»Structurally we understand what it takes to appeal to Asian target groups. Now we can upscale.«
Frank Vahldiek, Director International
Partnerships & Country Head China,
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South East Asia is a very special destination and TUI has a carefully thought-out strategy for opening it up to holiday makers from Europe and Asia. But in recent years a counterflow has started to emerge: in countries like Vietnam, Thailand and Indonesia a growing middle class is able and eager to holiday in far-away places. Malaysia is a case in point. In this interview Frank Vahldiek, Director International Partnerships at TUI Group, explains the company’s approach to the region.
Mr Vahldiek, tourism is a key industry in South East Asia. How is TUI positioning its role?
Under our global growth strategy “TUI 2022” we are not merely building South East Asia as a destination – above all we are opening it up as a regional source market.
That sounds like a big plan. How will you put it into practice?
Let’s take a step back to explain: TUI – in a nutshell – originally earned its spurs by taking holiday makers from the cold north to the warm south of Europe. Later we came up with a second business model and began opening up the Caribbean. But for many Europeans those destinations were too far away, which also made them very expensive in the early days. Logically, TUI then looked at North America as a source market and began to offer holidays in the Caribbean from there. We now have about 70 hotels in the region and these days they run to capacity all year round. We are now building on that experience and have adopted a systematic approach to South East Asia. We started out with our first Robinson Club on the Maldives and from the outset we reckoned on attracting holiday makers from Europe and China – and we did learn a great deal there about Oriental travel habits. Structurally we understand what it takes to appeal to these target groups. Now we can upscale.
Are there any more plans for hotels in South East Asia?
We are looking at options for hotels in Thailand, Vietnam, Malaysia, Indonesia and the Maldives – either newbuild or a change of brand for existing facilities. Lots of parallel processes are involved. Apart from distribution – flights, for example – we need to implement a completely new booking environment.
One current example for the way you do business in
South East Asia is Malaysia. How does one establish a
fully functioning system?
It all comes down to local infrastructure – for example, a whole range of hotels that can cater for the very different needs and habits of lone travellers, families, customers with very high standards. Only by offering a broad spectrum can we ensure that flights operate to high capacity. That in turn generates local economies of scale, such as in human resources and procurement. If we can cluster our offering in a country, we can then consolidate our social role there: after all, tourism means new jobs and revenues for restaurants and hotels, suppliers and service providers.
You mentioned flights: How do holiday makers get to Malaysia?
From 20 December 2018 TUI is flying weekly from three UK airports – London-Gatwick, Manchester and Birmingham – to Langkawi. That makes us the first and only European airline running direct flights to the island. As for short haul, we are also bringing holiday makers from China to South East Asia. Besides, all the TUI cruise companies stop in Malaysian ports and one ship will have its home port there in winter.
We have talked about flights and hotels. How do you ensure the all-round experience?
When TUI took on the destination management business on the Hotelbeds platform in 2017, Pacific World joined in. The company organises events and excursions at our various destinations.
Why so much effort?
The goal for TUI is always to provide a quality product from a single source – right across the value chain. Otherwise it may happen that a customer is unhappy with a locally organised excursion and this one bad experience will taint the overall holiday with TUI. Of course we can’t organise everything ourselves. But together with our strategic partners we can provide that all-round experience and set the standards for quality.
How does a country like Malaysia profit from tourism?
At present the travel sector contributes about five per cent to its gross domestic product (GDP) and to domestic employment. The potential is huge: the World Travel & Tourism Council calculates that over the next decade 250,000 new jobs could be created in tourism. The overall employment effect is 650,000 jobs.
Will these good prospects help to develop Malaysia as a source market as well as a destination?
In many countries of the world, a foreign company seeking to take nationals abroad on holiday needs a licence. In Malaysia we negotiated this with the Ministry of Tourism and Culture and we signed an agreement on 12 October 2018. To implement it we founded TUI International Holidays Malaysia, which now manages our business there.
What are your next steps?
We are designing holiday packages for travellers from South East Asia. That applies both to destinations close by like Sri Lanka, but also long-haul trips like London, where we can offer local hotels in addition to the flights. Naturally the holiday makers can fly anywhere they want, as we also work with partner hotels all over the world. But the aim is a package so that tourists from Malaysia and the region as a whole can enjoy the complete TUI holiday experience.
Thank you, Mr Vahldiek.
»Malaysia has worked closely with TUI for 45 years. In 2018 we raised our relationship to an even higher plane. More tourists will come to Malaysia from Europe – and vice versa. This will promote cultural exchange and benefit my people and our economy.«
Datin Sarah Albakri Devadason,
Ambassador of Malaysia in Berlin
»We are convinced that Southeast Asia will develop similar potential for us as the Caribbean has.«
Frank Rosenberger, Member of the Executive Board, IT & Future Markets