Actions of TUI Group reflect wider initiative to streamline business

Following the news that TUI has announced a group loss of €740.5m (US$802m) in its Q2 results and that 8,000 potential job roles are now at risk, 

Johanna Bonhill-Smith, Travel & Tourism Analyst at GlobalData, a leading data and analytics company, offers her view:

“Potential job cuts have without doubt been spurred by COVID-19 as losses have soared. However, these cuts are part of a wider operation to streamline and digitize operations.

“TUI’s headcount has already decreased by 11%. The global realignment program aims to reduce the company’s cost base by 30% for the group.

“In a globalsurvey by GlobalData,48% of travelers are spending more time, if not every day, browsing social media. After a long period of increased browsing time, post-pandemic this will likely influence travelers to book online independently, rivaling the traditional in-store agency model.

“Operators with high fixed costs such as in-store agents where rent has to be paid are already at a disadvantage in comparison to online travel agents. The future travel space may see TUI take a move to digitize operations moving gradually further away from the traditional travel agent to cut costs, but also effectively service the needs of the future traveler”.

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