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Interview CEO

PETER ROTHWELL, DID YOU ACHIEVE THE GOALS FOR 2011?

We have to differentiate between our goals for Kuoni Group’s positioning and our financial results. In strategic terms, Kuoni has finished 2011 in a much better position. In particular, the acquisition of Gullivers Travel Associates (GTA), which does such a high proportion of its business in growth markets, especially in Asia, marked a major step forward for Kuoni. We also managed to improve our financial results, and we achieved organic growth too. We met the expectations of the financial community. However, numerous negative external factors stopped us from recording an even greater improvement in results. Kuoni is now a larger and better positioned company than a year ago.

YOU ALWAYS EMPHASISE KUONI’S NEW POSITIONING. WHAT ADVANTAGE DO YOU THINK THIS GIVES YOU OVER OTHER COMPANIES IN THE SAME MARKET?

Traditional tour operating business in Europe is under a lot of pressure and growth prospects in this area are limited. A year ago this sector still accounted for about 60% of our total turnover. It now only accounts for about a third. The acquisition of GTA contributed to this shift. Business in the high-potential markets covered by the Global Travel Services Division and the Emerging Markets & Specialists Division now accounts for the majority of our activities. And this is where we differentiate ourselves very clearly from our traditional competitors.

WOULD YOU LIKE TO SAY GOODBYE TO TRADITIONAL TOUR OPERATING BUSINESS IN EUROPE?

No. We conduct profitable business in Scandinavia, Switzerland, France and the United Kingdom. In Southern Europe and the Benelux countries we are making a loss. This is partly due to the economic situation, especially in Italy and Spain, but also to the way business models are changing. It’s a clear target to run a sustainably profitable tour operating business in Europe.

HAVE YOU MISSED THE INTERNET TREND WITHIN THE EUROPEAN TRAVEL MARKETS?

Kuoni is more active on the internet than ever. We do business over the internet directly with customers (B2C) as well as offering global online travel services to tour operators and travel agencies (B2B). Individual bookings, using the databases run by our Global Travel Services Division for example, are almost all made over the internet. In traditional tour operating business in Scandinavia we sold nearly half of all holidays over the internet during the year. In tour oper- ating as a whole, the proportion has risen from 16% to 21% over the last three years. In Switzerland we became the first company to offer a virtual travel agency service with dynamic packaging. In addition, customers can also book package holidays using mobile devices, like on their smart phones. Our internet services have been expanded and are recording rising booking numbers. Simple travel products work well on the internet, while for other, very individual holidays where customers need more help and advice, our retail outlets are usually a better option.
In 2011 we significantly expanded our network of outlets. We are there wherever the customer wants us to be, depending on their specific holiday requirements: on the internet, in call centres or in our travel agencies.

YOU ARE OPENING MORE SHOPS. HOW DO YOU SEE THE FUTURE OF TRAVEL AGENCIES?

There will always be travel agencies, but their role is changing. People will always want personal contact when trying to sort out their holidays, especially if they are looking for a more sophisticated or complex option. In the face of today’s information overload and lack of time, consumers need and appreciate expertise, advice and certainty that holidays are handled trouble-free. Between them, our 12 000 employees around the world have an enormous store of knowledge, and we want to make this expertise available to our customers.

EXPANDING INTERNET SERVICES, OPENING TRAVEL AGENCIES, NEW ADVISORY MODELS – HOW DID THIS ALL AFFECT DIRECT CUSTOMER CONTACT IN 2011?

The percentage of the tour operating turnover that we generated through direct customer contact in 2011 went up again from 56% to 59%. Thanks to the new openings, our own retail outlets increased their share significantly from 11% to 13%. Sales made through our call centre accounted for 13%.

KUONI IS ALWAYS EMPHASISING ITS STRONG POSITION IN ASIA. WHY IS ASIA SO IMPORTANT FOR KUONI?

Asia is home to the biggest growth markets. More and more people in Asia can afford to travel. Kuoni started selling group tours to Europe in Japan 50 years ago, and this area of business is very successful throughout Asia. In 1996 Kuoni entered the Indian market, where today we are the leading tour operator. We are also continuously building up our destination management activities in Asia. And in 2011 we acquired GTA, which has greatly expanded our position in the Asian market. The Global Travel Services Division generate around 45% of its turnover in Asia/Pacific, and we are also active in China and Hong Kong.

DO CUSTOMERS IN ASIAN COUNTRIES BOOK HOLIDAYS IN A DIFFERENT WAY TO EUROPEANS?

When Europeans started booking holidays, the new technologies obviously didn’t exist; but they are available now to people in the Asian markets who are making their first holiday plans. This is why the internet and visits to travel agencies with direct online access to databases play such an important role. Flights, hotels, excursions and restaurants are all booked individually and directly through databases. The consumer might not always know that Kuoni lies behind their booking, but in many cases we play a large role in creating the service in the first place. This B2B business achieved double-digit growth in 2011. Consumers’ booking habits in Europe and North America are also moving more in the direction of these activities. We are participating in this worldwide growth, and will continue to do so in future.

THE GLOBAL TRAVEL SERVICE DIVISION’S GROUP TRAVEL BUSINESS WAS A BIG GROWTH DRIVER IN 2011 THANKS TO ASIA. WHY IS THIS BUSINESS DOING SO WELL AFTER 50 YEARS?

When Asian customers take a long trip for the first time, they tend to feel more secure and comfortable travelling in an organised group. Speaking to other people in their own language, sharing an interest in destinations and themes, and the familiar meals offered on these group tours play an important role. Given how many millions of people are able to afford their first foreign holidays and who want to travel within a short period of time to far-off places in an efficient way, you can see that the potential is enormous. However, these consumers will gain the experience and confidence to book their own more individual holidays. And Kuoni is well positioned to offer them hotels, transfers, excursions, city tours and other land arrangements. Kuoni has the chance to accompany people all over the world throughout their whole travel lifecycle.

KUONI’S PORTFOLIO ALSO CONTAINS A REAL JEWEL – VFS GLOBAL BUT WHAT HAS ITS BUSINESS GOT TO DO WITH YOUR CORE COMPETENCE OF TRAVEL?

Visa Facilitation Services (VFS) Global was a business idea that came out of our Indian market in 2001. It supports governments and embassies by taking on and speeding up the administrative processing of visa applications and issuance. In 2011 VFS Global again posted strong growth and very healthy profits. The company, which has 526 offices in 62 countries, relieves governmental authorities of a significant workload, expense and security concerns but also makes things less stressful for applicants by running modern visa offices in geographically convenient locations. Issuing visas always has something to do with travel, but no, there is no direct connection to our other areas of business.

A LOT OF WORLD EVENTS IN 2011 HAD A NEGATIVE IMPACT ON TOURISM. IS IT STILL REALISTIC FOR A TRAVEL COMPANY TO PLAN FOR THE LONGER TERM?

This is precisely where Kuoni has a big advantage over other companies in the industry. Geographically we have a broad worldwide presence. Our areas of business are better balanced than ever, Kuoni is in a healthy financial position and we own virtually none of our own aircraft or hotels. A crisis somewhere in the world is unlikely to throw Kuoni off course; we are very crisis-hardened. Yes, 2011 was a difficult year: the Arab revolutions, Fukushima, the European debt crisis, natural disasters – all of these things tested us sorely. But the experience has also helped accelerate our change process.

WHERE WILL KUONI BE AT THE END OF 2012?

Over the last three years, and especially in 2011, we have laid the foundations for a sustainable future. Kuoni is a different company today. We have the knowledge, the ambition and the innovative power to continue to expand our new global position. Even if events outside the company remain unpredictable, we will continue with our transformation process.