By Syed Sharfuddin*
This week the good old Thomas Cook, the travel and tourism company founded 178 years ago breathed its last after failing to raise £200 million demanded by its creditor banks by Sunday midnight on 23 September 2019. Thomas Cook was bailed out once before 8 years ago, but it continued to face financial and administrative problems, including loss of core travel revenue from sales of package holidays, as well as travel insurance and foreign exchange trading.
The company had read the writing on the wall for its collapse a year ago and in July had come up with a business plan identifying the money required for a complete overhaul of the business. However, it turned out that in addition to the £900 million needed as additional funding, another £200 million were required for the implementation of the plan. This under estimation, combined with the bills to be paid by Thomas Cook to its travel partners at the end of the 2019 summer season forced the banks to demand that the company come up with £200 million urgently to prove that it was able to carry on trading on the stock market. Failure to do so would risk bankruptcy.
Although Thomas Cook had successfully negotiated a partial rescue deal with a Chinese investment firm FOSUN and cut down on the number of high street shops in cities, these measures were not sufficient to raise the required sum to give Thomas Cook a new lease of life.
The company had a very loyal and committed staff force. On an average the Thomas Cook staff did not hop ropes from one employer to another but stayed with the company for more than twenty-five or thirty years
The company website listed three customer promises: Quality, Service and Reliability. Its 24 hour hotel promise said: “if your hotel isn’t what we described, we’ll sort it out within 24 hours of you contacting us, or move you to another hotel. If we can’t fix it, you can continue your holiday and we’ll give you a voucher for 25% of the total amount paid, or take the next available flight home, and we’ll refund the cost of your holiday”. Thomas Cook staff received regular training in customer service, due diligence and multi tasking, combining different roles to provide a well-rounded experience of travel industry. The company had a very loyal and committed staff force. On an average the Thomas Cook staff did not hop ropes from one employer to another but stayed with the company serving for more than twenty-five or thirty years. It is deeply disappointing that with such a strong focus on customer service and a loyal staff base, Thomas Cook went down under with a reputation and standing which few businesses today aspire for, and only some are able to achieve.
Thomas Cook was a quintessentially British institution, which had seen the British Empire rise and fall and take to the seas and air, spreading the good and glorious English language and the rich Anglo-Saxon values and cultural heritage to the colonies and the rest of the world
In the weeks before its collapse, the company identified a number of factors for its low performance in the volatile international travel market which included, among others, stiff competition from internet based travel services suppliers, a weak Pound, the long hot summer affecting sales and adverse travel advisories on some of its popular destinations. But the biggest factor responsible for its downfall was poor leadership and management and absence of an innovative and competitive business model adapted to the changing travel industry landscape. Thomas Cook also neglected expanding its loyal customer base by not cultivating young urban and internet-savvy professionals who are as passionate about going on holidays as a Christian about pilgrimage.
The company was founded in Market Harborough in Leicestershire in 1841 by an English businessman, Thomas Cook. His son joined him in the business and Thomas Cook became Thomas Cook and Son. Taking advantage of the affluence brought by the industrial revolution and the interest shown by the rich and noble in the colonies ruled by Britain, the company grew rapidly selling train journeys, travel equipment, travel guidebooks and hotel coupons. It specialised in bookings for overseas stays offering airline connections, sunny destinations, sandy beaches and city breaks.
In the early days of independence, Thomas Cook Travellers Chequers were the only secure alternative to cash US Dollars or Pounds. These were warmly accepted and duly honoured by the local airlines, hotels and banks in India and Pakistan
As Thomas Cook grew in England, it also began to reach out to the colonies. The company established branches in the newly independent former colonies. I was told by my father that when he travelled from Pakistan to India to get married in the former Princely state of Hyderabad in 1952, he took with him a couple of hundred Thomas Cook Travellers Cheques which were warmly accepted and duly honoured by the local airlines, hotels and banks in both India and Pakistan. In those days, Thomas Cook Travellers Chequers were the only secure alternative to cash US Dollars or Pounds. Years later in 1982, when I travelled from Islamabad to Washington to join work, I too carried a bundle of Thomas Cook Travel Cheques, although American Express Credit Card and Amex Travellers Cheques had also come in the market as strong competitors of Thomas Cook’s financial services. For a long time in the Commonwealth countries, Thomas Cook remained the top travel agent and the most trusted travel partner of officials and businessmen travelling abroad.
It is interesting that Thomas Cook and the Colonial Office went hand in hand without any formal arrangement. Almost everyone who served the Raj, whether British or recruited from overseas for the military or civil services, never abandoned Thomas Cook. Even the children of this privileged class followed their parents in using the services of Thomas Cook for their private and official travel requirements for many years.
By the start of the millennium, Thomas Cook operated its own charter flights to over 60 destinations in 16 countries with a staff of 22000 trained personnel. The travel company made sales of £9 billion, serving 19 million customers annually. It facilitated half a million tourists (150,000 of whom British) staying in its signature hotels in Europe, Africa, Asia, Australia, New Zealand and the Americas per day in the peak holiday months. Thomas Cook also took tourists to China and Cuba.
Thomas Cook won’t be around when travel agencies will start taking their first bookings for the moon, if they still exist by then.
Thomas Cook was not just any British company doing business to make money for itself and its shareholders. Until its share price slumped this year, Thomas Cook was trading strong in the stock market. It was a quintessentially British institution, which had seen the British Empire rise and fall and take to the seas and air, spreading the good and glorious English language and the rich Anglo-Saxon values and cultural heritage to the colonies and the rest of the world. The Government should not have treated Thomas Cook like just another business. It is sad that the government ignored the calls from within the business and political circles to come to Thomas Cook’s rescue by taking an equity share of £200m to save this glorious British flag carrier from collapse, putting 9000 workers out of job in these challenging times. RIP Thomas Cook. It would not be around when travel agencies will be taking their first bookings for the moon, if they still exist by then.
*Syed Sharfuddin is a former special adviser in the Commonwealth Secretariat London and writer of a book: Islamabad Travel Guide. http://www.commonwealthexperts.co.uk
Although his wife worked for the company, Mr Sharfuddin had no connection with Thomas Cook. sharfuddin@commonwealthconsultants.co.uk
London: 23 September 2019