Thomas Cook has unveiled plans for more ‘concept’ and ‘partner’ hotels in the coming years after improving its profits significantly this year thanks to a major turnaround in the UK, lower losses in France and Russia and higher profits in other markets.
The UK reported an operating profit of £66 million on revenues of just under £3 billion compared to just £3 million last year. The underlying EBIT margin improved to 2.2% from a fractional 0.1% due to cost savings, including 2,500 job reductions and the closure of more than 200 retail outlets over the last year.
Northern Europe remained the main profit contributor, with EBIT up 3.9% to £109 million on sales of £1.2 billion, and achieved a higher profit margin of 8.8%.
Continental Europe improved EBIT to £78 million on sales of £4.2 billion from £62 million last year, and improved the profit margin slightly to 1.8%. COO Peter Fankhauser said that Thomas Cook Germany was once again ‘the market leader’ in terms of profit margin this year. The company said it made “good progress” in the transformation of its businesses in France, where losses were reduced to €18.7 million, and in Russia, where business was stabilised and the loss slightly reduced to €10.5 million.
Airlines Germany (Condor) performed strongly and more than doubled EBIT to £48 million on revenues of £1.3 billion due to higher yields and load factors. This was a profit margin of 3.7%.
CEO Harriet Green said the “first 365 days in the transformation of Thomas Cook have been a great success” due to faster than expected cost savings and announced a ‘Second Wave’ with higher cost reduction targets for 2015.
Green said the rapid expansion of the franchised ‘concept’ hotels is continuing, with another 57 due to be on offer for next year, taking the total to 150 hotels. Over 500,000 customers booked one of the 93 ‘concept hotels’ this year. In addition, the number of ‘partnership’ hotels, offered with close partners such as Iberostar and Meliá, will rise from 216 this year to 310 in summer 2014.
Overall, Cook plans to increase the present 309 ‘exclusive’ hotels, including the concept hotels and ‘partner’ hotels, to 800 in the next four years to profit from their higher margins. Cook aims to have some two million customers in 250 concept hotels and 1.8 million customers in 550 partner hotels by the 2016/17 business year.
In addition, the number of ‘city break’ hotels in Europe will be increased from 7,000 to 20,000 in the next two years to increase the amount of cross-selling to the core ‘sun & beach’ customers.