»Our team have done a great job in
renegotiating contracts this year.
The key to this success is
our relationship with our suppliers.«
Garry, what are the main activities of Group Product and Purchasing?
Garry Wilson: TUI Group Product and Purchasing was created from the previous source market purchasing teams to leverage the TUI Group scale and expertise for all markets. Our focus is the development of group destination strategies, identifying synergies and opportunities for growth. We contract hotels for fourteen markets – namely, for TUI Central Europe, Northern Europe and Western Europe – and have developed differentiated hotel concepts that appeal internationally. Capacities are planned by each market but our team then take a group view when negotiating with the suppliers. The purchasing team work closely with the Source Market product teams in order to understand their needs and deliver accordingly. The team are based globally, in destinations and Source Market offices. TUI employees are considered within the industry as experts in their fields and we are continually focused on recruiting the best talent to the business.
Turkey, Egypt and Tunisia were hit hard last year. How flexible do you have to be in hotel purchasing in order to be able to respond to changes at short notice?
Our team have embraced the challenges very well indeed. They have done a great job in renegotiating contracts by acting quickly to reduce exposure on guarantees and prepayments, allowing us to take out capacity from some destinations and move it to the ones in demand. This has really brought home the value that Product and Purchasing bring to the organisation and it has highlighted the importance of the flexibility in our contracts. However, the key to this success is our relationship with our suppliers. Some of these relationships go back more than fifty years and as partners we have complete loyalty to each other in good and bad times.
What destinations have benefited from the changes in FY 15/16 and what have you done in hotel purchasing in order to respond to the changes in tourism flows?
Spain, Portugal, Italy, Croatia and some Long Haul destinations have all benefited from these changes as the capacities have been shifted from the affected areas. Our team in these areas have had an enormous challenge in increasing our allocations in the existing portfolio and sourcing new product as well as protecting the existing beds along with the support of our hotel partners.
How do you assess the trend towards private accommodation (Airbnb, etc.)?
Differentiated product, service and accommodation quality are our key competitive advantages over the private accommodation market. Whilst private accommodation has grown rapidly in the commodity city travel markets, the security and service that come with organised travel continue to be important for the main family holiday.
What trends are you expecting for the next few years?
We will continue to do what we do best – creating innovative differentiated products on an international scale. Growth of our core hotel brands and concepts across the globe and new developments, such as multicentres, tours etc, should be our key focus.