Thomas Cook missed the digitalisation boat, and suffered for it: experts

27 September 2019 - 07:00 By Kgaugelo Masweneng
Passengers of a Thomas Cook flight wait for their departure at the airport of Heraklion, on the island of Crete, Greece, on September 24 2019.
Passengers of a Thomas Cook flight wait for their departure at the airport of Heraklion, on the island of Crete, Greece, on September 24 2019.
Image: REUTERS/Stefanos Rapanis

If companies fail to see how the internet could affect their business, they're doomed - and this is exactly what happened to British travel giant Thomas Cook.

Travel industry experts told TimesLIVE that the collapse of Thomas Cook was a classic case of a big company’s inability to pitch into a new market, rather trading on their legacy.

According to a report by BBC, customers who booked flights with the company were left stranded and trying to find replacement deals - with Sky News reporting that British holidaymakers were thrown out of their hotels abroad as others scrambled for information on how to get home after the collapse.

Nathalie Schooling, a customer-experience specialist from Nlighten, said the news of the collapse was a testament that even the big fish that had been around for decades were not immune to competition - particularly new competition from technological sources.

"What established and well-known brands need to realise is that no matter how large scale or global they are, they are not immune to failure. Thomas Cook got left behind because they had been using the same model for years, with no technological upkeep.

"While it’s great to have a physical presence for customers to engage on the ground, one cannot neglect a digital offering in this day and age," Schooling said.

She said the travel industry did not need massive retail presence for what was essentially now an online business. In her view, Thomas Cook took too long with this move.

"Sadly, it came down to not listening to the customer, and not being agile enough to adapt to a new generation of travellers. Staying relevant and responding to the changing needs of not only current customers but future customers is really key," she said.

"The fact is that Thomas Cook became complacent and lost the ability to respond to customers’ needs in real time," Schooling added.

According to Clayton Hayward, customer engagement specialist and founder of JiniGuru,  the Thomas Cook lesson is a harsh one to learn for companies that have no digitalisation plans in place.

"Travel has taken over the internet. You no longer need specific travel insurance as it comes with your credit card, and you can book through sites like Bookings.com or AirBnB. If you want advice or further information you simply use Tripadvisor.com.

"The old-school booking system is no longer relevant in the rapidly evolving digital age," Hayward said.

He said consumers were spoilt for choice and could find excellent bargains online.

"Thomas Cook, by not developing a competitive online product, has killed their business. Digitalisation is an exciting and developing technology approach that has proven to kill old school models if not integrated with a newer, more online-focused offering," Haywood said.

He said this was a lesson for consumers to start trusting online platforms because Thomas Cook just proved that these businesses are more stable and offer much better value.

Otto de Vries, CEO of the Association of Southern African Travel Agents (Asata), said that the collapse of Thomas Cook would have "little to no impact on South African leisure or business travellers".

“We are deeply saddened by the news of the demise of an iconic international travel brand and the impact to staff and travellers. It is unlikely however that the closure of Thomas Cook will impact large numbers of South African travellers, as the group did not operate in South Africa, nor to our knowledge was it a direct supplier of product to the South African travel industry,” says De Vries said.

Asasta said the closure of the company came on the back of 18 airlines closing so far in 2019.

The problems at Thomas Cook also raised the importance of travellers ensuring that they were properly insured.

Vera Nagtegaal, executive head of the insurance quote provider Hippo.co.za, said it was important for travellers to do their research before leaving for their trips.

She said most travel insurance included emergency medical expenses, a hospital cash benefit per day, personal accident cover in the event of death or permanent disability, emergency travel and accommodation, legal assistance and personal liability cover, among others.

"But not all policies cover business travels, student, group or senior citizen insurance," she said.

Nagtegaal explained the differences:

  • Business insurance: If you’re travelling for business you would fall into one of two categories. Business administrative insurance for people who are typically travelling to a meeting, or business industrial insurance if you are travelling to perform a service or some sort of manual labour. This type of insurance generally provides cover for aspects like delayed or cancelled flights, lost passports and medical cover.
  • Senior citizen travel insurance: For those over 70, for example, this insurance covers things like medical expenses, a visit from a family member if necessary, missed flights or cancellations and lost or delayed luggage.
  • Student travel insurance: This type of insurance is for younger people travelling for work or leisure and includes cover for emergency medical costs, injury or damage to a third person or their property, cancellation of an entire trip and missed flights.
  • Group travel insurance: If there are more people travelling as a group to the same destination, group travel insurance may be a better bet. This type of insurance generally includes cover for medical costs, cash back for lost or delayed luggage, flight cancellations and missed flights and cover if a third person is injured.

"A basic form of travel insurance is often provided by your bank when purchasing an air ticket using your credit card. But, be warned that this cover may not be sufficient as it often places caps on age, costs, services and certain destinations," she said.

Nagtegaal recommends "going through your policy with a fine-tooth comb to determine exactly what is included and what is excluded".

"You should make a list of your particular needs over and above what your general travel insurance covers and then compare the various quotes to ensure that you get the best value for money. Travel insurance is there to protect you and to offer you peace of mind if you require medical attention, evacuation or suffer financial loss," said Nagtegaal.

De Fries added that "supplier default" wasn't always covered by regular travel insurance.

"It is important to check with your travel insurance provider what kind of default insurance is included. We would, however, always advise travellers to take travel insurance whether they are travelling for leisure or business," he said.


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