TUI Musement is an up-an-comer in the tours and activities space because of the parent company's huge base, and it knows how to run a tour. Now it has to execute on the digital challenge.
In his first press interview since becoming CEO of TUI Musement a little more than a month ago, it’s clear that Peter Ulwahn is trying to use TUI’s tour operator legacy to advantage in building the company’s tours and activities business — but that can be a mixed foundation.
Ulwahn pointed out in a Skift interview last week that a key part of his agenda is building TUI Collections, the tours and activities that TUI operates from owning the buses to employing the tour guides. He claimed that TUI Collections is seven times larger than European market leader GetYourGuide’s self-operated tours.
One only need to look at the epidemic of missed flights because of meandering and excessively lengthy security lanes in Amsterdam and London over the last few days to understand why there has been much talk in the travel industry recently about Booking Holdings’ push to ease myriad traveler hassles during a journey through a “connected trip.” But Ulwahn stated that TUI already delivers one to a great extent —albeit manually — because it has more than 1,000 customer service agents monitoring trips for travelers. He admitted, though, that automating that process is really difficult and TUI needs to invest in that technology.
On the down side of the ledger, while parts of the TUI business are digital and getting more so — Ulwahn said 100 percent of TUI Nordic is online — much of TUI Musement’s business is still done off line, although a mobile app is gaining traction, he said.
Parent company TUI sees its Musement tours and activities segment as a key growth driver for the overall company, and believes that benefit will come from further integration of TUI and Milan-based Musement, acquired in 2018, third-party sales, increased digitalization, and dynamic packaging.
Ulwahn worked in a variety of destination experiences and digital acceleration roles at TUI and Musement since 2015 before assuming the TUI Musement CEO role May 1. Skift discussed Musement’s strategy and direction with Ulwahn last week. The interview was edited for clarity and length.
Skift: In your new role, you got on board, what did you have to do? What was your biggest challenge? How did you look at it?
Peter Ulwahn: In the last couple of years I’ve been working on the digital transformation and was part of the due diligence team and the management team when we did the acquisition of Musement [in 2018]. My main focus right now is to ramp back from the pandemic and execute the strategy already in place.”
Skift: So what does that mean? What do you have to do?
Ulwahn: There is a history of big corporations and startups. We were really conscious about that when we did the acquisition of Musement. We were really conscious about that to make sure that we would do everything we could to take as much benefit and value from the Milan team. So, we kept them as separate as possible and as integrated as necessary for them to ramp up and run with it. In this last year right now, we’ve been, now, because they’ve been going from 70-100 people up to 300 people based in Milan. So, we’ve been ramping up the team. We have now merged it. So, from that perspective the transformation are done. We are now one division, one, one company, TUI Musement, and the team is there. I think the challenge is right now is more the operational part. So, we’re going from low customer volumes into big customer volumes, making sure that we can do everything we can in terms of getting the best possible customer experience.
Skift: And what kind of customer volumes are you seeing right now?
Ulwahn: We are back to for the summer to pre-Covid 19 numbers, which is good, after a really slow summer last year.
Skift: Is TUI the airline seeing a rise in airfares that the other airlines are? And how does that ultimately affect your experiences business?
Ulwahn: TUI has an airline. But we also are depending a lot on third-party airlines, as well, in source markets. So, from that perspective, we don’t see any volume changes or anything like that for the summer. We still see that the customer demand is there and they really would like to travel this summer.
Skift: And inflation, as well? You’re not seeing people setting aside their travel plans?
Ulwahn: No, no. We don’t see that. Not from that aspect.
Skift: You said you were helping with TUI’s digital transformation. So, in general, how is that going and how do you view that in terms of the digital transformation that has to take place in the tours and activities segment?
Ulwahn: I think it’s really interesting. So, I’m coming from the Nordics. I’m Swedish. I’m based in Stockholm. And I was part of the team that took TUI Nordic basically an offline business into a fully OTA (online travel agency). So, the Nordic business of TUI is a hundred percent online, no travel agencies, no nothing.
Skift: That’s just tradition, or how did it get to be that way? No travel agencies involved?
Ulwahn: I think it’s been evolving into that that way and also TUI took leadership to the market, as well. So, the customers were moving online. And we were really fast in adopting to it, as well. And basically it drove the strategic decision to go fully online. So, that is already done and dusted in there. So, they are part OTA. They do package tours, they do accommodation only, they do flights.
And when I move to TUI Musement, the tours and activities space, it’s been a similar ride. Which I think is really exciting. So, when we started in TUI Musement, it was an offline business focusing on selling with reps. And now with the acquisition of technology from Musement in Milan, and to where we are today, TUI Musement, the Tours & Activities division, is now 45 percent digital when in 2018 it was 2 percent. So, a huge change in a short time, and we now are definitely taking the benefits from this.
Skift: And how does that compare to TUI as a whole, the 45 percent? How does that compare to TUI in general?
Ulwahn: The Nordics are 100 percent, the UK, probably 80 percent.]
Skift: I’ve been writing about Expedia. And one of their problems, one of their issues, is all of the businesses are on different tech stacks. So, is that the same with TUI because you were talking about the Nordics is at one stage, and in the UK, is that another stage? Is that the same kind of issue for you guys?
Ulwahn: They are aligning around the same tech stacks. So, it’s the same ambition to do that as well.
Skift: So Booking Holdings CEO Glenn Fogel has talked a lot about his push for providing customers with the connected trip.Does TUI, because of all the products you have, already have that?
Ulwahn: We have. So, a large part of what we’re doing right now, for example, is selling to the two-way package customers. We call it the two-way upsell. So, a customer books a flight, the hotel, and we sell them, them the airport transfer. And either before or in the destinations, we also add the activity. We do it through the app. We have the two-way app now, and that’s been one of the bigger changes in the transformation during Covid, it’s up almost now to 80 percent. So, people are really using it. So that’s how we use it as a connected trip. We’re now also doing the other way around. Now, where we have customers coming into either Musement world or into the experience the ecosystem, and they then start with an experience and then add on the flights and hotels afterwards. Which I think is the new trend. So, I definitely see the aspect of the connected trip, and I think it’s really powerful going forward.
Skift: So, I’m a TUI customer and I bought a package, right? And my flight is going to be late, or I’m going to have to arrive the next day or whatever. I mean, do you let the hotel know, let the customer know? I mean, are those kind of things integrated?
Ulwahn: Yes. Those are integrated even — I know why you’re asking this— because we also know what a challenge it is.
Ulwahn: But it is. And I think that is one of the big benefits that we can actually manage those kinds of things. That’s really when the connected trips seem seamless. When it actually works like that. So, yes, I think it’s a big strength.
Skift: So, if I talk to one of your customers, one of your guests, would they tell me, “Peter, he could talk like that, but it really doesn’t happen on the ground.” Would they say that? O would they say, “Hey, man this, this really works. It is all connected.”
Ulwahn: I would say —and I would do the famous 99.9 percent thing — it would work because we have the dedicated 1,000-plus colleagues that make it happen. And I think a large part, we’re doing this manually today. We need to do more automation going forward. But there is a team monitoring these things and making sure it makes sense that it works.
Skift: OK, for the first half of the fiscal year 2022, TUI Musement lost 25.5 million euros, which was a vast improvement from the first half of 2021.
Ulwahn: It’s a loss because of the winter season. The winter season in Europe is the low season. And the summer season is the high season, even though it’s balanced with the Caribbean business, which isn’t fully back. For the European perspective, it has a bigger impact. I think in a normal year with the Caribbean and Asia being back and also having the cruise lines, it would be a better balance. ‘
Skift: Do you expect to get Musement to profitability by the summer?
Ulwahn: So TUI Musement is actually profitable already. We have the EAT (Excursions, Activities and Tours) business, we have the transfers part, and we also have the multi=day tours part, and we sell to TUI and we sell to B2B business. So B2B is cruise lines. B2B is also the OTAs that we have collaboration with, like Booking.com. And we also have tour operators TUI is roughly 50 percent and the B2B is roughly 50 percent.
Skift: So you are partners with Booking.com and Trivago. What about GetYourGuide and Tripadvisor/Viator? Are they on your wish list?
Ulwahn: I would say, depending on how we look at it. They are competitors and in some respects they could also be customers. And some aspects, they could also be suppliers. So, yeah, depending on what and how we want to do it. We are launching this program now of own product. So, I think one of the differences compared to GetYourGuide is because we come from the operators side, that’s our DNA. If you look at sun and beach, 66 percent of our products that we sell actually we operate ourself, which is a difference compared to Viator and GetYourGuide. So in that aspect, we’re more of a product company.
Skift: Give me an example of a typical tour that you operate.
Ulwahn: I would say all the island tours in Greece, for example, I think that would be the most visual one. So, a tour customer or a Booking.com customer come to Rhodes. We take them for the big island tour around the island of Rhodes. Well, it’s our own bus. We take them to the restaurant that we have done. It’s our own guides. We sell it under the brand TUI Collections. So it’s designed by us, operated by us, and fulfilled by our teams as well. And it’s sold to any of the channels.
Skift: GetYourGuide is doing their own tours, as well, right?
Ulwahn: I know that they’ve been experimenting a bit with that, and I assume that is attractive. The reason why we do it is that you capture part of the product margin, of course. So, that’s how we are profitable in that aspect. So if you control both part of the product and the distribution, then of course it is easier. So, we can see that they’ve been doing some things mostly in cities. We’ve been doing this for a long time and have a bigger space. So, I think we are seven times bigger in terms of own products in that perspective.
Skift: Seven times bigger than Get Your Guide?
Skift: Is the Musement as a brand fading? How do you view that?
Ulwahn: No, the Musement is the brand for the OTA parts in some countries, the Musement brand is still really strong. The Musement brand is a distribution brand and is not in the destinations.
Skift: So you’re background is as a product guy. Or part of your background. So what kind of new products do you envision for TUI and TUI Musement?
Ulwahn: I mean, the focus we have on TUI Musement right now is to enhance the portfolio and especially under the TUI Collection brand. So we know for a fact that when customers goes into the tours and activity space, they must see things. They can accept to have hotel that is OK-ish. But the once in a lifetime experience has to be really good. We use a lot of insights, both from the 10 million customers that we have, in terms of product innovation, but also the operational data we have. You will hear more from us.
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Photo credit: Peter Ulwahn, the new CEO of TUI Musement, is trying to build the tours and activities brand, TUI Collections.