TUI Travel says there is no impact from online travel agencies despite their strategy to chase the package holiday market.
Responding to an analyst question during half-year results ended 31 March 2014, chief executive Peter Long said it was something he had been hearing since 2007 but OTAs 'have not'made any impact.'
"I don't worry about them because we are not playing in a commodities market. We have a unique offering and a long term sustainable position."
Interestingly he separated booking.com from the pack describing it as a 'big elephant in the room but that is accommodation and it has a global footprint.'
Long also fielded a question on whether the accommodation wholesale business (including AsiaRooms and LateRooms) would 'creep up the value chain' and supply more to the retail business but said there was a line between the two.
He added that the marketing costs of building and promoting a brand meant it did not make sense and that the business still only has 10% of the market.
Long also touched on further ways to improve the efficiency of the business and said that while the company did not want to get into the huge restructuring of the past, one example was to reduce the number of data centres from 40 down to two or three. The company also plans to consolidate finance, back office and reservation systems.
He went on to highlight how investment in one online platform is paying off for the Thomson and First Choice brands in terms of improved levels of conversion as well as functionality and improvements in the customer experience.
He said the technology enables the company to create more landing pages which means improvements in organic search.
Highlights from the interim results include:
- an increase in online bookings of four percentage points to 38% - target of 50% by 2017
- an increase in direct distribution of three percentage points to 68% - target of 81% by 2017
- on track for full year operating profit growth of between seven and 10%
- confident of growth of between 15 and 20% a year in the accommodation wholesale business
- £12 million like-for-like reduction in operating loss in the UK and £16 million in Germany