Thomas Cook wants to offer more exclusive product to try and tempt holidaymakers, so it makes sense for it to find someone else to take care of its less lucrative business.
Thomas Cook is stepping up the remodelling of its travel offering with a deal to outsource around 3,000 hotel contracts.
This tie-up will see Australian company Webjet – via European subsidiary Sunhotels – pay $28 million (£21 million) to take over the majority of Thomas Cook’s complementary business, which is everything apart from its own-brand and partner hotels.
Thomas Cook said the move will allow it to concentrate on its core differentiated holiday offering, a strategy that has become increasingly popular among tour operators as they look to highlight their own exclusive products.
As the likes of Thomas Cook struggle to compete with online travel agencies in terms of price or volume, the tour operators in turn look to target holidaymakers with exclusive hotels only they can offer.
Compared to rival TUI Group, Thomas Cook was slow to react to the change in consumer demand and has been playing catch-up ever since it almost went out of business in 2011.
It is currently in the middle of a shift to what it describes as a New Operating Model, which aims to improve profitability through attracting more customers at higher price points.
The deal with Webjet is expected to help Thomas Cook save around $13-$16 million (£10-£12.5 million) as it looks to achieve EBITA benefits of up to $158 million (£120 million) by 2018.
Earlier this year Thomas Cook launched the first of its boutique Casa Cook hotels in Rhodes, Greece. The new properties are aimed at a cooler young crowd.
Thomas Cook CEO Peter Fankhauser, said: “Entering this new relationship with Webjet will transform the way in which Thomas Cook offers a wide choice of hotels to customers.
“It provides us with a low-cost production platform for our complementary offer across all our source markets, enabling us to streamline our systems and processes while at the same time ensuring greater certainty over the quality of hotels that we offer our customers.
“This frees us up to focus on growing our differentiated holiday offering, the area where we know Thomas Cook can really make a difference.”
In 2013, Thomas Cook signed an outsourcing deal with Collette Travel Service, Inc. to look after its UK’s escorted tours business.
Shares in Thomas Cook rose by 7.19 percent to 65.92p following the news.
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Photo credit: Thomas Cook's Casa Cook property in Rhodes, Greece. The company is looking to concentrate more on its exclusive product. Thomas Cook