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TUI closures a ‘turning point’

04 Aug 2020
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The closure of 166 TUI travel agencies might mark a turning point for UK travel agents, according to a press release from GlobalData.

A GlobalData survey showed that 45% of global tourists were opting to buy more products online in a post-pandemic world.

Johanna Bonhill-Smith, travel and tourism analyst at GlobalData, said:“This move from TUI UK is unsurprising after the European travel giant already declared initiatives to digitise operations in its half-year results earlier this year. With 45% of global tourists opting to buy more products online in a post-pandemic world, it is likely that more UK travel agents will evaluate their brick-and-mortar strategies and make this move to trim costs at a time when demand has not yet returned.” 

Johanna said agencies and operators with a more asset-light business model were still at a clear advantage to withstand the uncertainty that surrounded travel recovery, because they did not have high fixed costs such as rent, bills and other utilities to pay for. She said TUI’s decision to unload was a sign that it was looking to move in this direction.

“In light of the colossal slump in demand brought on by COVID-19, this is rather a big issue for operators with a high reliance on in-store revenue, and may further delay many operators’ recovery. It would be wise for these operators to re-focus on developing their online platforms to better cater for a wider range of tourists amid sweeping changes in consumer preferences,” she said.

In April, Australian news site News.com.au reported that Flight Centre was permanently closing 40% of its Australian stores by the end of July in an effort to reduce annual costs by AUS$1,9bn (R23.2bn). It also closed 40% of its retail stores in South Africa, as reported in Travel News.

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