Two examples of stupidity stick with me. One was that at the time they outsourced their website to their main competitor. Which as you can imagine worked well because their competitor had no desire at all to fix the many problems with the website. TC didn't understand that the website was everything because they were at heart a high street travel agency.
The other was when I worked on managing their AdWords account, which was enormous (like 100K different keywords in thousands of groups). Some keywords would be bid at £10s of pounds. It is very easy to lose a lot of money on these keywords because there's a fine balance between the profit you make on each holiday (usually £100-ish), versus paying a large amount of money on each keyword and the number of sales you make at the end of the "sales tunnel". There was also a weekly industry survey which came out ranking the position of all the travel websites according to number of visitors (I forget the name of it). Senior managers at TC were fascinated by "being number one" on this survey every week, and so would instruct us to dial up the keyword bids on Friday night and run like this over the weekend. Google AdWords with high bids is very effective at bringing large numbers of low quality visitors to the website.
Each week they would indeed come number one on this survey (read only by other senior managers in the travel industry), while at the same time losing tens of thousands of pounds selling holidays for negative profit.
I remember those times. A number of companies in the UK saw web-sites as extensions to their teletext based advertising, just with more information density and a few small pictures (emphasis on both few and small: most of their customers were using ~28k8 connections at home and/or overcommitted shared connections in collages & libraries). You were sill expected to phone in your order, or physically go to your local branch, once you had seen something that took your fancy.
eCommerce was happening at that point (Amazon started in '94 IIRC, and the gambling & other adult entertainment industries were already actively making moves in that realm), but it was in its early days and far from trusted by either the public or many companies.
This was an intranet site was launched in 94, we don't talk about bt.com
That is still an issue with many businesses, websites are still seen as just an electronic version of a poster on a bill board, its gradually changing.
And Eu companies are even worse, a few years back I suggested a link from a German parents website to the uk subsidiary and was told the Head office lawyers where checking to see if they "where allowed" to add a link.
So while involving lawyers every time is definitely high on the CYA scale, it may make sense to run some instances by a lawyer to be safe(er). The subsidiary's website shouldn't generally be much of a problem, though.
Generalizations don't help here. There is idiocy in companies and my feeling is that the bigger they are, the worse it gets.
Legacy as in business systems, business thought process, legacy IT, etc.
TC is a very old company
What an incredibly spurious, over-generalised anecdote.
By "misaligned incentives", I mean that we were rewarded with a % of ad spend. This is very common model in the old advertising industry, and AdWords was treated as adverts, not as a technology proposition. Of course this meant that we had very little financial incentive to reduce the ad spend.
A more aligned structure would have been to reward percentage of profits, but companies were reluctant to reveal their profit margins to a third party, and third parties couldn't trust their clients to report this data correctly anyway. Hence percentage of ad spend was what everyone used.
Even Ryanair didn't value their website or online offerings at first but they valued something which TC obviously missed time and time again - their bottom line.
[1] https://www.theguardian.com/books/2007/aug/12/biography.feat...
This is quite bad behaviour from the hotel. Presumably their business relationship is with Thomas Cook, not the people on holidays?
They went as far as grabbing people who jumped a wall in an attempt to get out!
More details here: https://www.bbc.co.uk/news/uk-49787563
The hotel is this one, maybe one to avoid: "Les Orangers resort in Hammamet, near Tunis."
It won't change its name. The reason they are still in business is that they are so dirt cheap. They are known in the area and avoided by almost everybody except for these "tours" and the uninformed.
> But perhaps worse that that, a hotel behaving like this, and not being slapped down hard by the Tunisian authorities, will damage the entire Tunisian tourism industry
It's already damaged. The tourism industry is a joke and the receipts are laughable comparing to other countries (Morocco or Egypt). Just a week before protesters were able to blockade a main road in the capital and cause a gridlock for several hours lasting until late-night.
"The detention of a customer by a business owner (e.g., hotel operator, apartment owner, credit card company) for the failure to pay a bill."
I would say that the facts presented above answer that question for you.
Meanwhile, Thomas Cook holidaymakers were anxious that they might be evicted from their hotels or charged again for their holidays. Holiday companies do not normally pay hotels until up to 90 days after guests have left.
Do hotels typically have insurance that covers situations like this?
Ninety day terms are very common in most B2B industries. Large companies quickly learn that their suppliers are dependant on them to stay in business and can be abused almost at will. So nominally "90 day" terms claiming you have 90 days to pay become "We definitely won't pay until 90 days after you bill us" and then "We typically pay in the working week after 90 days is due" and then "We only run routine bill payments on the third Wednesday of a month, so it can be up to 120 days I guess you got unlucky" and next thing you know the work you did in April is only paid for in October by a company that you know is already on the verge of bankruptcy but if you don't do that work they'll cut you off completely. It's crazy but that's how it is.
The EU says if in practice you don't pay on or before 90 days you owe interest at a calculated rate on the due amount. But most small suppliers are so in thrall to the huge company they supply that they won't even ask for that money.
that's hostage taking, it is a crime, there is no excuse.
> Those buses that arrived to transport holidaymakers to the airport at Enfidha were turned away by security, Orangers guests told the Guardian.
https://www.theguardian.com/business/2019/sep/22/thomas-cook...
Thomas Cook book the hotel. Hotel promised to allocate a room for Thomas Cook. Thomas Cook will pay the hotel fee. Hotel receive the fee from Thomas Cook.
The customer who actually use the hotel owes nothing from the hotel.
The same goes for Airlines.
It's a textbook example really.
https://en.wikipedia.org/wiki/Citizen%27s_arrest#Legal_and_p...:
”A person who makes a citizen's arrest could risk exposing him or herself to possible lawsuits or criminal charges – such as charges of false imprisonment, unlawful restraint, kidnapping, or wrongful arrest – if the wrong person is apprehended or a suspect's civil rights are violated.[4] This is especially true when police forces are attempting to determine who an aggressor is. Private citizens do not enjoy the same immunity from civil liability when making arrests on other private citizens as do police officers.“
For some time now, UK companies selling "package holidays" (with hotel, air, etc. all from one vendor and with one bill) are required to put up funds that the government uses to repatriate those who are already traveling when a company goes under:
https://www.caa.co.uk/atol-protection/
Note that it does not cover trips that people put together themselves; in that case, I expect they'd only have to arrange for a flight home (as they paid for the other parts themselves).
The CAA (the UK's Civil Aviation Authority) already has a site up for Thomas Cook customers:
These vacationers are in safe countries with good infrastructure. They definitely aren’t stranded like Tom Hanks in Cast Away. However, the other airlines can’t magic up 150,000 seats, so it might mean that some people will take a while to get home.
https://en.wikipedia.org/wiki/Thomas_Cook_Airlines
… and a hotel chain …
https://en.wikipedia.org/wiki/Thomas_Cook_Hotels_&_Resorts
I would not be surprised if the UK has laws in place, and/or are using ATOL funds, so that the existing Thomas Cook aircraft can be pressed into service for the return journeys.
For example, return arrangements have already been confirmed for those traveling from Croatia on the 23rd:
https://thomascook.caa.co.uk/customers/if-you-are-currently-...
The return flight details are identical to the original Thomas Cook flights (other than the flight numbers, which are similar).
The operation will temporarily be the 5th largest airline in the UK, with a fleet of around 50 aircraft.
It was done because of financially unstable package holiday companies setting up and then failing leaving people stranded. Most people in the UK know to buy an ‘ATOL Protected’ holiday if they go for a package deal.
$3,000 is no small amount of money, do people really feel so much shame in giving someone plain old money that they have to buy a gift card?
A gift card is almost like buying a stock, except it's much more risky and gives you zero benefits compared to the cash that paid for it. If you want someone to be able to travel for $3,000 just give them $3,000.
Voluntarily spending £3k on a gift card seems utterly insane. I imagine a lot of people would feel quite confused or upset about that considering what they could also spend a few grand on.
Money is the other extreme, it says "I really have no idea what kind of gift you'd like", so apparently you hardly know each other.
Gift cards are at least a small step up, you show you think the other likes to travel.
If you used a credit card, you get your money back in the case of bankruptcy. If you used cash you may not unless you bought bankruptcy insurance.
Maybe that's why they're in business and I'm not.
But having future commitments that you don't currently have the cash for is both normal and expected. The economy is held together by invoice credit.
(Wait until the people who get upset about banks "creating money" realise how commercial credit works and discover "shadow banking"...)
The ideal situation for a company is that if it receives payment for it services in advance (i.e. a consumer paying for a holiday) and has to pay its suppliers (i.e. hotels) much later. This can result in a situation called negative working capital where a company has received more cash from customers than it has paid to-date. This is effectively interest free financing.
Companies getting into financial difficulty will try to accelerate payment of monies they are owned and delay payment to supplies...as we see here.
The article mentions that one of the issues here is that the credit card companies saw that collapse was imminent and certain and thus refused to release the funds charged by their customers to Cook, knowing that Cook would collapse, the customers wouldn't get their full holiday, would do a chargeback, but the bank wouldn't be able to get the funds back from Cook.
> "The tour operator is understood to have made a number of proposals, including ... for credit card companies to release about £50m of cash they are holding as collateral against Thomas Cook bookings."
So maybe they did have enough cash on hand in a way, but the banks weren't releasing it to them.
Another intractable and perhaps the main problem was their massive debt service owed on their previous bailout. Kind of similar to Toys R Us and other companies that have had a bailout of one form or another that leads to massive debt and debt payments taken on and beyond the ability of the company's profits to pay off.
They are really low. They rely on large numbers of tourists to have a meaningful profit YoY.
Source: worked for a tourism company in early-to-mid 2000s.
It’s basically the cornerstone of insurance companies (especially life insurance).
BTW Norwegian are fine for a while
https://simpleflying.com/norwegian-bond-payments-deferrednor...
They recently sent me an email saying that they immediately ceased service and our booking will probably be cancelled. I checked with the hotel the same day and got a confirmation that the booking is all good (via phone and email). One day after I get an email from the hotel saying our booking has been canceled.
I did pay via (prepaid) credit card so it'll be interesting to see whether I'll ever get my money back...
Buy your plane tickets with a credit card, ask your credit company for the money back, buy another ticket. This is one of the main advantages of using a credit card: the credit company will absorb the debts of the third party (the airline, in this example).
That falls under c'est la vie. I gambled, I lost, suck it up, book BA (looks like the strike's over), Lufthansa, SAS, etc.
Their website[1] says they're continuing to fly, but I'm wondering if there any sort of precedent for what happens to child companies when the parent becomes insolvent.
Having just returned just last week from Europe via Condor Airlines, I'm glad I don't have to worry about this mess.
Basically Condor answered that they will continue operating but also had to apply for a state backed credit to bridge short term liquidity issues caused by Cook's insolvency. This is being assessed by the German government at the moment.
The german travel agent subsidiaries however have stopped selling travels for now (brands Neckermann Reisen, Bucher Last Minute,etc)
https://spiegel.de/wirtschaft/unternehmen/thomas-cook-reisek...
My partner has a holiday with them booked for November. I don’t have high hopes for that.
I agree with you this is strange and very non beneficial to the customers who book late in the process but it would be even worse for those who already had booked and would then be left hanging since no money was coming in anymore.
Though quite obviously the only people benefiting from this are lawyers and the executor.
> Dozens of charter planes have been brought in from as far afield as Malaysia to assist with the mass airlift.
Getting a charter plane has been quite difficult since the 737MAX grounding.
Any excess capacity has been soaked up.
There have been lots of unusual chartering by airlines that don’t usually charter. Air Canada had been using some, and it’s exceptionally rare for them to not use AC-branded planes.
At least it’s not the high season.
But I'm probably missing some vital piece of red tape. It's usually an insurance issue.
I would suspect airports are very unwilling to let those aircraft go anywhere until all the bills are paid as they might be only guaranteed way of getting money at this point.
None of these are obstacles which couldn’t be overcome but it’s quicker just to use someone else who doesn’t have those issues.
(Various sources give different numbers for the fleet size.)
This looks really bleak, everybody who had some liabilites to Thomas Cook in any way should at least consider the chance of insolvency.
The hotels should be able to check this information, but consumers?
Every person who gets a new phone contract has his credit rating checked, but if hundreds of thousand people buy expensive flights nobody warns them about the risk.
An additional factor may be the insurance situation: Some countries require travel organizers to set up insurance for these cases, ensuring that customers can still get back. I'm not 100% sure on this, but I think the UK doesn't have such requirements, which would worsen the situation for them in particular.
if you read a Swedish newspapers they'll talk about the Swedish customers, read a German newspaper and they'll talk about the German customers and so on.
-----
* There are 600,000 Thomas Cook travellers who have been left stuck overseas.
* More than 150,000 of those are Britons.
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cant see any details on when they started seeing issues, and how did they end up like this..
edit: here is how -- Thomas Cook returned to private ownership in 1972 and has seen a series of mergers and takeovers. In 2007, it merged with the UK-listed owner of Airtours, MyTravel Group, which nearly collapsed in 2011 but was bailed out by its banks. The rescue left Thomas Cook with a debt burden of £1.7bn and the company struggled to cope, leaving administration as the only option.
Surely the management must have known a week or two ago that the company was about to go under. In that case, stop anyone flying out but still bring people back. By the time they actually cease trading there should be few people left abroad. Some managers in Thomas Cook must have known that people flying out were going to end up stranded and they just let them go.
Agreed, if you knew there was 0% hope (say, of flying anyone back a week hence) it would be unethical to keep it going. But if you were trying to keep things afloat and thought you could do, it would be unethical to do otherwise, since stopping new outbounds would 100% doom the firm and strand the overseas travelers.
If the answer is “close to zero”, we need to rethink this privilege.
But I doubt they’re happy about that experience.
And the scale. Operation Market Garden only dropped 40,000 troops. D day only managed to land 150,000 on the first day.
Years ago I showed up a Croatian airport to head home after a few weeks vacation and during that time the Croatian airline (pilots I guess) had gone on strike. It was a bit hectic, but eventually we were put on an unbranded private jet to Frankfurt. From there getting back to the US was no big deal.
Possible causes would be long term trends in the types of holidays people want, increased competition, mismanagement, etc. But the problems started long before Brexit.
Thomas Cook might have been able to position itself, in the internet era, as a local trustworthy service that takes away the uncertainty of buying from unknown overseas services. The increased costs caused by Brexit only made a difficult market more difficult.
i suppose it didn't help that folks were probably less interested in travelling due to financial uncertainties around brexit but it definitely isn't the main reason
For a business with small margins, just this currency swing is a disaster
Prices going up do decrease sales, of course.
Nobody wanted to risk getting stranded at any changeover, and a lot of industries are probably reluctant to grant time off during it.
https://www.businessinsider.com/thomas-cook-bankrupt-airline...
There is some number of passengers who have not yet left on their trip, who are part of that number.
It's 150k UK vs. 600k total holidaymakers.
