Tour Operators
CASE STUDY
European Tour Operators: confronting competition in the tourism industry
Eric Viardot
European tour operators have managed to achieve a strong position in the tourism industry. Most notably the two biggest ones, TUI Travel and Thomas Cook have a large market share. However, in the latter part of the decade (2007–10) the industry has experienced a downturn because of the turbulent environment which has created new threats and modified the competitive forces.
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The tourism industry since 2000
At the end of 2008, the tourism industry was a major industry. Worldwide it generated US$5474 billion (x4023bn or £3665bn) of economic activity, represented 9.4 per cent of total world GDP and provided 219.8 million jobs (7.6 per cent) of total employment.i The second half of the twentieth century had seen a constant growth of the tourism industry. If the business had slowed in 2001– 03 following terrorist attacks in New York, Djerba and Bali, it had bounced back. In 2007, for the first time ever, the number of international tourist arrivals recorded worldwide exceeded 900 million, according to the World Tourism Organisation (UNWTO), a specialised agency of the United Nations (UN) for tourism policy, as illustrated in Figure 1. However, the global economic crisis starting in September 2008 and getting worse throughout 2009 had brought the business to a halt, with a general slowdown of activities, massive unemployment, and a major credit crunch for consumers.
Competition: a continuing consolidation in the European tourism industry
Over the 10 years from 1998 to 2008, the competitive landscape of the tour operator industry changed dramatically as the market experienced a continuing concentration of the players. The trend had been accelerated in 2007 with the acquisition of MyTravel, the number 3 European Tour Operator by Thomas Cook, the number 2, on February 2007. One month later TUI announced its acquisition and merger with First Choice, the fifth
European Tour Operators: confronting competition in the tourism industry
Eric Viardot
European tour operators have managed to achieve a strong position in the tourism industry. Most notably the two biggest ones, TUI Travel and Thomas Cook have a large market share. However, in the latter part of the decade (2007–10) the industry has experienced a downturn because of the turbulent environment which has created new threats and modified the competitive forces.
● ● ●
The tourism industry since 2000
At the end of 2008, the tourism industry was a major industry. Worldwide it generated US$5474 billion (x4023bn or £3665bn) of economic activity, represented 9.4 per cent of total world GDP and provided 219.8 million jobs (7.6 per cent) of total employment.i The second half of the twentieth century had seen a constant growth of the tourism industry. If the business had slowed in 2001– 03 following terrorist attacks in New York, Djerba and Bali, it had bounced back. In 2007, for the first time ever, the number of international tourist arrivals recorded worldwide exceeded 900 million, according to the World Tourism Organisation (UNWTO), a specialised agency of the United Nations (UN) for tourism policy, as illustrated in Figure 1. However, the global economic crisis starting in September 2008 and getting worse throughout 2009 had brought the business to a halt, with a general slowdown of activities, massive unemployment, and a major credit crunch for consumers.
Competition: a continuing consolidation in the European tourism industry
Over the 10 years from 1998 to 2008, the competitive landscape of the tour operator industry changed dramatically as the market experienced a continuing concentration of the players. The trend had been accelerated in 2007 with the acquisition of MyTravel, the number 3 European Tour Operator by Thomas Cook, the number 2, on February 2007. One month later TUI announced its acquisition and merger with First Choice, the fifth
References: i WTTC, www.wttc.org/eng/Tourism_Research/Tourism_Economic_ Research Tourism. ii Hotels Magazine, 25 June 2009, www.hotelsmag.com/article/CA6667503.html.