Annual Report & Accounts 2017

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Customer at our heart makes us who we are…

In 2015, we launched a pledge to put our customer back at the heart of everything we do. Our aim is to ensure we do all that we can to give our customers great holidays which inspire them to come back to Thomas Cook.
Our focus on the customer drives every decision that we take in the business, from the hotels that we sell every season and the service promises that we make, through to the destinations we fly to. But it also determines the big decisions that we take about the business we want to be in the future.

Peter Fankhauser
Chief Executive Officer

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Peter Fankhauser - Chief Executive Officer

Our culture helps to makes us different...

In 2016, we launched our Customer Promises: Quality, Service, Reliability. These promises are driven by our values and underpin everything we do – and help us realise the things that make us different.

Quality

We are passionate travel experts and have been creating great holiday memories since 1841.

We share customer reviews before you book to help you chose the perfect trip for you.

We listen & act on your feedback.

Our teams and the partners we work with are always looking to improve to make your next holiday even better.

Service

We'll be there whenever you need us. Our teams are available around the world, 24/7.

We are here to make you happy and we promise to put you at the heart of everything we do.

Your holiday means the world to us.

We'd love to welcome you again and are committed to sending you home with great memories of your holiday.

Reliability

We care. You can trust us to always be open and honest with you.

We always give you all the information you need to make your time away stress-free.

Your money’s safe when booking with us.

We’re ATOL protected for peace of mind.

And our strategy is driving profitable growth...

Customer at our heart is the cornerstone of our strategy for profitable growth. Our desire to create a genuinely customer-centric organisation shapes the way in which we think about the culture of the business and the values by which we work.
O P E R A T I O N A L E F F I C I E N C I E S A N D S T R E A M L I N E D O R G A N I S A T I O N A L S T R U C T U R E O U R F O C U S O U R C O R E S T R A T E G Y
Our progress in 2017
Care
  • 24-hour quality promise
  • In-resort resolution for carefree holidays
  • Expert crisis management High health & safety standards
  • Group Net Promoter Score up by nine points since 2015
  • 24-Hour Hotel Satisfaction Promise extended to reach 80% of sun & beach customers in core hotels
  • Annual health and safety audits on all core hotels
Contact
  • Direct personal engagement
  • Web penetration
  • Seamless CRM
  • Rich content
  • Controlled distribution now 68%
  • 24-Hour Hotel Satisfaction Promise extended to reach 80% of sun & beach customers in core hotels
  • Annual health and safety audits on all core hotels
Holidays
  • Thomas Cook Hotels & Resorts for unique experience
  • Selected high-quality partner hotels
  • Own Airline
  • Own-brand hotels sales up 10% for the summer
  • Moving towards fewer, better quality differentiated hotels – a further 310 removed for summer 2018
  • Airline seat-only sales up by 16%
Services
  • Personalised added-extras & ancillaries
  • Thomas Cook Money
  • Ancillary sales up a further 10%, reflecting more personalised offers
  • Launch of Thomas Cook Money to expand financial services offering
Partnerships
  • Thomas Cook China with Fosun
  • Strategic partnerships
  • Leveraging our brand
  • Strong first year for Thomas Cook China, growth targets on track
  • Completed complementary hotel strategy with Expedia alliance and Webjet partnership
The result Increasing customer loyalty and attracting new customers
Our vision To be the most loved holiday company

Our core strategy

Care

  • 24-hour quality promise
  • In-resort resolution for carefree holidays
  • Expert crisis management High health & safety standards
Our progress
  • Group Net Promoter Score up by nine points since 2015
  • 24-Hour Hotel Satisfaction Promise extended to reach 80% of sun & beach customers in core hotels
  • Annual health and safety audits on all core hotels

Contact

  • Direct personal engagement
  • Web penetration
  • Seamless CRM
  • Rich content
Our progress
  • Controlled distribution now 68%
  • 24-Hour Hotel Satisfaction Promise extended to reach 80% of sun & beach customers in core hotels
  • Annual health and safety audits on all core hotels

Our focus

Holidays

  • Thomas Cook Hotels & Resorts for unique experience
  • Selected high-quality partner hotels
  • Own Airline
Our progress
  • Own-brand hotels sales up 10% for the summer
  • Moving towards fewer, better quality differentiated hotels – a further 310 removed for summer 2018
  • Airline seat-only sales up by 16%

Services

  • Personalised added-extras & ancillaries
  • Thomas Cook Money
Our progress
  • Ancillary sales up a further 10%, reflecting more personalised offers
  • Launch of Thomas Cook Money to expand financial services offering

Partnerships

  • Thomas Cook China with Fosun
  • Strategic partnerships
  • Leveraging our brand
Our progress
  • Strong first year for Thomas Cook China, growth targets on track
  • Completed complementary hotel strategy with Expedia alliance and Webjet partnership
OPERATIONAL EFFICIENCIES
AND STREAMLINED ORGANISATIONAL
STRUCTURE
The result Increasing customer loyalty and attracting new customers
Our vision To be the most loved holiday company
We've made big strides towards our target to put the customer back at the heart of the business. Our strategy is clear: to deliver sustainable growth by giving our customers great holidays which inspire them to come back to Thomas Cook and recommend us to their family and friends.

Care

We believe that the biggest opportunity we have to differentiate a Thomas Cook holiday from the competition is in the level of care and reassurance that we provide to our customers.

Gambia evacuation

When political instability caused the UK Foreign Office to recommend against all but essential travel to Gambia in January 2017, we provided all of our holidaymakers situated in the West-African nation with seats on rescue flights home. In total, we repatriated 3,500 customers within three days across 16 rescue flights.

Contact

Putting our customers at the heart of the business means building a closer relationship throughout the year, wherever and whenever our customers want to engage with us.

Reshaping our contact with customers in the UK

We're adapting to changing consumer behaviours by investing in our websites, while making sure our customers have a seamless experience of Thomas Cook, be that online or offline. We closed 101 stores last year but increased direct sales to customers, evidence that we’ve improved contact with customers whenever and wherever they need us.

Our holidays

The quality and range of our holidays that determine the success of our business.

Hotel quality tracking

To ensure the quality of our partner hotels, we track NPS scores at every stage of our holidays. This year, we stepped up the resources available to our hotel quality managers, enabling them to operate at the heart of the feedback loop of our customers, source markets, and hotels.

Our brand hotels and resorts

The development of a strong portfolio of own-brand hotels and resorts is critical to the success of our strategy for profitable growth.

Casa Cook

Launched as a boutique hotel brand in 2016, Casa Cook fills a niche in the travel industry by appealing to a growing generation of independent travellers. Comprising of a collection of stylish, eclectic, and modern resorts, each offers its own personality inspired by its local surroundings and global travel tastes.

Airline

The other key element of our holiday offering which is increasingly important to our strategy for profitable growth is our airline.

US long-haul growth

After expanding our offer on transatlantic routes, more than one million passengers flew across the North Atlantic with Thomas Cook during last year’s winter and summer season. In the same period we introduced 11 new US destinations, with more long-haul routes planned for early 2018.

Partnerships

As we focus on our holiday offer, we are putting our energy and attention into a number of key areas where we can create the most value for our customers.

China

We launched Thomas Cook China in September 2016, less than a year after we announced our Joint Venture with Fosun. Using Fosun’s knowledge and local market access, and our brand heritage and travel expertise, the business has developed into a full service travel company operating inbound, domestic, and outbound tourism.

Services

The additional services we offer our customers as part of their holiday, through our direct sales channels, Airline, and in-destination teams, make us different from travel agents and other tour operators.

Offering ancillary services

We have broadened the range of holiday extras offered to our customers through ancillary services such as seat reservations, extra luggage, meals on board, travel insurance, and in-resort transfers and excursions. Since creating our Group Ancillaries Team in 2015, anciliary sales have increased by 20 percent, with a 10 precent increase from 2016.

Efficiencies

Underpinning every element of our strategy for profitable growth is a continual drive for greater operational efficiency.

Financial shared service centre in Palma

By centralising our Group financial shared service centres in Palma, we are reducing costs and providing a greater consistency of quality across the business. From Palma, we aim to extend a culture of collaboration and best practice throughout the Group, strengthening our efficiency as we grow.

Financial KPIs

Underlying EBIT (£m) & EBIT Margin (%)(i)

Underlying EBIT & EBIT Margin
Definition

Underlying EBIT provides a measure of the underlying operating performance of the Group and growth in profitability of the operations. EBIT margin measures the underlying EBIT generated as a proportion of sales. We target improving these metrics across all our businesses.

2017 performance

Group underlying EBIT of £330m and underlying EBIT margin of 3.7% represents growth of £24m due to an improvement in our Airline partially offset by competitive pressure on our UK Tour operator.
(i) Figures have been represented on a like-for-like basis.
(ii) FY16 figures have been restated. See Note 33 for details.

Basic EPS and underlying EPS(ii)

Basic EPS
Definition

Basic earnings per share (EPS) represents profit for the year attributable to equity Shareholders. This metric provides a measure of Shareholder return that is comparable over time. Underlying EPS(iii) is defined as earnings before separately disclosed items after a national tax charge divided by the weighted average number of ordinary shares. We are targeting a positive and improving EPS.

2017 performance

Underlying EPS has increased by 1.3p whilst Basic EPS has increased by 0.5p since FY16 due to continued progress in our transformation.
(ii) FY16 figures have been restated. See Note 33 for details.

Net Debt £m(iii)

Net Debt
Definition

Net debt is a measure of how the Group is managing our balance sheet and capital structure. A strong balance sheet is essential to withstand external market shocks and seize opportunities. Accordingly, reducing net debt and as well as the cost of the debt is a priority for the Group.

2017 performance

Net debt decreased by £89m; mainly due to free cash flow generation of £93m.
(iii) FY15 Net debt has been restated to include hedging on borrowings.

Non - Financial KPIs

Net Promoter
Score

NPS
Definition

Net Promoter Score (NPS) is an index that measures the willingness of our customers to recommend our products and services to others. We use this as an indicator across the whole Group of our customers’ overall loyalty and satisfaction in relation to our flights, our hotels and the holiday experience overall.
We are targeting NPS increases in all of our source markets and our branded hotels.

2017 performance

Year on year the group achieved a 4 point increase in NPS, with improvements seen in all of our major service markets and our branded hotels.

Employee Satisfaction Score:
Core-Index and Commitment-Index

Employee Satisfaction Score
Definition

Employee engagement is measured through our annual Survey, “Every Voice”. We focus on the measurement of two main indexes, being our ‘Core-index’ and ‘commitment-index. Our target is to at least maintain our high core-index score and increase our commitment index score.

2017 performance

Our core index and commitment index was 74% and 68% respectively, level with 2016. The strongest progress this year was seen in customer orientation, driven by the launch of the Customer promises and values which has driven more customer centricity. The results also told us that the strategy and direction of the Company is more clear among all managers – a foundation for driving the new strategy.