and whether an individual would recommend a brand, has risen 3.5 percentage points to a total score of 13.2 over the last six months.
For the same period, Thomson’s brand buzz score, which weighs up the positive and negative perceptions among consumers, has significantly climbed 3.5 percentage points to 4.6.
It’s a similar story for holiday provider First Choice. Although it is nine places (19th) below Thomson on YouGov’s BrandIndex ratings, its brand index score has risen 2.7 percentage points to 7.5 over the last six months.
Tui is the right brand
However, Joussen insists that rebranding to TUI is the right long-term decision.
He said: “Thomson is a successful power brand and we know people may categorise this as a risk, but this is like renovating a house as once you’ve done it and see the results, you wonder why you didn’t do something earlier.”
Joussen said TUI was going ahead with the changes to ensure it didn’t allow its local market brands to become ‘old fashioned’. He said that the changes will allow everything from TUI’s marketing to customer service to improve and become more digitally focused.
He explained: “It’s not a secret that I’m not a fan of having lots of brands and the rebranding will allow us to reposition as one. When online really takes off over the next five years, we believe global brands will perform better than local ones.”
Today, in the first strategy update since last year’s merger of London-listed TUI Travel and German owner TUI AG, The TUI Group said it was confident of meeting this year’s target for profit growth of up to 15%.
And shares in the group soared more than 2% after it revealed losses had narrowed to €272.6million in the six months to the end of March, from €341.4million a year ago.
The group credited a strong demand for summer holidays and a ‘significant increase’ in online bookings for the turnaround.