Opinion: Leader - Embracing change is right strategy for TUI

This week we reveal TUI Thomson, the UK's biggest holiday company, is refocusing its PR agency relationships. But behind this news there is a wider strategy story and an important lesson for market-leading brands.

Last Friday BBC2's The Money Programme ran a piece called'Sunset for the Package Holiday'. The documentary confirmed what many travel industry analysts have been saying for years: the traditional package holiday is in terminal decline. It doesn't take a genius to realise that consumers have become more confident in booking the components of their holiday - flights, hotels, car hire - online, rather than relying on high-street travel agent packages.

But for a long time the big brands in the market, Thomson included, have been in denial, insisting the package holiday was in rude health. Hidebound by its ownership of the Lunn Poly high-street chain, TUI felt unable to address the massive changes in holiday distribution. All this time the average price of a package holiday remained static, there was little growth for shareholders and sluggish profit margins.

Fortunately TUI Thomson has now taken the bull by the horns and undertaken a major restructure of its business. The relocation of its head office from London to Luton, and hundreds of redundancies late last year, may have drawn negative headlines but, at the same time, the company engaged with the media to explain the reasons behind the apparent savagery.

Indeed, TUI worked closely with The Money Programme, chief executive Peter Rothwell allowing it to follow him on business trips. Rothwell was candid about the fact that consumers and the industry were changing dramatically and TUI was trying to adapt.

Over the past week, the company admitted that it expects half of bookings to be taken online within four years and is to encourage homeworking.

Unlike other 'legacy' retailer, such as Marks & Spencer, TUI has gritted its teeth and taken a leadership position embracing the media debate about the need to change.

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