Skift Take

Given the state of the traditional retail industry, on the surface this appears to be a risky deal. But Hays Travel is a profitable, growing business and will probably have secured the assets at a knockdown price. The company knows better than most how to make shops work.

A travel agency chain based in the north of England will snap up all of Thomas Cook’s 555 retail shops, potentially saving thousands of jobs.

Sunderland-headquartered Hays Travel has agreed to a deal with those in charge of the Thomas Cook liquidation. A spokesperson for the Insolvency Service declined to say how much Hays Travel was paying, saying that the details were “commercially sensitive”.

The purchase will catapult Hays Travel into the retailing big leagues, potentially quadrupling its size and giving it a total of 745 shops across the country.

“Thomas Cook was a much-loved brand and a pillar of the UK and the global travel industry. We will build on the good things Thomas Cook had – not least its people – and that will put us in even better stead for the future,” said Hays Travel chair, Irene Hays.

Since Thomas Cook’s collapse, Hays Travel has already recruited 421 former members of staff and many more will likely join.

“Now that we are able to re-open the shops, we are looking forward to welcoming many more people who share our passion for the travel industry, into our family business,” said managing director John Hays.

Manuel Cortes, general secretary, of the TSSA union, which represents Thomas Cook workers, said the Hays deal was “very welcome news offering real hope of reemployment to former Thomas Cook retail staff”.

Vote of Confidence

Hays’s decision to make such a big acquisition is a vote of confidence to the traditional travel retail model, where advisors or agents arrange holidays on behalf of customers.

In the wake of Thomas Cook’s collapse it appeared this model was dead but perhaps the problem in that case was down to the individual company.

“Much will depend on the terms of the deal. As this is breaking news, we don’t yet know the cost of the deal, what terms can be agreed with landlords for example, but this was most certainly a buyer’s market situation so Hays should have been able to negotiate favourable terms,” said Nick Wyatt, head of travel and leisure research and analysis, at analytics company GlobalData.

“Hays should be able to operate without the millstone of debt round its neck and the publicity around the Thomas Cook collapse may even spur people to seek out Atol protected package holidays for peace of mind, which will play into Hays’ hands”

According to the most recent set of accounts for Hays Travel, the company is in a very healthy financial state. It made a pre-tax profit of $12.3 million (£10.1 million), revenue of $464 million (£380 million) with a total transaction value of $1.3 billion (£1 billion). Hays Travel has accumulated profits of $49 million (£40 million).

Selling holidays via an extensive retail estate isn’t without its risk. It tends to be a low-margin business, with high fixed costs related to operating the shops.

“The deal is not however, without peril,” Wyatt added.”It will have to conduct a review of store locations and operations and there may be a need for a rationalization at some point, particularly in areas in which Hays already has a strong presence. Hays will also need to make sure it invests in digital trends as competitive online threats to a large store network are legion.”

Founder John Hays started Hays Travel in 1980 and still owns the business along with his wife Irene.

German Insolvency

Meanwhile, in Germany rescue talks are ongoing over the future of Thomas Cook’s tour operating business.

“The investor talks are in full swing, running well and giving hope,” Julia Kappel-Gnirs, a liquidator of Thomas Cook Germany’s Bucher Reisen and Oeger Tours units, told Reuters in a statement on Wednesday.

Like many of Thomas Cook’s European businesses, the German arm filed for insolvency at the end of last month following the collapse of the London-headquartered firm.


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Tags: europe, thomas cook, uk

Photo credit: The Thomas Cook Stratford City store. Hays Travel has agreed to buy Thomas Cook's UK retail estate. 354130

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