The travel industry is the last place you would expect to find a superbrand. For a sector that has seen considerable consolidation over the past few years, the industry’s branding still looks unwieldy and fragmented. This is despite the fact that it is controlled in the UK by four main players.
Thomson, the market leader, Airtours, Thomas Cook and First Choice all have a baffling array of holiday brands. After last week’s announcement that First Choice is building a network of more than 700 shops, all four have their own travel agencies. They also own airlines and are now looking at acquiring hotel chains.
Thomas Cook, after its merger with Carlson, will own three travel agency chains – Thomas Cook, Carlson Worldchoice and AT Mays – as well as airlines Flying Colours (including Airworld), Caledonian and Peach. And its holiday brands include Club 18-30, Inspirations, Sunworld, and Sunset – all clear brands in their own right, but with little to indicate any connection with the parent company or each other.
Simon Vincent, managing director for Thomas Cook’s UK tour operations, has recently appointed design consultants Enterprise IG to review all the brands in its portfolio. “We’re now looking at the brand equity within the individual brands. We’re looking at how you bring all that together in the context of an overall umbrella brand for the tour operating division.”
A report by the Monopolies & Mergers Commission earlier this year effectively gave the green light to companies to integrate vertically and since then, there has been a succession of acquisitions and mergers.
With this level of activity, any marketer would jump at the opportunity to create a single brand which the consumer could see on countless occasions before and during their holiday.
“The point is, there are an awful lot of places where you should in theory be able to get the brand involved,” says Jon Leach, marketing director for HHCL & Partners, which won the Thomson account in May. “It’s a big ticket item and so there is a huge branding opportunity.” He points out that branding is to a large extent about emotion and the holiday is one of the most emotional purchasing decisions a consumer makes.
Richard Carrick, deputy managing director of Airtours, says: “Given the phenomenal branding opportunity that’s available, it is amazing nobody’s really doing anything about it.”
The reason for this brand surfeit is largely historic. On the road to consolidation, operators have picked up many solid brands. And tour operators, by their own admission, are not as advanced in marketing techniques and culture as packaged goods companies and have had shorter-term priorities. Carrick says: “The attention has always been fixed on maximisation of next week’s flight or perhaps next year’s brochure. The market is still very much sales driven.”
But the retail structure is particularly important in this market. The big players are heavily dependant on independent or competing travel agencies to sell their goods. As Michael East, analyst with Eastcastle Management, points out: “Lunn Poly would never be able to sell as many holidays as Thomson produces.”
For Thomas Cook, which is predominantly a retail brand, it would be commercial suicide to badge its tour operator products sold through independent outlets with the Thomas Cook name. Because travel agents would not be willing to give out brochures bearing a direct competitor’s name.
Vincent says: “We have to be aware that we are reliant on third-party retailers to distribute our tour operator products. Given the strength of the Thomas Cook brand, a lot of the retailers would not ‘rack’ the product.” And while there was speculation that the tour operators Thomson and Airtours were contemplating changing the signage on their shops, replacing, for example, Lunn Poly with Thomson, they appear to have backtracked.
But the jury is out on how travel companies will sort out this situation. Inevitably, it will mean some tough decisions on which brands to keep, nurture and grow and which ones to throw out.
Managing director of the ABS consultancy Eli Abeles says: “I suppose the best example is British Airways, which has successfully sub- branded with World Traveller and Club World. These products say ‘this is BA, we’re safe and reliable but because you’re travelling World Traveller your meal will be quite basic and your seat will be this wide’. However, I don’t know how you do that for some brands in the tour operator and travel market. How, for example, do you put Club 18-30 alongside Thomas Cook, which is seen as safe and reliable – you wouldn’t want the Thomas Cook brand anywhere near it.”
It is no surprise that the industry has drafted in a number of senior executives from other sectors who are bringing their marketing skills to bear on tour operators. These include Shaun Powell, marketing and commercial director of Thomson, who used to work at Barclaycard; and Thomas Cook’s Simon Vincent, who used to work at Midland International.
Marketers who are looking five or ten years into the future are debating how far the brand will stretch. Carrick says: “There is a case for saying that once you have embedded the brand, you could stretch it to make it cater for a wider audience. So instead of having a separate brand for budget holidays you could possibly make it into Airtours: Holidays for Less.
“The debate is, how far will it stretch and could it be developed into a superbrand such as a Tesco or a Sainsbury’s? So far there are no tour operator superbrands.”
Following the June launch of Global Services, Thomas Cook plans to branch into other financial areas such as car insurance and general medical insurance. Finance is a natural extension for travel providers, which already have experience in this area through foreign exchange. There is no reason why the tour operators could not move into related areas such as banking and credit cards.
Another key debate is whether the superbrand should be taken from the tour operator or the travel agent. Tour operators’ names are not usually top of mind when it comes to brand recall among travellers. If you asked a traveller which company they travelled with, high on the list would be the agent, because that’s the first point of contact. Thomas Cook, arguably the most powerful brand of all, is led by its shops.
Peter Shanks, managing director of Going Places travel agency, says: “The retailer is closer to the customer and there are the points of sale where you have the ability to influence, which is a powerful proposition. You could have some holidays branded under Going Places and others with brand X, Y and Z.”
Final decisions will rest in the hands of consultants and marketers. The travel market may be a great branding opportunity waiting to happen. The creation of travel superbrands will undoubtedly happen in the long term, but for now travel marketers will have to cope with the limitations of an unruly collection of brands.