Thomas Cook needs to rethink its pricing model, says GlobalData

Following Thomas Cook’s recent announcement of disappointing results,

Nick Wyatt, Head of Tourism at GlobalData, a leading data and analytics company, offers his view on the company’s performance:

“Thomas Cook’s reasoning for their disappointing results illustrates the need for a rethink of their pricing policies. At the moment, travellers believe they can get a great holiday for a cheap price if they wait long enough and they can.

“Heavy discounting in recent years has altered consumer expectations on what the cost and quality of their holiday should be and skewed value perception. What consumers demand from, say, a £600 holiday, far exceeds what they expected 10 years ago, as well as the cost of providing it. Thomas Cook along with many other retailers and tour operators have fallen victim to this putting a huge strain on margins.

‘‘The inevitability of discounts has created a brinksmanship whereby consumers no longer book early and ‘wait it out’. It would be a risk to move first, but introducing greater pricing discipline and reducing discounts would help the company to improve margins. Thomas Cook can change this market dynamic and alter the balance of power, but it is yet to be seen whether it will it be brave enough to do so.”

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