Tarik Evers and his team are laying foundations for TUI in new source markets like Spain, Portugal, Brazil, India and Malaysia. In this interview, the Head of Finance at Future Markets explains how the company is applying purely digital methods and innovative technology to win customers in countries where TUI has had little presence, if any, in the past.
Mr Evers, you are developing future markets for TUI. What is so special about those markets?
We have evolved from being a classical tour operator into a product provider with our own hotels and cruise companies. As we expand our hotel and cruise portfolio, we are also exposed to a greater capacity risk – we can currently provide around 100 million bed nights a year, and those beds need filling. To do this, we need to generate growth at our tour operators. In our main markets – Germany, United Kingdom, Benelux, France and the Nordics – we have about 21 million customers and we are already almost always the leading provider. That’s why we are looking one by one at new source markets of particular interest to us so that we can recruit new customers for our products. We start by offering hotels.
What are your criteria for selecting these markets?
The reasons for choosing a country are very complex. For one thing, we naturally look at how it is growing in general. That’s where the BRIC countries – Brazil, Russia, India and China – enter the picture as the fastest-growing emerging economies. At the same time, it has to fit with our strategy. That’s why we have selected five countries initially: Spain, Portugal, Brazil, India and Malaysia. The conditions in each are very different, but they are all a good match for us.
Take Spain. It has big potential because 80 per cent of the population spend their holidays within the country. They take their own car to a natural environment – the Pyrenees or Galicia, for example – or to the coast, maybe the Costa del Sol. They want beaches, good food and an element of luxury. And we can deliver exactly that in Spain with our own strong hotel brands. The same goes for Portugal.
Let’s stick with the example of Spain and Portugal: How did you go about it?
In Spain and Portugal, just like in the other future markets, we are relying solely on online solutions. That is why we have deployed high-quality technology that we can scale however we want on our online platforms and apps. In other words, whereas Germany and the UK each have their own tour operator system, for the future markets we have built a website that works in lots of languages. We simply switch over. And because we are already using the language in Portugal, Brazil makes a lot of sense. Apart from the platform capabilities I just mentioned – the scalability and the language options – the technology must of course be extremely fast and reliable. For example, it needs to process tens of thousands of enquiries intelligently at the same time. We don’t want customers to search and find what they want, and then try to book it only to realise that the capacity is no longer available. We asked various external providers to develop a platform that will display enquiries, prices and availabilities within milliseconds.
How do you publicise all these country platforms?
To be perceived globally, we must be closely linked to tourism’s meta-search engines Google, Trip Advisor and Trivago. We always launch our commitment on a back burner and expand as we gain experience. We have call centres – in Spain, for instance – so that people can get in touch and we can answer their questions.
We’ve talked about Spain, Portugal and Brazil. What about the Asian countries?
We see tremendous potential in India, if only because of the size of the population. Out of 1.4 billion inhabitants, 120 million are able and keen to travel. Nearly eight million also take holidays in South-East Asia, where we have hotels and resorts in Vietnam, Thailand and the Maldives. Malaysia is an unusual case, because there we don’t operate under our own brand. Instead we run a joint website with Malaysia Airlines. But that is working well too.
What hotels do you offer on these platforms?
Above all our own offerings from TUI Blue, TUI Magic Life, RIU and Robinson. They play a significant role because naturally they generate better margins. But we also have third-party facilities that are likewise very important. We use them to build our brand – and in return we offer those hotels great added value for using our platform. In future we will organise services for them, such as suggested pricing or the option to book a specific room, like one with a sea view or near the pool. This helps our partners to market their products more effectively.
Have the future markets met your initial expectations? And what happens next?
In those five countries we had about 250,000 customers in the tourism year that just ended. The aim is to notch up a million guests by 2022 – and we are actually going to meet that target earlier. We want to continue that strong growth, and we will do so. Besides, in future we will not only be providing hotels, but also flights, transfers and excursions. This way we will enable tourists from more and more source markets to book their entire holiday with us.
»A million additional customers from the future markets allow us to build scale and to enlarge TUI’s ecosystem.«
Birgit Conix, Member of the Executive Board, CFO