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TUI Travel

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Celeste Ng

on 25 November 2010

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Transcript of TUI Travel

Germany Final Project-Germany
MGMT404-001 Prepared by:
Maymay Lam B-A7-0218-1
Celeste Ng B-A7-0103-1
Janet Ho B-A7-0189-0
Dolphin Pun B-A7-0255-7
Keith Leong B-A7-0315-5
Jericho O B-A7-0008-3
Content 1. Introduction to German Tourism industry
2. Country-level based Analysis-- Diamond framework 3. Introduction to TUI Travel PLC 4. Industry-level based Analysis-- Five forces 5. Company-based Analysis-- VRIO framework
Background information about Germany Is located in the Central Europe
The territory covers 357,022 km2
Is the 7th largest country by area in Europe
With 82.3 million inhabitants, Germany has the largest population of any Europe member state
Comprises of 16 federal states German Tourism Industry Germany is the 3rd most visited country in Europe

According to Travel and Tourism Competitiveness Reports, Germany is rated as one of the safest travel destinations worldwide

There are two types of travel
1. Business Travel
2. Leisure Travel Cultural institutions
-5,000 museums, 300 theaters
-Over 100 musical theaters and opera houses
-130 professional orchestras, 7,500 libraries

UNESCO World Heritage
-32 natural and cultural heritage sites

Tradition and Festival
-Wine festivals
-Christmas markets The ten most visited cities in Germany in 2009
German Tourism Industry Landmarks
Cologne Cathedral Neuschwanstein Castle
Jasmund National Park
Factor condition Education
--Education in Germany is one of the classic opulence of Germany
--383 institutes of higher education
--Vocational colleges closely cooperate with approximately 500,000 companies Workforce
--Workforce in 2007
--German travel agencies and tour operators employ around 63,087 people in jobs
--A total of 2.8 million people work in the travel industry in Germany. Capital
--Germany is the 3rd largest economy in the world
--Gross Domestic Product comes to EUR 2,423 billion in 2007
--Gross National Product per capita is EUR 29,455 Question Time How many territory does Germany cover?
A. 357,022 km2
B. 257,022 km2
C. 360,000 km2
D. 260,000 km2 Which is our company?
A. TUU Travel
B. TUI Travel
C. TUI Travel PLC
D. TUU Travel PLC A C Knowledge
--There is a long history in travel industry
--Then nowadays, the travel agents are quite well-organized, experienced and efficient Physical infrastructure
The infrastructure of the country is quite developed
Question Time Make a guest, how is the domestic demand?
A. It is high
B. It is medium
C. It is low
D. None of the above A It is really high
In 2009, Germany again benefited from the Germans’ love of travel Domestic demand condition Airline industry
More than 100 international airlines flying into German airports

Hotel & resort industry(3191hotels)
Almost every city of the Germany has wide range of Hotels from highly luxurious hotels to cheap hotels.
Germany is well known for health tourism Related and supporting industries Locally-based rivals
With almost 11,000 travel agencies, Germany has one of the highest concentrations of travel agencies in the world
So it is very high
Prices are relatively low since the high rivalry

Since there are so many agencies, they use different strategies to differentiate themselves (Differentiation, cost advantage, niche market)
Good price-quality rate Strategy and Rivalry What was the theme of Germany in Shanhai World Expo this year?
A. Win win win Germany!
B. Go go go Germany!
C. 12 reasons to visit Germany
D. 10 reasons to visit Germany Question Time D Government Support Since the 1930s, local and regional governments have set up various theme routes
It got a highest effects in Shanghai World Expo with the theme “10 Reasons to visit Destination Germany”.
TUI Travel PLC -- Profile Question Time What is the slogan under this logo?
A. Not Just A Smile
B. More Than A Smile
C. Experience With A Smile
D. Smile And Smile B World’s leading leisure travel company
Was formed on 3 September 2007
The merger of First Choice Holidays PLC (UK, 42.5%) and the Tourism Division of TUI AG (Germany, 57.5%)
Headquartered in England
Operating in 4 sectors TUI Travel -- Strategy TUI Travel -- Strategy TUI Travel -- Operations TUI Travel -- Mainstream The largest Sector in terms of size, financial performance and employee numbers
Sales of:
--Complete travel packages
--Components (such as flights)
Three divisions:
--Central Europe
--Northern Region
--Western Europe TUI Travel – Accommodation & Destinations -Provides destination services to:
tour operators
travel agents
corporate clients
consumer worldwide
-Cruise handling market leaders
-The only accommodation and destinations service provider with a global reach TUI Travel – Specialist & Activity The world’s leading provider of specialist and experiential travel
Delivers unique customer experiences:
--“if you can dream it, we can take you there.”
Six divisions: TUI Travel – Emerging Markets Growing portfolio of travel businesses on specific markets:
Russia & CIS (the 1st mover of international tour operator)
Evaluating broader opportunities
Question Time When was TUI Travel PLC formed?
A. 03 Sep 2006
B. 04 Sep 2006
C. 03 Sep 2007
D. 04 Sep 2007
C Intensity of Rivalry Largest travel agencies in Germany(2009)
Highly Fragmented Industry with Intense Rivalry
- 11,000 travel agencies in Germany

Degree of differentiated products – Low
- Travel agencies provide similar products
- Degree of differentiated products of TUI – High

Degree of customer loyalty – Low
- Degree of customer loyalty of TUI – High

Exit barriers -- Low
- Degree of customer loyalty of TUI – High Intensity of Rivalry Question Time Which is not one of the top 3 largest travel agency in Germany?
A. Rewe Touristik
B. TUI Travel
C. Thomas Cook
D. Renew Tour
D Threat of New Entrants Economies of Scale -- Low
Dominated by TUI Travel, Rewe and Thomas Cook
Small new entrants have less ability to negotiate
Access to Distribution Channels – Low
Existing companies contracted for beds and seats
New entrants need more investments to secure access
Capital Requirements – Low
No need to purchase expensive assets
Brand loyalty and switching costs -- Low
High loyalty and differentiated products only happen in large companies (such as TUI)
Similar package tour and price
Customers are driven by price
Reactions from existing competitors
Threat of New Entrants Threat of Substitute Products Price and performance of other substitutes
Beside travel, there are many entertainments
Using the same amount of money to buy other things
Substitutes of travel agency
Direct booking from hotels and airlines
Threat of Substitute Products Bargaining power of buyers Switching costs -- Low
- Few companies provide special products
- High price sensitivity
- Low brand loyalty for small firm
Available of substitutes – High
Information collection – High
Purchase in small amount
Bargaining power of buyers Question Time As mentioned above, what are the levels of Threat of Substitute Products and Bargaining Power of Buyers?
A. Low, High
B. Medium, High
C. High, High
D. Medium, Low
C Bargaining power of suppliers Number of Airlines
Over 100 airlines in Germany
Different types of accommodations
Hotel, inn, resort, hostel, etc.
Threat of backward integration
TUI and Thomas Cook have their owned hotels and airlines
Small firms depend much on airline and accommodation suppliers
Full information Bargaining power of suppliers Conclusion VRIO Framework -- Physical A fleet of 143 aircraft
Cruise line
- 243 hotels and 154,000 beds
About 3,500 retail shops
Located over 180 countries
VRIO Framework -- Financial Revenue: £13,863m
Listed on the London Stock Exchange in the FTSE100 (Financial Times Stock Exchange 100 Index)
Share Price: £2.09 (24/11/2010)
Joint ventures with other companies
– high financial asset
Question Time How many qualified staff dose TUI Travel have?
A. 40,000
B. 4,000
C. 50,000
D. 5,000
C VRIO Framework -- HR Group Management Board

Numerous and Qualified staff
50,000 employees
Tactful knowledge and experience
TUI Spirit
Group Code of Conduct
VRIO Framework -- Reputation Power brands:
Over 200 brands
Airlines, tour operators and travel agencies

Differentiated products:
Arctic and Antarctic expedition cruising
Water-based holidays
Snow sports

Awards of sustainable development

World’s leading leisure travel company
VRIO Framework – Marketing skill World wild advertising
Continued innovation
International Roll-Out of Solutions
-No. 1 travel websites in Germany
and UK by visitor numbers

What is international Roll-Out of Solutions? Which is the wonderful travel agency?
A. TUI Travel PLC
B. Weng On Travel Agency
C. Hon Tai Travel Agency
D. ABC Travel Agency
Thank You! Which group is the winner?
Full transcript